A supply chain and trailer is the final case study looks at a particular business working within an
industry that was clearly ready for disruption.
So when we do the work with clients and consultants around, where can these contracts.
Smart contracts and technology be most useful?
Were generally looking at industries or processes that appear to have a high degree of inefficiency
in them or are peculiarly analog, haven't been updated in the way that the operations are run.
For tens, maybe more than that of years and logistics and supply chains looks like a good example of
that.
So one of the features of globalization was that international parties entered into contracts with each
other on a much broader scale.
A hundred years ago, there was a great deal of contracting, which between domestic entities, less
between international entities.
That changed with the rise of globalization, particularly through the 1980s and 90s and the later century.
But the contracting matrix around supply chains was developed over a hundred years ago, and that didn't
change.
What changed was the size of the market.
So generally, the way that supply chains work is through the kind of documentation that you would associate
with ports and the import and export of goods.
So goods would start at a particular place in the world.
They would be put onto from a factory, onto a lorry, from a lorry, onto a container container onto
a ship.
The ship goes to port at the port.
The container is unloaded, put onto another lorry, eventually reaches its destination.
So you can see here there are various stages in the transportation and at each of those stages.
Traditionally, there has been paperwork and the paperwork has been duplicates in leverage files that
are stamped by the commercial parties.
The party whose buyer and seller the customs authorities allowing the goods to move between one customs
jurisdiction and another and between the various logistics and transport entities.
So you have volumes of paper to move one cargo of goods from one party to another party elsewhere in
the world.
That is clearly automatable and the benefits of block chain technology are clear here.
If we say the old question, why is a block chain better than a database?
And the traditional answer is it's it's better than a database where you're dealing with parties that
don't have a trusted relationship between them.
That's the case in supply chains, because there are so many parties, a party who is transporting from
the truck to the port at the country of origination will likely have no relationship with the party
that is transporting on the truck at the destination jurisdiction.
So block chains work well in these multiparty non trust transactions, and they work well to take paper
out of processes.
And we've seen that with the development of supply chain contracting and logistics.
And the company best known for this is trade lens.
It has significant adoption.
It has many customers.
It has market share.
And you can go and look in its website.
It shows how the interactions have changed from this analog paper-based, very human centric basis into
a more automated and machine focused.
Now there are social policy questions around what that means in other aspects.
But as far as the transaction itself is concerned, the transaction is an intangible thing.
It is moving goods from one place to another via a series of parties and via a series of relationship.
And so what trade lens does is provide a platform where all of the parties are able to use the same
trusted database and bring that efficiency to a market.
So supply chains have been one of the most successful areas of adoption for both small contracts, but
also block chain more broadly.
And these are the use cases that many commercial parties are looking at.
What does my industry have in common with the supply chain logistics industry?
Because that's where I'm going to find use cases that work because they've been proved out there.
So a broad range of use cases.
And you can see from the information about trade trade lens and from IBM that writes about it, how
this has developed and where the prospects of future development lay.
But in the in the context of the lawyer and smart contracts, we can see for sure that ability to have
remote access, virtual transactions, automation, all of these characteristics of smart contract are
a benefit.
And it should go without saying that lawyer's role in this transactional life is to not stop clients
from doing what they want to do, but ensure that they can do what they want to do in a way that is
compliant with rules and regulation.
On the one hand, but also is efficient and work smoothly on the other hand.
So that's the challenge for lawyers.
So we get to the end of the session.
And what have we learnt?
So I hope that we've put some context around contracts for you that they are in most jurisdictions,
US, UK and Europe.
They can be relatively informal creatures, but they do have certain formal characteristics because
there is a serious consequence that sits behind them that they can be enforced by the courts.
It's a serious consequence, but it's a foundation of a lot of economic life.
You can't grow your crops if you're that farmer, if you don't know that there would be a market to
sell them into.
You're taking that risk.
But the concept of future contracts, a type of contract where the farmer sells the grain in the future
and enables the farmer to predict and plan because they know that there is a return available for them.
The smart contract is now overlaid on that by the farmer.
If they're not able to deliver because of a lack of rainfall, knows that they have another relationship
with a party, the insurance company that will stand behind that economic transaction.
So you see from the perspective of a farmer as an economic actor, the ability of contracts to provide
certainty, predictability, allow the farmer to purchase the seeds, confident that they will have
the ability to sell them at the end of the harvest, and that small contracts are now working their
way into this and providing benefits of efficiency and automation.