Blockchain Contracts – A Binary Revolution of Agreements

Cryptocurrency has been a mainstream topic in the media for numerous years now. Its goal to digitize and make transactions private has spurred much debate. Many commercial transactions using cryptocurrency involve a blockchain contract, which operates like contracts that people enter into daily.

A blockchain is a database shared by all parties to a transaction. The blockchain for a given transaction is stored and accessed using the parties’ computers. The database uses mathematics and software to prevent the data from being tampered with, altered, or destroyed.

Blockchain contracts are best explained using the example of a vending machine. For instance, Justin owns a vending machine that sells soda for $1.50. Caleb agrees to pay $1.50 for Justin’s soda. After Caleb fulfills the condition of paying $1.50, the smart contract would automatically take the soda from Justin and give it to Caleb. Because the contract is set up through the blockchain using secure data, this cuts out the possibility that Justin would not give up the soda once Caleb paid $1.50. So long as the condition of paying $1.50 is met, Justin’s performance under the contract will automatically be executed. Simply put, the binary nature of whether a condition has been met makes blockchain contracts efficient to execute and successful at preventing breaches of contract.

Although blockchain contracts are relatively new to the courts, these agreements will fit into contract law that attorneys dispute on a daily basis. For example, because of its written nature, a blockchain contract will satisfy the statute of fraud. Furthermore, the entire body of code will be deemed part of the contract; therefore, it provides the court with a clear depiction of the “four corners” of the contract.

Blockchain contracts, on the other hand, can create unique procedural issues for attorneys. Blockchain contracts have a processing fee the initiating party pays to the agreement. In the crypto world, this processing fee is known as “gas,” which represents compensation paid to other computers to validate the contracts before they are given full legal effect. Technology glitches and power outages are especially prevalent due to Midwest weather. If a computer cannot validate a contract, this could cause the third party who runs the authorized computer to incur liability.

If programmed correctly, blockchain contracts lower liability and reduce legal costs. However, litigation can ensue if blockchain contracts are programmed incorrectly or fail to execute to the parties’ specifications. This will cause a shift in the type of work litigators encounter, requiring attorneys to understand and argue technology law, which is likely unsettled in the courts.

From a transactional law perspective, attorneys will need to quickly absorb information pertaining to technology law and be able to write contracts that protect their clients from future liability. Since blockchain contracts are formed electronically, attorneys will need to learn how to code their contract clauses so agreements can automatically execute as soon as their conditions are fulfilled.

Blockchain contracts will likely rise in popularity in the future. Attorneys, courts, and clients need to understand the risks but appreciate the efficiency and security these agreements can provide. Erickson Sederstrom Law stays current with the shifts and changes in contract law.

D & M Roofing & Siding v. Distribution, Inc.

In the case of D&M Roofing & Siding v. Distribution, Inc., the Nebraska Supreme Court considered a procedural question on final judgments and appeals. D&M Roofing & Siding, the appellant, entered into a contract with Distribution, Inc., the appellee, to repair hail damage to the roof of a warehouse owned by Distribution. These repairs were subject to an insurance claim in which Distribution would pay D&M the approved claim amount. D&M alleged Distribution breached their agreement by canceling the contract and hiring a different company to repair the hail damage. This breach of contract led both parties to file a motion for summary judgment.

When a trial court grants summary judgment in Nebraska, the case is considered complete and adjudicated. The trial court awards rights and relief to the party whose motion for summary judgment is granted.

The trial court overruled D&M's motion for summary judgment and granted Distribution's motion for summary judgment in part. The court held that D&M was limited only to breach-of-contract damages stipulated in the contract. Although summary judgment was partially granted, the court's order did not express the parties' rights nor release any relief to the damaged party in a single document.

The Nebraska Supreme Court was presented with the issue of what constitutes a final judgment. Nebraska law requires that for there to be appellate jurisdiction, there must be a judgment rendered, a decree issued, or a final order from the trial court.

The Supreme Court explained a final judgment is proper when "the rights of the parties are concluded so that further proceedings cannot affect them." In other words, nothing must be left for the trial court to act on. On the other hand, the Supreme Court explained there is no final judgment when there is something of "judicial nature" the trial court must still act on.

