corda/docs/source/hello-world-contract.rst

Writing the contract

In Corda, the ledger is updated via transactions. Each transaction is a proposal to mark zero or more existing states as historic (the inputs), while creating zero or more new states (the outputs).

It's easy to imagine that most CorDapps will want to impose some constraints on how their states evolve over time:

• A cash CorDapp would not want to allow users to create transactions that generate money out of thin air (at least without the involvement of a central bank or commercial bank)
• A loan CorDapp might not want to allow the creation of negative-valued loans
• An asset-trading CorDapp would not want to allow users to finalise a trade without the agreement of their counterparty

In Corda, we impose constraints on what transactions are allowed using contracts. These contracts are very different to the smart contracts of other distributed ledger platforms. They do not represent the current state of the ledger. Instead, like a real-world contract, they simply impose rules on what kinds of agreements are allowed.

Every state is associated with a contract. A transaction is invalid if it does not satisfy the contract of every input and output state in the transaction.

The Contract interface

Just as every Corda state must implement the ContractState interface, every contract must implement the Contract interface:

interface Contract {
    // Implements the contract constraints in code.
    @Throws(IllegalArgumentException::class)
    fun verify(tx: TransactionForContract)

    // Expresses the contract constraints as legal prose.
    val legalContractReference: SecureHash
}

A few more Kotlinisms here:

• fun declares a function
• The syntax fun funName(arg1Name: arg1Type): returnType declares that funName takes an argument of type arg1Type and returns a value of type returnType

We can see that Contract expresses its constraints in two ways:

• In legal prose, through a hash referencing a legal contract that expresses the contract's constraints in legal prose
• In code, through a verify function that takes a transaction as input, and:
  • Throws an IllegalArgumentException if it rejects the transaction proposal
  • Returns silently if it accepts the transaction proposal

Controlling IOU evolution

What would a good contract for an IOUState look like? There is no right or wrong answer - it depends on how you want your CorDapp to behave.

For our CorDapp, let's impose the constraint that we only want to allow the creation of IOUs. We don't want nodes to transfer them or redeem them for cash. One way to enforce this behaviour would be by imposing the following constraints:

• A transaction involving IOUs must consume zero inputs, and create one output of type IOUState
• The transaction should also include a Create command, indicating the transaction's intent (more on commands shortly)
• For the transactions's output IOU state:
  • Its value must be non-negative
  • Its sender and its recipient cannot be the same entity
  • All the participants (i.e. both the sender and the recipient) must sign the transaction

We can picture this transaction as follows:

scale

15% :align: center

Let's write a contract that enforces these constraints. We'll do this by modifying either TemplateContract.java or TemplateContract.kt and updating TemplateContract to define an IOUContract.

Defining IOUContract

The Create command

The first thing our contract needs is a command. Commands serve two purposes:

• They indicate the transaction's intent, allowing us to perform different verification given the situation
  • For example, a transaction proposing the creation of an IOU could have to satisfy different constraints to one redeeming an IOU
• They allow us to define the required signers for the transaction
  • For example, IOU creation might require signatures from both the sender and the recipient, whereas the transfer of an IOU might only require a signature from the IOUs current holder

Let's update the definition of TemplateContract (in TemplateContract.java or TemplateContract.kt) to define an IOUContract with a Create command:

package com.template

import net.corda.core.contracts.*
import net.corda.core.crypto.SecureHash
import net.corda.core.crypto.SecureHash.Companion.sha256

open class IOUContract : Contract {
    // Currently, verify() does no checking at all!
    override fun verify(tx: TransactionForContract) {}

    // Our Create command.
    class Create : CommandData

    // The legal contract reference - we'll leave this as a dummy hash for now.
    override val legalContractReference = SecureHash.sha256("Prose contract.")
}

package com.template;

import net.corda.core.contracts.CommandData;
import net.corda.core.contracts.Contract;
import net.corda.core.crypto.SecureHash;

public class IOUContract implements Contract {
    @Override
    // Currently, verify() does no checking at all!
    public void verify(TransactionForContract tx) {}

    // Our Create command.
    public static class Create implements CommandData {}

    // The legal contract reference - we'll leave this as a dummy hash for now.
    private final SecureHash legalContractReference = SecureHash.sha256("Prose contract.");
    @Override public final SecureHash getLegalContractReference() { return legalContractReference; }
}

Aside from renaming TemplateContract to IOUContract, we've also implemented the Create command. All commands must implement the CommandData interface.

