Smart Contracts and AI: The Legal Landscape of Autonomous Transactions

The integration of smart contracts and artificial intelligence (AI) is redefining the legal and economic foundations of modern transactions. Smart contracts, underpinned by blockchain technology, execute agreements with transparency and immutability, while AI enhances these systems with adaptability, predictive capabilities, and autonomous decision-making. Together, they enable self-executing, cross-border transactions that challenge traditional notions of contract law. However, this technological convergence introduces complex legal and ethical dilemmas concerning enforceability, liability, jurisdiction, consumer protection, and algorithmic fairness. The opacity of AI models further complicates accountability, particularly in cases of error, fraud, or bias. This paper explores the foundations of smart contracts, the role of AI in augmenting their functionality, and the resulting implications for contract law and digital governance. It argues for the development of hybrid legal frameworks that balance automation with human oversight, ensuring that efficiency and innovation do not undermine fairness, transparency, or accountability. Drawing on case studies, regulatory trends, and cross-jurisdictional perspectives, the study offers insights into how legal systems must adapt to govern the emerging landscape of AI-powered autonomous transactions.