Launch date: OpenLaw was first released in 2017. Launched and hosted on the Eventbrite platform on August 2, 2018.
A brief overview of OpenLaw
OpenLaw addresses the different problems that exist in contractual agreements by re-imagining the creation, execution, and storage of legal agreements. Using OpenLaw, lawyers and organizations can automate the creation and management of legal document execution and embed Ethereum-based smart contracts into legal agreements when needed, reducing the ambiguity associated with certain legal documents.
The earliest written agreements appeared in Mesopotamia thousands of years ago, written on clay tablets with cuneiform pens. From these first written agreements, the world was steadily constructed through legal documents. Contractual agreements document basic human relationships, help people take risks, structure industries, and serve as the backbone of the organizations that shape our daily lives.
Yet, despite the ubiquity of legal agreements, and despite the fact that it is the cornerstone of the $437 billion U.S. legal industry, the way contracts are created and generated has not changed significantly. While agreements are no longer recorded in clay, lawyers have failed to take advantage of advances in computer technology to streamline and simplify their work. For most lawyers, the development of standard contracts followed an old path. Lawyers meet with clients, assess their needs, and then painstakingly draft agreements using written templates based on previous work. These agreements are customized to the facts at hand, but most of the text remains the same from one deal to the next, written in legalese style, which sometimes creates ambiguity and litigation risk. Simple drafting errors, such as failing to add an innocent Oxford comma, can lead to disastrous consequences.
Once an agreement has been revised, reviewed and finalized, signature pages are awkwardly exchanged between the parties, often using ink signatures. For large matters, obtaining these signatures often requires the help of highly qualified attorneys, which can slow down the completion of complex matters and waste valuable time. On the other hand, the storage of legal agreements is fragmented and insecure. Agreements exist as attachments in emails, stored in insecure document management systems, or worse, in moldy file cabinets, becoming forgotten relics that are only identified in the event of a dispute. Legal documents act as honeypots for malicious hackers who seek to profit from the valuable confidential information created and maintained by lawyers.
One of the most worrisome issues is the signing of agreements that stay at the moment they are signed and are not subject to outside influence. Changing the way a contract works requires changing the terms of the contract, and the contract itself requires a formal amendment, waiver, or renegotiation. As a result, agreements cannot respond to real-world events or be updated in light of new circumstances. In other words, they are not programmable.
The OpenLaw Core Team
OpenLaw has a brilliant team led by Aaron Wright and Davin Roon and backed by blockchain venture capital firm ConsenSys.
Aaron Wright is an Associate Professor at Cardozo Law School and Director of the College’s Blockchain Program. He is the head of the Enterprise Ethereum Alliance’s Legal Working Group, a CoinCenter scholar, editor of Ledger, and co-author with Primavaera DeFilippi of a forthcoming book (Blockchain Technology and the Law: the Rule of Code), and has signed a contract with Harvard University Press.
Roon is the creator of JVM-based tools for integrated Ethernet development; the creator of Cubefriendly (an open data database engine). He is also a graduate of Technion class of 2009.
MikolajSzabo, Senior Engineer. He was a Scala platform engineer at Gawker Media and also wrote for the publishing platform Kinja. In addition, Mikolaj has experience as an eCommerce consultant on large retailer projects such as Tesco and Shop Group.
Priyanka Desai was Vice President of Operations and Business Development prior to joining OpenLaw, Priyanka attended the Bangamin Kadozo School of Law. While in school, she gained experience in virtual currency implementation for the blockchain consortium R3 and NYSDFS. Prior to attending law school, Priyanka Desai worked for the House Foreign Affairs Committee and a New York law firm.
OpenLaw Working Tools and Utilities
- OpenLaw Legal Markup Language
OpenLaw provides “legal templates” enhanced with the OpenLaw “legal markup” language, which is similar to Wikipedia’s “wiki text” and has more powerful The OpenLaw legal markup language makes the once painful process of preparing legal agreements a breeze and dramatically reduces the time required to generate and execute a series of contracts, rather than just simple agreements. Users can typically create a legal template in minutes and quickly identify the key variables of an agreement’s optional terms. Once a legal template is created, the OpenLaw interface guides the user through the normally customized areas of that agreement and automatically regenerates the document in real time based on user input.