The CommandData interface is a simple marker interface for commands. In fact, its declaration is only two words long (in Kotlin, interfaces do not require a body):

interface CommandData

The verify logic

We now need to define the actual contract constraints. For our IOU CorDapp, we won't concern ourselves with writing valid legal prose to enforce the IOU agreement in court. Instead, we'll focus on implementing verify.

Remember that our goal in writing the verify function is to write a function that, given a transaction:

• Throws an IllegalArgumentException if the transaction is considered invalid
• Does not throw an exception if the transaction is considered valid

In deciding whether the transaction is valid, the verify function only has access to the contents of the transaction:

• tx.inputs, which lists the inputs
• tx.outputs, which lists the outputs
• tx.commands, which lists the commands and their associated signers

Although we won't use them here, the verify function also has access to the transaction's attachments, time-windows, notary and hash.

Based on the constraints enumerated above, we'll write a verify function that rejects a transaction if any of the following are true:

• The transaction doesn't include a Create command
• The transaction has inputs
• The transaction doesn't have exactly one output
• The IOU itself is invalid
• The transaction doesn't require signatures from both the sender and the recipient

Let's work through these constraints one-by-one.

Command constraints

To test for the presence of the Create command, we can use Corda's requireSingleCommand function:

override fun verify(tx: TransactionForContract) {
    val command = tx.commands.requireSingleCommand<Create>()
}

// Additional imports.
import net.corda.core.contracts.AuthenticatedObject;
import net.corda.core.contracts.TransactionForContract;
import static net.corda.core.contracts.ContractsDSL.requireSingleCommand;

...

@Override
public void verify(TransactionForContract tx) {
    final AuthenticatedObject<Create> command = requireSingleCommand(tx.getCommands(), Create.class);
}

Here, requireSingleCommand performing a dual purpose:

• It's asserting that there is exactly one Create command in the transaction
• It's extracting the command and returning it

If the Create command isn't present, or if the transaction has multiple Create commands, contract verification will fail.

Transaction constraints

We also wanted our transaction to have no inputs and only a single output. One way to impose this constraint is as follows:

override fun verify(tx: TransactionForContract) {
    val command = tx.commands.requireSingleCommand<Create>()

    requireThat {
        // Constraints on the shape of the transaction.
        "No inputs should be consumed when issuing an IOU." using (tx.inputs.isEmpty())
        "Only one output state should be created." using (tx.outputs.size == 1)
    }
}

// Additional import.
import static net.corda.core.contracts.ContractsDSL.requireThat;

...

@Override
public void verify(TransactionForContract tx) {
    final AuthenticatedObject<Create> command = requireSingleCommand(tx.getCommands(), Create.class);

    requireThat(check -> {
        // Constraints on the shape of the transaction.
        check.using("No inputs should be consumed when issuing an IOU.", tx.getInputs().isEmpty());
        check.using("Only one output state should be created.", tx.getOutputs().size() == 1);

        return null;
    });
}

Note the use of Corda's built-in requireThat function. requireThat provides a terse way to write the following:

• If the condition on the right-hand side doesn't evaluate to true...
• ...throw an IllegalArgumentException with the message on the left-hand side

As before, the act of throwing this exception would cause transaction verification to fail.

IOU constraints

We want to impose two constraints on the IOUState itself:

• Its value must be non-negative
• Its sender and its recipient cannot be the same entity

We can impose these constraints in the same requireThat block as before:

override fun verify(tx: TransactionForContract) {
    val command = tx.commands.requireSingleCommand<Create>()

    requireThat {
        // Constraints on the shape of the transaction.
        "No inputs should be consumed when issuing an IOU." using (tx.inputs.isEmpty())
        "Only one output state should be created." using (tx.outputs.size == 1)

        // IOU-specific constraints.
        val out = tx.outputs.single() as IOUState
        "The IOU's value must be non-negative." using (out.value > 0)
        "The sender and the recipient cannot be the same entity." using (out.sender != out.recipient)
    }
}

