Ricardian contracts were originally proposed in the Financial Cryptography in 7 Layers paper by Ian Grigg in late 1990s. These contracts were used initially in a bond trading and payment system called Ricardo. The key idea is to write a document which is understandable and acceptable by both a court of law and computer software. Ricardian contracts address the challenge of issuance of value over the Internet. It identifies the issuer and captures all the terms and clauses of the contract in a document in order to make it acceptable as a legally binding contract. Based on the original definition by Ian Grigg at http://iang.org/papers/ricardian_contract.html, a Ricardian contract is a document that has several of the following properties:
A contract offered by an issuer to holders
A valuable right held by holders, and managed by the issuer
Easily readable by people (like a contract on paper)
Readable by programs (parseable, like a database)
Digitally signed
Carries the keys and...