To understand what smart contracts are, first of all you need to understand what a contract is. What is a contract? A contract is a binding agreement between two or more persons or parties, usually enforceable by the law. The roles of each individuals entering into the contract are well stated in the contract’s document and there is a legal side to it to make sure that the content of the contracts are upheld and not broken.

Now what is a “smart contract”?, Well a smart contract is a contract which is capable of executing or enforcing itself. Whereas a contract is written in legal language on a printed document, Smart contracts are written as programming code which can be run on a computer. This code can define strict rules and consequences in the same way that a traditional legal document would, stating the obligations, benefits and penalties which may be due to either party in various different circumstances. But unlike a traditional contract it can also take information as an input, process that information through the rules set out in the contract, and take any actions required of it as a result.

Source: https://btc.ng/market-news/dao-smart-contracts-101-in-nigeria/