A fintech company is deploying a smart contract for automated insurance payouts. The contract relies on an oracle to verify claims. The legal team is concerned that the oracle's data may not be admissible in court, making the contract's decisions legally challengeable. What is the best way to mitigate this legal risk?

Remove the oracle and rely on manual claims processing

Use a decentralized oracle to make the data more trustworthy

Include a legal agreement that recognizes the oracle as the final arbiter of claims

Make the contract immutable to prevent legal challenges

A company wants to use a smart contract to automate dividend payments to shareholders. The legal team is concerned about whether the smart contract itself can be considered a legally binding agreement. What is the primary legal risk they should evaluate?

The risk that the blockchain network might be slow during peak times

The risk of integer overflow in the dividend calculation

Enforceability of the smart contract in a court of law

The risk that the contract cannot be upgraded after deployment

EC-CouncilBlockchain Fintech Certification

Domain 3Objective 3

Smart Contract Risks BFC Practice Questions (Page 5)

Part of the Smart Contracts in Financial Ecosystems domain, which makes up ~7% of our current practice bank.

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Questions 21–25

21expert · hard
A fintech company is deploying a smart contract for automated insurance payouts. The contract relies on an oracle to verify claims. The legal team is concerned that the oracle's data may not be admissible in court, making the contract's decisions legally challengeable. What is the best way to mitigate this legal risk?
Select an answer first
22application · medium
A company wants to use a smart contract to automate dividend payments to shareholders. The legal team is concerned about whether the smart contract itself can be considered a legally binding agreement. What is the primary legal risk they should evaluate?
Select an answer first
23foundation · easy
In a financial ecosystem, a smart contract that depends on a third-party price oracle to determine settlement amounts is exposed to which type of risk?
Select an answer first
24foundation · easy
Which operational risk arises when a smart contract's behavior depends on information from outside the blockchain, such as a price feed?
Select an answer first
25foundation · easy
A smart contract has a function that is intended to be called only by the contract owner, but it does not verify the caller's identity. Which vulnerability does this represent?
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Smart Contract Risks BFC Practice Questions (Page 5)

Questions 21–25

A company wants to use a smart contract to automate dividend payments to shareholders. The legal team is concerned about whether the smart contract itself can be considered a legally binding agreement. What is the primary legal risk they should evaluate?

In a financial ecosystem, a smart contract that depends on a third-party price oracle to determine settlement amounts is exposed to which type of risk?

Which operational risk arises when a smart contract's behavior depends on information from outside the blockchain, such as a price feed?

A smart contract has a function that is intended to be called only by the contract owner, but it does not verify the caller's identity. Which vulnerability does this represent?

Keep studying — Smart Contracts in Financial Ecosystems