This research essay details the effects that a disruptive technology like smart contracts cloud computing might have on the businesses such as medical, construction or aerospace. Further, the types and impacts of such technology in our daily life is detailed.The essay is divided into four parts. The first part describes the purpose of the essay in detail and sets out the layout of the essay. The second part describes the technology which is disruptive in detail and provides the background and history of the same and describes how cloud computing and smart contracts have evolved and the how these items work in regular life. The third part describes the different of contracts that might occur. The fourth part describes the impact that the disruptive technology of cloud computing and smart contracts has on the businesses worldwide. This is followed by a conclusion whichsummarises the arguments put forth within the essay.

1. IMPACT OF DIGITAL DISRUPTIONS ON
BUSINESS CONTRACTS
[Assignment submitted by: Student’s Name]
[UNIVERSITY NAME]
[COURSE NAME]
[DATE]

2. 1
Abstract
This research essay details the effects that a disruptive technology like smart contracts cloud
computing might have on the businesses such as medical, construction or aerospace. Further, the
types and impacts of such technology in our daily life is detailed.The essay is divided into four
parts. The first part describes the purpose of the essay in detail and sets out the layout of the
essay. The second part describes the technology which is disruptive in detail and provides the
background and history of the same and describes how cloud computing and smart contracts
have evolved and the how these items work in regular life. The third part describes the different
of contracts that might occur. The fourth part describes the impact that the disruptive technology
of cloud computing and smart contracts has on the businesses worldwide. This is followed by a
conclusion whichsummarises the arguments put forth within the essay.
Introduction
As per Clayton M. Christensen, a Harvard Business School professor, any disruptive technology
is one which is a new emerging technology which can unexpectedly displace or render obsolete
an already established one. Christensen used this term for the first time in his 1997 best-selling
book entitled, The Innovator’s Dilemma (Management of Innovation and Change).
In it, the author claims that there are two categories of new technologies: one which sustains and
one which disrupts. Sustaining technologies is one which can correspond to other well-known
technologies that take on successive improvements, whereas the other kind of technology, i.e. the
disruptive technology is one which is a new technology which still lacks certain refinement and
finesse, which often has performance problems, and are known only by a very limited public,
and one which might not even have a proven practical application yet. Disruption itself can be

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witnessed from a different point of view. Even if we look at the etymology of the word, it can be
considered something whichdrastically metamorphoses and amends the very fabric of society.
The disruptive technologies can hold within their very own being the volume to alter our
complete way of living, and how we define our business and in turn the economy of the world. In
this essay, the chosen disruptive technology is cloud computing and smart contracts1.
Smart Contracts and cloud computing
Today’s world is one where things such as smart watches, delivery by drones, bots for chatting,
live streaming exist, and such things have become part of our everyday life. But at the same time,
there are also technologies which while existing, are not in the common parlance and not as well-
known as the others. Companies which are just starting up can make sure that they properly
embrace innovation are often the ones who keep an eye on the horizon and keep a keen eye on
what the next innovation would be.
That innovation could be a smart contracts which is a contract which is enforced through the
technology of block-chain which automatically makes sure that the transactions are managed and
the records are kept accurate. Such technologies removes the requirement for the involvement of
third parties which may include escrow companies, which are often included in transactions such
as the buying or selling of houses or cars. In laymen’s terms, these are smart computer programs
which can execute the contract without there being any need for human intervention2.
1Maria Fonseca, Disruptive Technology Examples: 12 Of The Best Disruptive Technologies (2017)
Intelligent Head Quarters <https://www.intelligenthq.com/technology/12-disruptive-technologies/>.
2Disruption You’Ve Never Heard Of (2017) Theaustralian.com.au
<http://www.theaustralian.com.au/business/technology/opinion/smart-contracts-and-fabrics-disruptive-
technologies-youve-never-heard-of/news-story/cacaaf7eff05c628c642b768d8438aa6>.

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Such contracts remove the need for actual lawyers to be hired to negotiate the contractual terms
for each party. Instead of the litigation parties, the computers themselves automatically try to
find out the competitive rates and offer them to the parties. This would seem a bit complicated to
the layman, but in the world of such a contract, it would be possible that in case a payment for
the mortgage on a car is missed, the automatic car would turn off and cease driving around or
even turning on.
Clothes are not be the very first thing which would come to the mind when thinking about
disruptive technology, but it is a fact that the invention of smart fabrics will have a much much
bigger impact than most. As the technology continues to evolve, making textiles which are
interactive is no longer a pipe dream and in fact very close to reality. There’s a company which
can make it a reality to incorporate touch interactivity into any kind of clothes simply by using a
standard, particular kind of loom. The company combines metal alloys which are thin in nature
which are combined with natural and organic yarns such as polyester,silk or cotton which makes
the cloth strong enough so that it can be woven on any kind of industrial cloth. Similarly, there’s
a company in New York which creates scarfs that filter and purify the air which you breathe and
inhale, and it utilizes the very same mechanism which the army uses to arm and save themselves
against warfare of a chemical nature.
Contracttype:
There are many ways to categorise contracts, including on the basis of formation, on the basis of
the nature of consideration, on the basis of execution and on the basis of validity. Each category
of contracts has different kinds of contracts. The same are briefly described below.

