Information technology - blockchain - distributed ledger.
A smart contract is a set of encrypted instructions in a blockchain that are carried out automatically when predefined conditions are met.
The actions carried out under the smart contract can include releasing funds, as well as other tasks that might otherwise need human intervention to be authorised.
When the actions have been carried out, the blockchain is updated accordingly.
The idea is to reduce delay, costs, and certain types of error and fraud, by reducing the level of human involvement.
The legal status of smart contracts differs, according to the jurisdiction.