For example, using OpenLaw’s legal markup language, it is possible to combine four different versions of the Simple Agreement for Future Equity (SAFE) into a single legal template that can be converted between different standard variations in real time with a few clicks. In addition, various tools are provided through the OpenLaw language, which are necessary to create truly programmable legal agreements. Currently, it supports if-then, aliasing, multivariate expressions, hidden variables, and can even perform basic calculations.
OpenLaw is the first project to truly create “smart” legal protocols, providing everyone with an easy way to reference and trigger Ether-based smart contracts to manage contractual commitments. Using OpenLaw, any Ether-based smart contract can be embedded in a legal agreement with a few lines of code and automatically triggered after the agreement has been digitally signed by all parties. As a result, using OpenLaw, users can create agreements and business relationships that were previously impossible to implement. For example, users can create a simple employee offer letter and be able to pay employees in real time (every minute). With no payroll processor or other intermediary closely involved in the creation and execution of the agreement, the employee can watch his or her account grow in value over time.
Think of OpenLaw as the glue that holds the emerging blockchain stock together. Assets and other digital tokens are generated and protected by blockchains such as Ether, and OpenLaw provides a seamless user experience to structure and manage transactions involving these assets in a way that is familiar in today’s world.
All agreements on OpenLaw can be easily signed digitally. Once an agreement has been finalized, a signature can be sent via email. Signing requires only the click of a button, and the signatures are stored on the ethereum blockchain, providing them with a degree of permanence for future reference. Once signed by all parties involved, each party and the sender receive an executed copy for their records.
Because they are stored on IPFS and the ethereum blockchain, legal agreements generated through OpenLaw are more private and secure. Neither the legal templates nor the generated agreements are stored on our central servers or those of Amazon, IBM, or Google, so the information is less susceptible to cybersecurity threats. Currently, we require you to create a user account using OpenLaw, and our goal is to minimize the amount of information we store and manage. Over time, lawyers will be able to generate and manage documents in a way that truly resembles the paper world without having these agreements go through third parties who do not understand the contract.
- Smart Token Purchase Protocol
OpenLaw is a blockchain-based protocol that enables parties to create traditional legal agreements that interact with ethereum smart contracts, meaning users can quickly turn any legal agreement into one that incorporates and manages assets on the blockchain. using OpenLaw, one can generate a basic token purchase agreement with just a few clicks to manage the sale and transfer of any ethereum-based tokens. OpenLaw has tagged a token purchase agreement that has been widely used as part of a token sale, and when signed by both parties, triggers a transaction contract that manages the payment and transfer of the purchased token.
The subsequent blockchain-based approach provides certainty to the party selling the tokens that the sale is subject to a traditional legal agreement, thereby reducing the risk associated with the transaction. The parties can enter into a familiar legal agreement and know that the sale will rely on a smart contract to take place. In other words, the smart contract can govern the payment and transfer of the tokens, but the parties’ arrangement can be supported by a familiar written agreement in case a dispute arises at some point down the road. If this happens, a court or other administrative body will be able to understand the context of any arrangement and manage its resolution.
More importantly, smart contracts can prevent unauthorized parties from attempting to purchase tokens during a sale. Smart contracts are programmed to distribute tokens only to parties who sign an agreement based on our template, and buyers cannot purchase more than the amount specified in the signed agreement, thus providing token sellers with more control over token sales.
- Complex transactions
Commercial arrangements are often shrouded in complexity. Basic arrangements such as confidentiality agreements, leases, service agreements and short-term financing documents account for a large number of commercial transactions. However, they are only a small part of the existing transactional legal market in the United States. As all lawyers say, many transactions are a bundle of documents, a “deal” that work together to manage risk and assign rights related to a particular transaction.
