Hyperledger Fabric for verifying contract validity

Blockchain technology has the potential to fundamentally transform the way governments and companies do business, offering a new infrastructure for building the digital economy.  Hyperledger strongly believes that better transparency and accountability help foster trust and supports sustainable business practices across various sectors.

Hyperledger Fabric – one of the most interesting permissioned blockchains can serve as a tool to improve invoice processing, it can also improve ways to manage contracts. This article will discuss how the use of blockchain in contract validity brings transparency and builds trust among parties.

What is a contract?

A contract is a legally binding agreement between two or more parties to live up to a particular responsibility in exchange for something of value. People enter into contracts in their daily lives when they buy products and during business transactions. These contracts are either written, oral, or a combination of both. However, some contracts, like the sale of a property, must be in the written form in order to make a valid transaction.

Why do people enter into contracts?

Contracts ensure that the law protects all the parties’ interests, and the parties will live up to the commitments as vowed. If one party goes against the contract, some solutions are available to the parties, known as remedies.
If possible, it is advisable to enter into a written or automated contract. When one party breaks the contract, it will be easier for a court of law to decide the best way forward based on the written services, obligations, and exchanges.

Main aspects of a contract

A valid contract comprises of an agreement, capacity, consideration, and intention.


Offer: An agreement occurs when a party makes an offer (like an employment offer) to another party or parties. An offer is simply a transaction proposal and a document of terms that the individual making the offer is willing to obey contractually. An offer differs from an invitation to treat much. The latter only asks another party to make an offer and is not contractually binding. For instance, adverts, catalogues, and brochures with product prices are not offers, but invitations to treat. If they were, the advertiser must offer everyone who accepts them the products or services regardless of stock levels.
Acceptance: The acceptance of an offer is unconditional (for example, a signature on a contract of employment), and the person accepting the offer must have consent. Negotiations between the parties are classified as counter-offers.


The parties must have the ability to understand the terms and conditions of the contract. Besides, consent to the contract must be freely offered. Below are some classes of individuals who cannot enter into contracts:
Children under the age of 18 years — unless the transaction proposal is for basic needs, like food, clothing, shelter, or education, and the conditions are fair and beneficial to the child.
Those affected by mental health conditions or under the influence of drugs- only if the impediment hinders the individual’s capacity to comprehend its nature.
If a party lacking capacity has entered into a contract, it will be upon that individual to decide whether they want to terminate the agreement. 


People must exchange value, known as consideration, for a contract to be binding. Consideration must not be adequate or to profit other people; it only needs to be sufficient. For example, if you want to sell your car for nothing, the deal lacks consideration; but if they value it at $15,000, there is a valid consideration.
Examples of insufficient considerations include:

  •         A public duty, like a soldier’s duty to protect the public, or a contractual obligation, such as creating services already needed by another contract. 
  •         Things with sentimental values only.
  •         Things that took place before the contract, like a reward given in April is considered insufficient for a contract entered in November the same year. 
  •         Anything illegal.


Not every agreement between parties is a contract — the parties must enter into a legally binding contract. For business agreements, the members intended to enter into a contract.
Socially, there is no intention for agreements to be legally binding contracts, like colleagues planning to meet at a specific time would not be termed as a valid contract. The individual needs to ensure the agreement becomes a contract to ascertain that the parties planned to enter into a legally binding contract.

Business and public contract transparency

Transparency is the act of being open, honest, and straightforward regarding a company or government activities. Transparent establishments share information about performance, revenue and sourcing, pricing, and business values. When things go wrong, transparent companies do not hide them. Instead, they are sincere about the matter.
From enhancing employee retention to increasing sales, transparency has many benefits for your business’s reputation and success. When a company is honest and straightforward, it is likely to experience an increase in customers. A recent survey established that 94% of consumers would be loyal to a transparent brand.
In the digital era, consumers require good communication and transparency. If a company fails to meet those two demands, it will lose customers to a business that caters to them.
As much as you want to hire and retain trustable workers, they also wish to have trustable employees who respect work contracts. When workers trust their bosses, there is a rise in advocacy, loyalty, engagement, and commitment. For your employees to trust you, you must be transparent with them. 

Hyperledger Fabric strategy and solution

Various governments and the companies they engage with pass through costly processes to finalize contracts for services and managing them throughout the contract lifetime. The same applies to most businesses and organizations that transact with other parties. The contract process comprises many people, departments, steps, and revisions and lends itself to blockchain to provide full transparency. All concerned parties will share the same record of data and information that has been approved, time-stamped, and kept in a ledger.
The Hyperledger Fabric team actualized the concept to take the existing contracts between companies and their clients and put them on a shared blockchain database, which every member can use to securely access contract terms, revise and approve amendments running on a blockchain network. The Hyperledger developers involved other professionals, like lawyers, to prove, create, test, and eventually set up a contract validity solution. The solution offers a new way to draft and sign contracts with little friction, high efficiency, and encrypted data. 

Distributed Ledger Technology – how it works

Hyperledger Fabric for contracts takes existing manual and semi-automated contracts and puts them on a shared blockchain ledger that all designated entities can leverage to read contracts, revise and approve changes securely. The blockchain is an immutable digital ledger that is programmed to record all transactions with mutual transparency. What is highly beneficial for all of business network participants.
Each step of the contracting process is based on specified endorsement policies and creates notifications and alerts on any transaction updates, invalid transactions or transaction responses to all the individuals involved and a mutual ledger of all activities and to keep transaction validity. The end product is definitive contracts, kept digitally, and accessed by only the designated parties.
The Hyperledger Fabric smart contract solution offers heightened security via encryption and limited data sharing with confidential identities while facilitating high transparency. The platform checks the digital identity and allows users always to enjoy access to live contracts, and all contract amendments are recorded, forming a tamper-proof audit trail. This is achieved through recording and keeping unique hash codes of the documents and transactions on each of blockchain nodes. Hash codes are unique sequences of characters that distinguish contract types from each other.
The Hyperledger Fabric solution approach allows parties to propose, revise and implement contracts on the platform. The features and capacities are designed to operate within the web app. Contract drafting, rule-based agreements, digital signatures, software entitlements, and automated remittance can be performed through an enterprise blockchain.
Furthermore, parties can share and collaborate on a contract in real-time and view each other’s changes. The entire process serves as a single truth source for designated members.


Hyperledger Fabric for contracts is useful for handling contracts in the digital age. The digitization of contracts onto the blockchain can transform the way you create, send, keep, and observe contracts. The solution is available as custom software and supports various business-to-business contract management needs.
Blockchain network for contracts can generate value for companies by acting as the only repository for contracts that irrefutably hosts up-to-date, agreed-upon versions. The blockchain solution increases speed and efficiency, enhance visibility, allows various parties to share access to the same data, minimizes reconciliation efforts and disputes, and decreases environmental waste.

We are helping various businesses with powerful enterprise blockchain solutions based on Hyperledger Fabric. Click here to contact us and one of our experts will get in touch with you.

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