Although the trial court denied D&M's motion and partially granted Distribution's motion, the trial court did not grant nor deny relief to D&M's breach of contract claim. To do this, as the Supreme Court explains, the trial court must sign a "single written document" containing the rights of the parties and the relief granted in the action. Until the written document is signed, the trial court still has a task of "judicial nature" which prevents a party from asserting its right to appeal.

Because the trial court did not sign a single written document containing relief and rights of the parties, there was no final judgment. Therefore, because there had yet to be a final judgment, D&M lacked the ability to appeal under Nebraska law. So, the Supreme Court did not have jurisdiction to hear D&M's other contractual claims. D&M Roofing & Siding v. Distribution, Inc. clarifies the requirements for appellate jurisdiction within Nebraska and prevents litigants from appealing a case before the trial court is finished ruling.

A Week in the Life of a Law Clerk at Erickson Sederstrom

Life as a law clerk at Erickson Sederstrom varies greatly from day to day. From dense contractual conflicts to arcane procedural problems, the assignments I have been given challenge my legal abilities and communication skills.

By mid-morning on Monday, the clerks finish projects from the previous week or are given new projects to delve into. As the week progresses, attorneys will ask us to join them at hearings, site visits, or client consultations. Often, these activities lead to additional projects for us to work on. These are the most gratifying tasks to complete. Being able to meet clients and apply legal theory to real cases is one of the best parts of joining the Erickson Sederstrom team.

I learned early this summer the firm encourages an open-door policy. Associate and partner attorneys alike invite clerks to ask questions to tackle legal issues that will make a difference in our client’s cases. In addition, Erickson Sederstrom is not afraid to give difficult, nuanced questions to its clerks.

For example, within the first two weeks, I was asked to research claims we might have against a bank for withholding client funds. These claims changed depending on the jurisdiction we could sue in. I was asked to analyze the law in federal and state courts to determine which jurisdiction we would have the best chance to succeed in. The attorneys had me present my findings and discuss the pros and cons of filing suit in a particular jurisdiction. Clerks at Erickson Sederstrom are not just research assistants but rather strategists the attorneys rely on for an advantage in litigation.

In addition, clerks are encouraged to discuss our legal interests with the attorneys. In turn, we receive projects in those areas of interest. For example, as someone interested in complex commercial litigation, I have been working with an attorney for over a month on a case concerning contracts, property, business associations, commercial law, trusts and estates, and civil procedure. Being able to continually work on a single case throughout discovery and summary judgment has taught me the pace of litigation and expanded my understanding of these subject areas while helping our client win.

Through this experience in commercial litigation, I have been given the opportunity to draft and participate in several aspects of the pre-trial process. Along with memoranda, I have already drafted a motion and brief for summary judgment, objections to the opposing party’s expert witnesses, deposition reports, a brief in resistance to the opposing party’s motion for summary judgment, and a mediation statement.

I was also invited to mediation where I was encouraged by our partner attorney to present arguments to the mediator on topics I have researched. Not only am I producing documents the firm will use and rely on, but our partner attorney let me argue on behalf of our client. This

experience, without a doubt, helped me grow as a prospective commercial litigator. As a former athlete, being able to compete in that mediation was one of the most rewarding experiences I have been given this summer.

The attorneys expect a lot out of the clerks and we welcome that challenge. The attorneys provide us feedback on documents and trial strategies. We are never left in the dark wondering what we could have done better. In a competitive field like law, this feedback is what will help the next generation of attorneys at Erickson Sederstrom continue to provide top-notch legal services to our clients.

Erickson Sederstrom also cares greatly about their community. Within the first month, twice we assisted at the local foodbank to give back to our community. This fun teambuilding activity was a unique opportunity to get away from the office, work with each other on different projects, and help a greater cause.

Clerks are also encouraged to join the attorneys at networking events and firm outings. The firm holds annual outings and activities for the College World Series, Masters Golf Tournament, and holidays throughout the summer. Erickson Sederstrom cares far more than just the work we complete at the firm. The attorneys and legal staff at Erickson Sederstrom are a family and the clerks are invited to join that family.

A week in the life at Erickson Sederstrom varies greatly. That is one of the many reasons why this summer has been so exciting. Whether it is preparing drafts of documents, meeting clients, or throwing darts at a company outing, the summer clerkship at Erickson Sederstrom has been a first-class experience.