Lawyers painstakingly manage the complexity of these transactions, taking the time to ensure that the definitions, terms and underlying information related to the parties in these documents are consistent. The current process of managing transactions is time consuming, cumbersome, tedious and incurs additional costs; costs that ultimately hurt clients, add to the pockets of law firms and reduce access to essential legal services for most people.
OpenLaw set out to solve these problems by simplifying the creation of complex legal document sets using blockchain technology, and the team aims to drive down the cost (and tedium) of performing complex legal work while increasing access to legal services around the world. With Legal Markup Language as a core component of OpenLaw, lawyers can build their agreements or entire transactions in minutes. A few key features of the markup language are mentioned below.
Helps attorneys identify and incorporate optional legal terms, or what we call “conditions”.
Handles logical expressions (if-thens; if (condition A & & condition B) -> [action], etc.).
Structuring key parts of legal agreements (such as dates, numbers and signatories).
Performing basic calculations that help signatories pass variables and make calls to smart contracts running on the Ethernet network.
In this way, OpenLaw transforms legal agreements from static documents into dynamic systems that manage complex business tasks. Simply put, each legal agreement on OpenLaw becomes an object. Each of these legal agreements in turn contains its own set of objects that can be manipulated by the user at will. As a result, legal agreements become increasingly computable: one can define and set variables, modify the text of the agreement (or set of agreements) on-the-fly, and automatically calculate payment amounts, allocations, and other obligations.
The object-based approach allows a simple bundling of a set of documents and the creation of a “transaction” with interdependent relationships. Common variables between these documents can be set simultaneously, and the language of multiple agreements can be changed automatically with a simple click of a button. In addition, the “transaction” architecture helps OpenLaw users to create and execute complex transactions in minutes. Using OpenLaw, one can have an employee digitally sign a retainer letter, an arbitration agreement, a confidentiality and invention transfer agreement, grant restricted stock to an employee on a direct vesting schedule, and generate a unanimous board action in minutes with a few clicks. Not only that, but these agreements can invoke and execute multiple smart contract programs when executed, transferring payments and transferring tokenized stock to employees on a vesting schedule. Tasks that would have taken lawyers hours and involved multiple intermediaries now take minutes and are all managed through the blockchain.
- Digitize real estate
By using OpenLaw to create a standardized legal agreement governing the purchase and sale of property between two parties, a “Land Sale Agreement” was created. This Land Sale Agreement contains the standard terms one would expect in such a transaction, including a description of the property, purchase price terms, and financing conditions.
Because the OpenLaw markup language enables frictionless contracting, the agreement is transformed into a dynamic object that interacts with Ethernet smart contracts, enabling the buyer and seller to effectively negotiate, manage and execute the agreement. As part of this interaction, calls to the smart contract from the land sale contract include key parameters entered by the parties.
The seller’s and buyer’s Ethernet addresses (to facilitate the distribution of tokenized property and escrow funds).
The purchase price, deposit amount and loan amount (if any); and
A unique string identifier for the property based on the physical address (to enable tokenization).
The call to the smart contract is made after the land sale contract (signed by both parties) is executed using the OpenLaw protocol. The buyer can then transfer the deposit amount into escrow in this smart contract. In turn, the lender can send the loan amount to the smart contract escrow prior to settlement. After the total purchase price is sent to the smart contract, the seller can finalize the transfer and trigger the smart contract to pay the funds into their account and transfer the tokenized property to the buyer. The transfer is recorded on the ethereum blockchain and the status of the title ownership is updated.
An important practical consideration is how the Ether blockchain will account for other types of property interests that are not recorded using the ERC721 token (which so far has only represented mere ownership of the underlying property). For example, we are still working on how to record and treat easements, attachments, security interests, and other covenants. This problem could be solved if these things could be registered and recorded along with ownership, for example using the newly proposed ERC994 mandated non-forged token standard. For the sake of simplicity, we have not modeled these types of interests.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/openlaw-automated-legal-protocols/
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