Smart Contract

A smart contract is not necessarily a legal contract. When Nick Szabo coined the term in the 1990s, he said it was "a set of promises, specified in digital form, including protocols within which the parties perform on these promises.” For instance, someone can promise to transfer DOT into a particular wallet on a certain date and hold it in a locked wallet until that date arrives, constituting a set of promises. But instead of just taking their word for it, you can create the wallets and write some code - so you have specified your promises in digital form - and specify the code will run on a Polkadot parachain, so you have specified your protocol and now you have a smart contract. It is not legally binding, but once you set it in motion, it is certain to execute and no one can stop it. ( Unless it is designed to be subject to review or appeal. Smart contracts in Jur can reference the Jur dispute resolution system as the final arbiter if there is any controversy about the execution of the contract. )

A Ricardian smart contract adds natural language in a comment in the contract to explain what it means.

A smart legal contract is a real world legal contract paired with a smart contract designed to execute the terms of the legal contract. Thus the execution of the contract is guaranteed to happen on the blockchain and the legal contract helps ensure that no action is taken off chain to reverse or negate the execution on the blockchain. From another perspective, rather than try to enforce your legal contract in the real world, a smart legal contract gives you hassle free blockchain security and reliability, no chance you will be chasing a payment.

How are smart contracts, Ricardian smart contracts, and smart legal contracts relevant to the Network State?

These tools are the core of the Network States power, allowing incorruptible execution of desired policies that requires no trust because the system is certain to follow the known and agreed on rules.