@Override
public void verify(TransactionForContract tx) {
    final AuthenticatedObject<Create> command = requireSingleCommand(tx.getCommands(), Create.class);

    requireThat(check -> {
        // Constraints on the shape of the transaction.
        check.using("No inputs should be consumed when issuing an IOU.", tx.getInputs().isEmpty());
        check.using("Only one output state should be created.", tx.getOutputs().size() == 1);

        // IOU-specific constraints.
        final IOUState out = (IOUState) tx.getOutputs().get(0);
        check.using("The IOU's value must be non-negative.",out.getValue() > 0);
        check.using("The sender and the recipient cannot be the same entity.", out.getSender() != out.getRecipient());

        return null;
    });
}

You can see that we're not restricted to only writing constraints in the requireThat block. We can also write other statements - in this case, we're extracting the transaction's single IOUState and assigning it to a variable.

Signer constraints

Our final constraint is that the required signers on the transaction are the sender and the recipient only. A transaction's required signers is equal to the union of all the signers listed on the commands. We can therefore extract the signers from the Create command we retrieved earlier.

override fun verify(tx: TransactionForContract) {
    val command = tx.commands.requireSingleCommand<Create>()

    requireThat {
        // Constraints on the shape of the transaction.
        "No inputs should be consumed when issuing an IOU." using (tx.inputs.isEmpty())
        "Only one output state should be created." using (tx.outputs.size == 1)

        // IOU-specific constraints.
        val out = tx.outputs.single() as IOUState
        "The IOU's value must be non-negative." using (out.value > 0)
        "The sender and the recipient cannot be the same entity." using (out.sender != out.recipient)

        // Constraints on the signers.
        "All of the participants must be signers." using (command.signers.toSet() == out.participants.map { it.owningKey }.toSet())
    }
}

// Additional imports.
import com.google.common.collect.ImmutableList;
import java.security.PublicKey;
import java.util.List;

...

@Override
public void verify(TransactionForContract tx) {
    final AuthenticatedObject<Create> command = requireSingleCommand(tx.getCommands(), Create.class);

    requireThat(check -> {
        // Constraints on the shape of the transaction.
        check.using("No inputs should be consumed when issuing an IOU.", tx.getInputs().isEmpty());
        check.using("Only one output state should be created.", tx.getOutputs().size() == 1);

        // IOU-specific constraints.
        final IOUState out = (IOUState) tx.getOutputs().get(0);
        final Party sender = out.getSender();
        final Party recipient = out.getRecipient();
        check.using("The IOU's value must be non-negative.",out.getValue() > 0);
        check.using("The sender and the recipient cannot be the same entity.", out.getSender() != out.getRecipient());

        // Constraints on the signers.
        final Set<PublicKey> requiredSigners = Sets.newHashSet(sender.getOwningKey(), recipient.getOwningKey());
        final Set<PublicKey> signerSet = Sets.newHashSet(command.getSigners());
        check.using("All of the participants must be signers.", (signerSet.equals(requiredSigners)));

        return null;
    });
}

Checkpoint

We've now defined the full contract logic of our IOUContract. This contract means that transactions involving IOUState states will have to fulfill strict constraints to become valid ledger updates.

Before we move on, let's go back and modify IOUState to point to the new IOUContract:

class IOUState(val value: Int,
               val sender: Party,
               val recipient: Party) : ContractState {
    override val contract: IOUContract = IOUContract()

    override val participants get() = listOf(sender, recipient)
}

public class IOUState implements ContractState {
    private final Integer value;
    private final Party sender;
    private final Party recipient;
    private final IOUContract contract = new IOUContract();

    public IOUState(Integer value, Party sender, Party recipient) {
        this.value = value;
        this.sender = sender;
        this.recipient = recipient;
    }

    public Integer getValue() {
        return value;
    }

    public Party getSender() {
        return sender;
    }

    public Party getRecipient() {
        return recipient;
    }

    @Override
    public IOUContract getContract() {
        return contract;
    }

    @Override
    public List<AbstractParty> getParticipants() {
        return ImmutableList.of(sender, recipient);
    }
}

Transaction tests

How can we ensure that we've defined our contract constraints correctly?

One option would be to deploy the CorDapp onto a set of nodes, and test it manually. However, this is a relatively slow process, and would take on the order of minutes to test each change.

