This paper focuses on comparing the nature, as well as economic and potential legal aspects of smart contract technology with current theoretical and practical knowledge of transaction economy and legal regulation of contractual obligations in Croatian law. Smart contracts are a modern technology, arising from the need of blockchain to automate the execution of systematized actions, along with providing the same amount of information to all parties interacting with the smart contract. It will describe the features and technical specifications needed to define the nature of smart contracts, as well as their functionality and applications within the blockchain ecosystem. Furthermore, theoretical knowledge and reviews of the nature of transactions and transaction costs will be presented, as well as the application of smart contracts in transactions. Following the previous content, the legal regulation of mandatory and contractual relations in Croatian law will be presented, as well as the nature of smart contracts with the legal regulation of mandatory relations. Finally, applying knowledge from the available documentation on smart contracts on the Ethereum blockchain, the project shows the process of developing and using a smart contract in business.