Facilitating e-commerce and digital associations with (smarter) legal agreements?

I have long wondered how to practically use smart contracts to boost e-commerce. To this end, and to illustrate for further musing: I want to hash out a hypo for a limited liability association coordinated via DAO that ships “Surly Radishes” farm-to-table 🌶️.

In this quirky setting, it would also be useful to demonstrate how smart contracts, the foundation of DAO governance, might also encourage strangers to make deals for these kinds of sight-unseen goods 🤝.

Now, it’s one thing to yearn for and tilt at such lofty windmills, but thankfully, a number of blockchain-enabled services have recently made these legalish hypos easier to play out 👌🏹.

Namely, with the OS blockchain apps OpenLaw.io and Aragon.org, a limited liability digital association is easier to grasp. Many thanks to the devs toiling into these interfaces 🙌.

Enough prelude banter. Here we go: 🔧

(1) Create a DAO for your Radish Coop. via Aragon:

For a testnet DAO 🤖, visit: https://rinkeby.aragon.org/#/ .

Formally, we might consider a flexible LLC structure for this venture (see below); consideration of structure can/should influence how we deploy our DAO.

Here, I will select “Token project with democracy”; claim a DAO name; customize a voting token and set relevant consensus thresholds (e.g., 15% quorum, 51% support).

Soon enough, there’s an interface for this DAO: https://rinkeby.aragon.org/#/surlyradishes.aragonid.eth/ .

This interface at its most basic allow us to create a multi-sig. wallet 🔑 🔑 and bulletin-board for votes on (i) Digital Asset Transfers, (ii) Governance Interests, (iii) Y/N Proposals.

Now, let’s try and think 💭 of how we might better limit the liability of our new Surly Radishes DAO members for their biz; otherwise, we might be looking at a default ‘general partnership’ structure for participants, which is far from ideal if you are selling 🌶️️ 🔥.

(Though parties may be able to limit remedies to DAO assets through private agreement, the realm of torts is not so flexible, and a traditional ‘corporate veil’ over Surly Radishes DAO activities would likely give more comfort to DAO participants 🧥.)

Anyways, let’s head over to OpenLaw to access some legal templates ->>

As it happens, there is a handy template for LLCs dabbling in the DAO arts, “LLC-DAO OPERATING AGREEMENT.”

Running through this template and filling out our LLC-DAO governance details 📜, we might then arrive at something that looks like this…where Surly Radishes LLC members essentially agree to coordinate through a listed DAO interface:

Each Member signs LLC Op Agreement via MetaMask Wallet on OpenLaw

Some language hashing out DAO references

Let’s also make this format more official (among other formalities) by filing Articles of Organization for this prospective Surly Radishes LLC boosted from: “NEW YORK LLC ARTICLES OF ORGANIZATION”:

To build more links ⛓️ to the DAO, the LLC-DAO members might then further ratify the Ethereum blockchain transactions that executed signatures for their LLC formation docs via OpenLaw 📜 .

(signing ratification in Aragon from same MetaMask wallets that had executed docs:

Interesting stuff!

Also see 🔎: https://rinkeby.aragon.org/#/surlyradishes.aragonid.eth/0xb417a9723a8615a3c5ca9b93178a6084578cc328 (for voting dashboard...)

NOW, let’s take a look at how Surly Radishes LLC-DAO — a digital farm-to-table association of sorts — might further leverage smart contracts and legal templates to secure its radishy deliveries with more trustless edge 🗡️🔥. (Because, why not?)

Turning back to OpenLaw, we can deploy an escrow smart contract to facilitate a remote deal with a would-be radish customer 🍽️.

Update 2/13/19: I have eliminated need to predeploy ‘blank’ escrow agreement . . . parties should now be able to deploy and write their Bill of Sale conditions to escrow smart contract from a single OpenLaw form, see: “(SMARTER) BILL OF SALE.”; 2/17/19: Peep this simple Escrow Dapp to program and deploy smart contract for eth-commerce without OpenLaw trimmings.

**\\\[[[ Maintained for Background: First, pop open: “SMART ESCROW DEPLOYMENT AGREEMENT FOR SALE OF GOODS.”

HERE we have a preliminary commitment for sale of goods managed via smart contracts for delivery (requiring less trust); Seller ethaddress set to Surly Radishes’ DAO Vault 🏦:

note Farmer Coop arbitration language…see also Farmer Coop DAO example here: https://rinkeby.aragon.org/#/farmercoop.aragonid.eth/

Let’s follow up and locate the ethaddress of the ‘template’ escrow smart contract that was just deployed to the rinkeby testnet after executing this deal primer with MetaMask wallets:

(Ta da’): https://rinkeby.etherscan.io/address/0xb6bf5fa33e7927440ea93e96c672b00762f19328 (showing smart contract deployed via OpenLaw) ]]]///**

FINALLY, load up the (Smarter) Bill of Sale which will write our agreement details to an escrow smart contract, hopefully also making this e(ther)-commerce transaction all the more enticing ✨: specifically, radish customers can control the release of their ether purchase price to Surly Radishes LLC-DAO after actually confirming receipt of their spicy goods 🌶️ 📬.

(! make sure to follow template instructions & copy-paste escrow ethaddress where indicated !):

We also authorized a member 💂 to sign & manage this escrow transaction from the DAO interface for more linkage 🔗:

After the deal and escrow smart contract are signed via OpenLaw, the radish customer can confirm these terms and interact with the escrow functions from, e.g., Remix: 👇

This radish customer should then ideally follow their obligations stemming from the (Smart) Bill of Sale, attaching their negotiated ♦1 ether to confirmPurchase and lock the associated escrow smart contract with the radish purchase price 🔒:

Confirmed (!):

NOW that we have a binding legal agreement and ♦1 ether locked in the escrow smart contract, the LLC-DAO should return the favor and send 20 Surly Radishes 📦️📭 along so that the remote customer will release the ether and consummate the transaction 📬👏.

To wit: After receiving 20 Surly Radishes 🌶️, customer confirms and ♦1 ether is released from the escrow smart contract to the DAO Agent/LLC Member 💂 (as deployed and programmed via our OpenLaw deals 👩‍💻):

Ether from hither to thither!

DAO Agent/LLC Member💂 then finalizes by depositing ♦1 ether to the multi-sig. vault 🏦:

DAO, we are in business 💼:

Well, that was interesting! Now, what do we think of legal logistics here? I welcome all feedback and hope to expand on this PoC in the coming weeks 🎩.

Disclaimer: This article is not legal advice, does not create any attorney/client relationship, and represents my own personal views, not those of any firm, entity or organization with which I am, have been or become associated.

Thanks for reading 🙌!

(1/27: Update/edit: Perhaps orders for new batches of Surly Radishes could be arranged by hopeful customers via a proposal on SR DAO’s Voting Board with their suggested terms, and if Members vote (Y) via MetaMask, the above transaction might be automated with proposer’s ethaddress and deal terms being written to OL Deal and new Smart Contract … tbc.)