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Contracts on the basis of formation may be distributed into three kinds, express, implied and
quasi. Express contract are those where the contract terms are set through conversation between
the two parties. Implied contracts are those for which no verbal communication has taken place
and finally, quasi contracts are the only kinds of contracts for which no offer or acceptance is
necessary. Instead, if the conditions for a quasi-contract are met, then the contract is created by
virtue of law.
There are only two types of contracts on the basis of the nature of consideration, those which are
bilateral and those which are unilateral. Bilateral contracts involve the movement of
consideration in both directions while unilateral contracts are those in which consideration only
moves towards one direction.
Contracts on the basis of execution are either executed contracts or executory contracts. If the
performance has been made, the contract is executed and if the performance is still to be made,
the contract is considered to be an executory contract.
Finally, the contracts on the basis of validity can be distributed into five groups. Those comprise
of valid contracts, void contracts, voidable contracts, illegal contracts and unenforceable
contracts. Valid contracts are those which have all six essential elements of the contract. Void
are those which cannot be enforced because they are deficient in the six essential elements of the
contract. Voidable contracts are those which can become void on the option of one party. Illegal
contracts are those which are against the law and finally unenforceable contracts are those which
suffer from some minor technical defect3.
3Types Contracts, Types Of Contracts (2017) Lawsofbusiness.com
<http://www.lawsofbusiness.com/2013/08/types-of-contracts.html>.

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Impacts of disruptive technology:
In today’s world of increasingly abundant instances of disruption of a digital kind, it is
imperative that companies should have the talent and ability to create and sustain new
technologies such as mobility, big data and analytics systems, cloud computing options, or
robotics to gain a competitive advantage over their rivals. In some cases, it might be wise to not
go to your regular IT service vendor in order to do that. But at the same time, by the same token,
there may sometimes be advantages in working with your current supplier of IT. By sticking
with your current supplier may let the IT outsourcing customers to leverage their existing
contractual obligations and terms to accelerate the contracting process.
Companies and IT based companies mainly, often want a partner that they can trust who can
manage their entire technological infrastructure. By making sure an expansion of a current deal
takes place, the customer can make sure that they have kept to themselves the integrated
performance standards and service levels for the entire environment and maintain streamlined
governance processes. This can also help in reducing any costs associated with the transition or
termination4.
It is however possible that trying to integrate a technology which is already disruptive into an
already existing sourcing arrangement would have its own set of difficulties. For example, the
rights and obligations in a contract which are available to the client in certain key areas such as
control, approval and audit as well as the right to own intellectual property and rights subsequent
to the termination are extremely likely to be very different in most respects.
4ConstantinosMarkides, "Disruptive Innovation: In Need Of Better Theory" (2017) 23 The Journal of
Product Innovation Management.

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The models for pricing which are used for technologies which may be considered disruptive for
example, cloud, autonomics or robotics, are often extremely different. And more than that, it is
possible that the current IT provider may himself have to rely on someone to subcontract who
can deliver some of the facilities he himself may be lacking5.
Additionally, there may be some critical issues which are very commonplace when it comes to
the expansion of any particular IT contract or its scope, i.e. there may be some transitional
changes which may need to be considered. Since making way towards a brand new technology
would require extensive work regarding the transition and at the same time coming up with a
new solution and also creating a detailed transition plan which would determine the entire map
and critical path for the migration and eventually the migration itself to the new technology. The
implementation of the considerably newer tools and processes may at once be necessary and a
painful part of the process and the clients must take utmost care to ensure that such costs are
effectively added to their businesses.
The migration towards a new and advanced technology could often result in the destruction and
conclusion of most parts of an already existing contract because the same would be much more
convenient than trying to incorporate the disruptive technology within the contract which in turn
could overhaul much of the existing contract. Therefore, it would often be convenient of it would
trigger the least amount of commitments which in turn would result in the payment of the
charges for the termination of the contract6.
5Clayton Christensen, "How Disruptive Innovation Will Change The Way The World Learns" (McGraw Hill,
2008).
6MarnixAssink, "Inhibitors Of Disruptive Innovation Capability: A Conceptual Model" (1998) 9 European
Journal of Innovation Management.

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It is imperative the companies work within their existing contract and ensuring that ample
leverage is there to negotiate the charges for termination. But of course, there are certain charges
which may be unavoidable. So in a nutshell, in case an agreement needs to be terminated,
businesses need to ensure that as little termination charges are paid as possible but in some cases
it may not be possible as some termination charges are not negotiable.
The costs which are unavoidable often times also include the equipment which may become
obsolete or irrelevant. There is a possibility that the client has some equipment which is not
obsolete when the migration is made towards the newer solution. If however it is the IT service
provider who owns the equipment, there is a penchant for making sure that the cost for the same
is passed onto the client in the form of the termination charges7.
At the same time, there can be maintenance contracts for third parties which are required to be
concluded which have their own fees for termination. Further, the client which outsources also
may no longer have the space to house the newer technology innovation solution. This is also
something which needs to be factored into the business planning by the client.
The whole point of commerce or economics is that it operates on a model which is centralized in
nature where parties interact and enter into transactions with each other through intermediaries
which are trusted. Such intermediaries could be (i) banks and other financial institutions which
can act a vessel for different parties in the financial transactions, (ii) retailers who buy goods
from the producers and sell them to customers, and (iii) websites and other mobile apps such as
Uber and Airbnbwhich act to assist in the purchase of goods or performance of services which
7 Jay Paap, "Anticipating Disruptive Innovation" (2004) 47 Research Technology Management.

