When a smart contract conflicts with the written licence: what to do first
Stop the disputed transfer or exercise of rights before it settles on-chain, then pull the written licence and read its precedence clause first. The clash between code and text is a contract question, not a technical one. No party should keep acting under either document until the controlling text is identified. This page sets out the order of steps, the deadline already running, and the forum that decides. For what the file leaves out entirely, see What we do not do, and why the line.
What governs, and what does not
The conflict itself sits in contract law: which document the parties named as controlling, and what the governing-law clause says. No EU sector regulation decides that question for you. Two EU regulations sit next to the licence without resolving it, and it helps to know exactly where their edge falls.
Regulation (EU) 2023/1114 (MiCA) governs the issuer's white paper and disclosure duties, in force since 30 December 2024. It runs alongside the licence. It does not rank above it, and it does not say which of two conflicting texts a holder may rely on when they diverge.
Regulation (EU) 2023/1113 (TFR) governs the information that must accompany a transfer of crypto-assets, also in force since 30 December 2024. Where the disputed transfer has already executed on-chain, the record kept under this regulation can serve as evidence of who moved what, and when. It is evidence, not the rule that settles the dispute.
Sector regulation and contract law answer different questions. One asks whether the issuer disclosed enough. The other asks which document the parties actually agreed to be bound by. Treating the first as an answer to the second is the most common reading error at this stage.
What changes in practice
Once a smart contract and a written licence diverge, three things happen at once. The on-chain state keeps updating regardless of who turns out to be right. Any further transfer made under the disputed term deepens the position instead of freezing it. And the clock on any contractual notice period starts running from the moment either party becomes aware of the discrepancy, not from the moment it is resolved.
Divergence usually has a mundane cause. The smart contract is deployed against an early draft of the terms, and a later amendment to the written licence is never mirrored in the code. Or the code enforces a parameter — a transfer cap, a royalty split, an expiry block — that the final signed text describes differently. Neither party notices until an event triggers the mismatch.
This mismatch tends to resemble a related problem: a claimed reserve that is not the same as the evidence for it. The document that describes what should exist is not the object that proves it does. See When reserves must be evidenced in practice for that adjacent question.
What to do first
Work through the steps below in order. Skipping the freeze step to save time is the most common cause of a position that later cannot be unwound.
| Step | Who does it | Why it comes at this point |
|---|---|---|
| Freeze the disputed transfer or right | Technical lead, with counsel's sign-off | Stops the position from deepening while the two texts are compared |
| Retrieve the written licence in full | Counsel | A precedence clause, if one exists, is read before any other clause |
| Set the conflicting clauses side by side | Counsel and the business owner | Scope, term, royalty and exclusivity rarely conflict all at once |
| Preserve the on-chain state and its timestamps | Technical lead | This becomes the evidence of what actually executed, and when |
| Notify the counterparty in writing | Counsel | Starts the written record that a forum will later read |
Keep the freeze and the notice separate acts. Freezing is operational and can happen within hours. Notice is a legal act with its own form requirements under the licence, and it should not be rushed to match the speed of the freeze.
Who decides, and by when
If the licence names a forum — a court or an arbitral body — that clause controls, and it should be read before any other step is taken. Where the licence is silent on forum, the applicable forum follows from the law that governs the agreement, not from where the smart contract happens to be deployed.
A blockchain has no jurisdiction of its own. The place where a transaction is recorded does not decide who resolves a dispute about the rights that transaction was supposed to reflect.
The deadline already running is the notice period the licence sets for disputes, counted from discovery of the conflict, not from its resolution. Interim relief — an order to preserve the status quo pending a decision — is available in most forums on a request made early, before the position has moved further. Nothing in either regulation above extends or shortens that period; it is a matter of the licence text alone.
If your situation is different
If the licence contains a clause stating which document prevails, follow it. The dispute then becomes one of interpreting that clause, not of filling a gap in the contract.
If the licence is silent on precedence and the smart contract has already executed the disputed transfer, treat it as a breach claim against the party who deployed the code. Treating the transfer as automatically void is rarely the right first move.
If the counterparty disputes the timestamp evidence itself, the forum will need an independent read of the chain state before it reaches the underlying question of precedence at all.
If both documents were drafted by the same party and neither addresses precedence, a court or arbitral body typically reads the ambiguity against the drafter, but only after the ordinary tools of interpretation are exhausted.
What this page does not resolve
This page does not tell you which document wins in your specific case. That depends on the precedence clause and the governing law, both of which sit in the licence itself, and on facts this page cannot see. It also does not value what is recoverable once a forum rules, or set out from which party it can actually be recovered.
For the practical limits on tracing and recovering the underlying asset, see Asset in Estonia and its limits.
For the limits on what can be established about the counterparty itself, see Debtor in Estonia and its limits.
Verified
Checked against Regulation (EU) 2023/1114 (MiCA) and Regulation (EU) 2023/1113 (TFR), both in force since 30 December 2024, current as of the review date stated in the site footer. Text sourced from the Official Journal of the European Union.
Related reading
A related conflict arises when the underlying work the token points to disappears rather than diverges from the licence. See When the referenced work is removed: what to do.
FAQ
What is the first step when a smart contract conflicts with the written licence?
Freeze the disputed transfer or exercise of rights before it settles on-chain. Retrieve the written licence and read its precedence clause before comparing anything else.
Which deadline is already running?
The notice period the licence sets for disputes, counted from the moment either party becomes aware of the discrepancy, not from its resolution.
Who decides, and on what evidence?
The forum named in the licence, or the forum that follows from its governing law if the licence is silent, reading the preserved on-chain timestamps alongside the two conflicting texts.
Send both documents and the disputed clause. A partner replies within minutes during business hours, and a price for the review follows within one business day.