# kaal:claim:5554218-024

**Claim.** The deterministic execution of smart contracts rigidly enforces coded terms and thereby incentivizes participants to exploit loopholes for immediate gain, because no mechanism exists to adapt the rules contextually.

**Type.** failure  **Support.** argued

**Holds when.**

- smart contracts without on chain amendment or human review mechanisms

**Source quote.**

> Conversely, smart contracts' deterministic execution rigidly enforces coded terms, incentivizing participants to exploit loopholes for immediate gain, as there is no mechanism to adapt rules contextually.

**From.** Furrer Andreas, Wulf A. Kaal, *Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era* (2025), 5.3 Flexibility: Deterministic Execution vs. Legal Adaptability, page 32

**Cite as.** Furrer Andreas, Wulf A. Kaal, Universal Digital Law Codex (UDLC) Building the Legal Infrastructure for the Digital Era (2025). SSRN: https://ssrn.com/abstract=5554218

**Verify.** sha256 of source PDF `55738b4035a91b70aa2ddaa127552fe4b373ec641afee2719fbdcabebdcbea44` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Andreas%20and%20Kaal%20-%202025%20-%20Universal%20Digital%20Law%20Codex%20%28UDLC%29%20Building%20the%20Legal%20Infrastructure%20for%20the%20Digital%20Era.pdf

**Failure mode.** Loophole exploitation under rigid coded terms  (family: smart-contract-rigidity)

**Topics.** regulatory-failure, smart-contracts, governance-design

**Keywords.** determinism, loophole-exploitation, flexibility, smart-contracts, governance

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