Blockchain and Commercial Contracts
Many of our clients are familiar with the blockchain platform for property settlements called PEXA. This was created by the banks to ensure a cheaper more efficient way of having the existing mortgagee release their mortgage security and at the same time receive funds directly from the incoming lender as provider of the funds. Participating solicitors and the Department of Natural Resources Queensland are members and this allows for a seamless transaction through from signing the contract of Sale electronically, to lodging the Transfer documents online. The Office of State Revenue Queensland is not yet fully integrated but they allow a unique transaction number to be used in the workspace.
This is far more efficient, has security protocols that are rigorous and allows for a more efficient transaction for all parties.
Now we are looking at the next stage of blockchain technology and legal contracts. The future is here with the announcement this week of a new Digital Platform for settling Commercial contracts and exchange of payment.
A new platform called “Lygon” has started being used and utilised successfully to effect settlement of a Commercial agreement.
The move makes the first step to complete an alternative payment method in a commercial contract and represents a watershed moment for Australia’s legal profession.
The distributed ledger technology is just beginning and this will help to rapidly modernise and improve legal processes. Instead of wet signatures on paper documents exchanged in physical form, parties can now look to exchange funds for the on-line steps completed as part of a platform based system for commercial agreements.
Payment guarantees in commercial contracts have always been paper based which inevitably caused delays risks and inefficiency. The new “Lygon” platform, with the support of major banks and IBM blockchain technology will help parties to commercial contracts enjoy greater efficiency and security over guarantees.
The CEO of Lygon stated the usage of the platform offers major advantages to lawyers.
In February this year, Lygon created the first digital bank guarantee in the world, and it was also the first time blockchain had been used in the Australian banking sector in a live, real-world application for commercial contracts.
This is an exciting move forward in the use of blockchain and commercial agreements and it is clear we have only just begun exploring how widely it can be used by the legal services profession.
It is important to note that the engagement of the banking institutions to enable issue of a bank guarantee for fulfillment of commercial contract terms, is an exciting innovation and one we will watch closely.
It makes sense in the time of Bitcoin that we adapt and create new ways of commercial dealings that can be wholly conducted on line, without paper based documents and the old fashioned ways of wet sealed documents exchanged in hard copy.
Ask us how we use PEXA for all our property transactions and how it works to create efficiency and security, contact us today at tony.crilly@perspectivelaw.com or 07 3839 7555