Invalid Conditions and Void Smart Contracts: A Comparative Study in Iranian Law, Common Law, and European Union Law

Abstract

The expansion of blockchain technology and smart contracts has fundamentally transformed the traditional structure of contractual relations. Smart contracts rely on coded instructions and automated execution mechanisms that reduce the need for direct human intervention in contractual performance; however, technical self-execution does not necessarily guarantee the legal validity of contractual terms. The central issue emerges when an invalid, unlawful, ambiguous, unfair, or public-policy-violating condition is embedded within a smart contract and automatically executed through code. In such circumstances, a tension arises between technical certainty and legal legitimacy, raising the question of whether successful code execution can replace traditional legal standards of contractual validity. This study adopts a descriptive-analytical and comparative approach to examine invalid conditions and void smart contracts in Iranian law, common law, and European Union law. The findings demonstrate that, despite important differences in doctrinal foundations and regulatory approaches, all three legal systems recognize a distinction between technical execution and legal enforceability. Iranian law provides a strong conceptual framework through the traditional distinction between invalid conditions and conditions that invalidate the principal contract, although significant gaps remain regarding automated execution, developer liability, and technical reversibility. Common law offers flexible mechanisms through doctrines such as severability, public policy, unconscionability, and equitable remedies for controlling invalid contractual terms in digital environments. European Union law places stronger emphasis on consumer protection, transparency, and the regulation of unfair terms, especially in technologically complex contractual relationships. The study concludes that smart contracts must remain subject to the foundational principles of contract law and that technological automation cannot replace legal legitimacy, fairness, judicial supervision, or mandatory legal norms.