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are to be provided by the third parties. Thismodel which is centralized often creates a
dependence on the intermediaries within the change and in turn keeps adding costs to each
transaction within the chain in order to compensate them for their own involvement and
assistance. Smart contracts, however, often help reduce the reliance on centralized systems, and
avoid the expenses of utilizing the intermediaries and providing other advantages8.
The traditional aversion that businesses have to risk has usually meant that the legal profession
has not been one who has been in the forefront when it comes to new technology. But at the
same time the legal business is often seen as ripe for disruption of a technological kind. Such
view is based mostly thanks to the pressure from corporate clients which are even the least bit
tech-savvy and clients which question the exorbitant amounts and clients which have a
requirement of reducing risk.More and more law firms these days have become familiarized with
things such as machine learning and mining of the data, the law firms are hiring for tech-focused
jobs such as “head of research” or even hiring coders or experts of artificial intelligence (AI).
Change is a factor which is caused not only by the demands from the clients that a business may
have but also by the other companies within the industries which may offer services that the first
company may be unable to, such as offering technology to do work which has long been
considered routine. Startups, most commonly those which are created by former lawyer
themselves, often use technology to help them streamline or further automate the routine aspects
of legal work. Such companies are a threat to the established giants, the entities which are small,
nimble tech companies trying to change and disrupt the business models of even companies
which have been established centuries ago.A study by a leading audit firm suggests that
8Forbes Welcome (2017) Forbes.com <https://www.forbes.com/sites/oliverherzfeld/2016/02/22/smart-
contracts-may-create-significant-innovative-disruption/#615e75a2396a>.

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technology is already leading to job losses in the legal sector of many countries. Since the
disruptive technology allows routine tasks of businesses to be automated, there are a number of
driving efficiencies in multitudes of sectors which allow for better cost predictability and service
quality for clients9.
Research suggests that nearly all business people utilize smartphones during their work hours,
and such devices are not used just for communications. Software such as those for email and
calendaring are used in the business world of today, and for a variety of uses10.
Conclusion
As the world moves more and more towards technologies which are more disruptive than
sustaining, then the business world will have to move at a similarly fast pace and not the current
glacial pace at which they are moving and ensure that their business contracts are up to the mark
and can sustain facing off with such disruptive technology and from the looks of things, the
business world will do just fine.
9Artificial Intelligence Disrupting The Business Of Law (2017) Ft.com
<https://www.ft.com/content/5d96dd72-83eb-11e6-8897-2359a58ac7a5>.
10View Howarth, Disruptive Technology Is Transforming The Legal Industry (2017) Samsung Business
Insights <https://insights.samsung.com/2016/12/09/disruptive-technology-is-transforming-the-legal-
industry/>.

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Bibliography
1. Clayton Christensen, “How Disruptive Innovation Will Change The Way The World
Learns” (Mcgraw Hill, 2008)
2. ConstantinosMarkides, “Disruptive Innovation: In Need of Better Theory” (2017) 23 The
Journal of Product Innovation Management.
3. Croft Jane, Artificial Intelligence Disrupting The Business of Law, Financial Times 3rd
May, 2017<https://www.ft.com/content/5d96dd72-83eb-11e6-8897-2359a58ac7a5>
4. Herzfeld Oliver (2017), Smart Contracts May Create Significant Innovative Disruption,
Forbes.com, <https://www.forbes.com/sites/oliverherzfeld/2016/02/22/smart-contracts-
may-create-significant-innovative-disruption/#37f07f39396a >
5. Howarth Fran, Disruptive Technology is Transforming The Legal Industry’, 4th May
2017<https://insights.samsung.com/2016/12/09/disruptive-technology-is-transforming-
the-legal-industry/>
6. Jay Paap, “Anticipating Disruptive Innovation” (2004) 47 Research Technology
Management.
7. Maria Fonseca, Disruptive Technology Examples: 12 Of The Best Disruptive
Technologies (2017) Intelligent Head Quarters
<https://www.intelligenthq.com/technology/12-disruptive-technologies/>.
8. MarnixAssink, “Inhibitors Of Disruptive Innovation Capability: A conceptual Model”
(1998) 9 European Journal of Innovation Management.
9. Smart contracts and fabrics: Disruptive technologies you’ve never heard of
(2017)
Theaustralian.com.au<http://www.theaustralian.com.au/business/technology/opinion/sma
rt-contracts-and-fabrics-disruptive-technologies-youve-never-heard-of/news-
story/cacaaf7eff05c628c642b768d8438aa6>