Can a DAO sue other party for breach of Contract?
Basically, a DAO can sue another party for breach of contract. This requires on the one hand, that the DAO is party to the given contract. On the other hand, the DAO must be able to be party to a civil proceeding. If these requirements are fulfilled, the general legal principles apply. Therefore, from this perspective it makes no difference whether the contractual counterpart is sued by a DAO or by any other legal entity.
A DAO can enter into contracts with other parties and can be subject to a civil law proceeding, if it is regarded as a legal entity under civil law. This depends on the structure of
the DAO, in particular on the relationship between its members. In current legal practice, DAOs may basically qualify as a company, either as a civil law partnership (Gesellschaft
bürgerlichen Rechts – GbR) or under certain circumstances as a general partnership (offene
Any action intended to be initiated by a DAO can, under the current procedural laws, most
suitably, be initiated as a representative action or a class action. Any member of the class
affected can initiate filing after meeting with the procedural formalities and the members
of that class would be bound by such decisions. It may however be noted that while specific statutes require registration or incorporation of an association of persons or body
of individuals before filing a legal action, in the absence of any specific statute governing
a DAO, no such limitation can be construed for a DAO, at this point.
In general, to sue another party for breach of contract, a plaintiff must have legal standing, which usually includes natural persons and recognized legal entities, such as corporations or partnerships. DAOs, however, operate in a decentralized manner and often lack a centralized management structure or legal entity status, which can create challenges when attempting to sue for breach of contract under traditional legal frameworks.
If a DAO enters into a contract through a smart contract, the legal enforceability of the smart contract in Polish jurisdiction is not well-established, as smart contracts are a relatively new concept, and their decentralized nature can pose challenges for traditional contract law. However, if a smart contract were to be recognized as legally enforceable under Polish law, the ability of the DAO to sue for breach of contract would likely depend on factors such as the specific terms and conditions of the agreement and the intentions of the parties involved.
Another possibility is that individual members or participants of the DAO could sue on behalf of the DAO, especially if they were directly involved in the agreement or suffered damages as a result of the breach. This approach, however, might not fully align with the decentralized nature of a DAO and could lead to complex legal questions surrounding the representation of the DAO's interests in court.