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Blockchain, Businesses & Startups, Featured, Smart Contract

All You Need To Know About Ricardian Contracts

Lately, many blockchain-based technologies have begun supporting Ricardian contracts. People having the basic concept of blockchain technology already have an idea about smart contracts. However, it is time now to understand some more regarding new technologies. The Ricardian contract is one of them. In this piece of writing, we are going to shed light on the new kind of contract recently introduced in the industry of blockchain.

Define Ricardian Contracts

The Ricardian contract refers to a human-readable lawful agreement that is additionally signed and agreed upon by both parties involved within the contract. Therefore, it happens to be transformed into a contract that is machine-readable and clearly stipulates the designated intentions of both parties involved. Thus, it can readily automate the operations on numerous option apps that are dependent on this technology. A Ricardian contract can also be considered as a smart contract that is both human and machine-readable. 

Also Read: Where Does Blockchain Stand in the Mainstream?

What Makes Ricardian Contracts Unique? 

The unique factor of Ricardian contracts lies in the fact that it is cryptographically verified and signed. Even when it happens to be a digital document, it is accessible in a text that is human-readable that is pretty simple to understand for everyone and not just lawyers. It refers to a unique legal document or agreement that is readable for humans as well as computer programs at the same time. 

In other words, it serves two unique purposes and has two parts. Firstly, it happens to be an easy-to-read lawful agreement between two or more parties. Lawyers can easily acknowledge it and even normal people can understand the inherent terms of the agreement. Secondly, it happens to be a machine-readable agreement as well. 

With the platforms of blockchain, these agreements can now be easily signed, hashed, and can be stored on a blockchain. Above all, Ricardian contracts help merge technology and legal contracts, blockchain to be very precise. They combine the parties within a legal contract before carrying out the actions on the network of blockchain. 

Features and Advantages of Ricardian Contracts 

Ricardian contracts, as both human-readable and machine-readable, come with a host of benefits. But, before we hop into the advantages, let us understand some of its basic features. 


  • Ricardian contracts help record the terms of a contract as a legal document. 
  • It happens to be a legally binding agreement or document. 
  • Any Ricardian contract can also be a smart contract as well. 
  • Ricardian contracts can additionally automate operations on blockchain-based apps. 


  • Costs: Ricardian contracts can help save costs time and effort you may require to invest in case of the arrival of disputes. 
  • Acts like smart contracts: Ricardian contracts not just define the intentions of other parties under lawful terms and conditions, but can also carry out instructions as well. 
  • Legal binding contract: Unlike smart contracts, these contracts bind both parties in a lawful agreement. If anything happens wrong, one can put a case against the other party in a court of law. 

Working Procedure of Ricardian Contracts 

Primarily, a Ricardian contract refers to human-readable lawful agreements between two parties. You can utilize this contract in the court of law because they bind you to a different party in a lawful contract. 

You might require lawyers to develop the actual lawful agreement, after which both the parties can agree, read and understand followed by signing the document. Furthermore, post this step, you can hash or digitalize the agreement so that it can be utilized by software to operate on the blockchain platform. 

Also Read: Role of Smart Contracts for the Ticketing Industry

Concerning the validity of the lawful contract, an issuer can readily develop a legal framework. Both holders or parties need to fill that legal framework and sign it by agreeing on it. You also need to keep in mind that Ricardian contracts are a kind of smart contracts or they use the code utilized in smart contracts. They can also be referred to as live contracts that can be transformed after the happening of an event. Understand this by the example below. 

For instance, in the case of an agreement about selling and buying a car between both parties, one clause can highlight reaching out to an authority that can validate whether or not the seller happens to be the actual owner of the car. Furthermore, once you gather the required information, adding it to the Ricardian contract and developing a new version of the agreement is easier. Through this manner, it helps execute various events and moves ahead to a logical conclusion dependent on the result of every event. 

Difference Between Smart Contracts and Ricardian Contracts

While Ricardian contracts may be smart contracts on a blockchain, vice versa is not true. Here are some of the basic differences between recording and contracts and smart contracts.


Smart Contracts

Ricardian Contracts

Readability Machine-Readable Human and Machine-Readable
Adaptability Restricted in its processes to adopt the characteristics of Ricardian Contracts Readily adapts the characteristics of smart contracts
Scalability Not flexible to alter or add new terms in the contract Flexible and scalable to add new contract terms
Purpose Readily executes instructions according to event triggers A legal agreement that is physically recorded

Winding Up

Lately, with many blockchain organizations implementing Ricardian contracts, it can be considered that the future is bright for the same. Many decentralized applications have been seeking to add Ricardian Contracts in the upcoming future as well. Because of the host of features and benefits it presents, Ricardian Contracts have provided a sense of reliability to stakeholders because of which various investors are looking forward to pitching in for it.

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