Instead, we can test our contract logic using Corda's ledgerDSL transaction-testing framework. This will allow us to test our contract without the overhead of spinning up a set of nodes.

Open either test/kotlin/com/template/contract/ContractTests.kt or test/java/com/template/contract/ContractTests.java, and add the following as our first test:

package com.template

import net.corda.testing.*
import org.junit.Test

class IOUTransactionTests {
    @Test
    fun `transaction must include Create command`() {
        ledger {
            transaction {
                output { IOUState(1, MINI_CORP, MEGA_CORP) }
                fails()
                command(MEGA_CORP_PUBKEY, MINI_CORP_PUBKEY) { IOUContract.Create() }
                verifies()
            }
        }
    }
}

package com.template;

import net.corda.core.identity.Party;
import org.junit.Test;
import java.security.PublicKey;
import static net.corda.testing.CoreTestUtils.*;

public class IOUTransactionTests {
    static private final Party miniCorp = getMINI_CORP();
    static private final Party megaCorp = getMEGA_CORP();
    static private final PublicKey[] keys = new PublicKey[2];

    {
        keys[0] = getMEGA_CORP_PUBKEY();
        keys[1] = getMINI_CORP_PUBKEY();
    }

    @Test
    public void transactionMustIncludeCreateCommand() {
        ledger(ledgerDSL -> {
            ledgerDSL.transaction(txDSL -> {
                txDSL.output(new IOUState(1, miniCorp, megaCorp));
                txDSL.fails();
                txDSL.command(keys, IOUContract.Create::new);
                txDSL.verifies();
                return null;
            });
            return null;
        });
    }
}

This test uses Corda's built-in ledgerDSL to:

• Create a fake transaction
• Add inputs, outputs, commands, etc. (using the DSL's output, input and command methods)
• At any point, asserting that the transaction built so far is either contractually valid (by calling verifies) or contractually invalid (by calling fails)

In this instance:

• We initially create a transaction with an output but no command
• We assert that this transaction is invalid (since the Create command is missing)
• We then add the Create command
• We assert that transaction is now valid

Here is the full set of tests we'll be using to test the IOUContract:

class IOUTransactionTests {
    @Test
    fun `transaction must include Create command`() {
        ledger {
            transaction {
                output { IOUState(1, MINI_CORP, MEGA_CORP) }
                fails()
                command(MEGA_CORP_PUBKEY, MINI_CORP_PUBKEY) { IOUContract.Create() }
                verifies()
            }
        }
    }

    @Test
    fun `transaction must have no inputs`() {
        ledger {
            transaction {
                input { IOUState(1, MINI_CORP, MEGA_CORP) }
                output { IOUState(1, MINI_CORP, MEGA_CORP) }
                command(MEGA_CORP_PUBKEY) { IOUContract.Create() }
                `fails with`("No inputs should be consumed when issuing an IOU.")
            }
        }
    }

    @Test
    fun `transaction must have one output`() {
        ledger {
            transaction {
                output { IOUState(1, MINI_CORP, MEGA_CORP) }
                output { IOUState(1, MINI_CORP, MEGA_CORP) }
                command(MEGA_CORP_PUBKEY, MINI_CORP_PUBKEY) { IOUContract.Create() }
                `fails with`("Only one output state should be created.")
            }
        }
    }

    @Test
    fun `sender must sign transaction`() {
        ledger {
            transaction {
                output { IOUState(1, MINI_CORP, MEGA_CORP) }
                command(MINI_CORP_PUBKEY) { IOUContract.Create() }
                `fails with`("All of the participants must be signers.")
            }
        }
    }

    @Test
    fun `recipient must sign transaction`() {
        ledger {
            transaction {
                output { IOUState(1, MINI_CORP, MEGA_CORP) }
                command(MEGA_CORP_PUBKEY) { IOUContract.Create() }
                `fails with`("All of the participants must be signers.")
            }
        }
    }

    @Test
    fun `sender is not recipient`() {
        ledger {
            transaction {
                output { IOUState(1, MEGA_CORP, MEGA_CORP) }
                command(MEGA_CORP_PUBKEY, MINI_CORP_PUBKEY) { IOUContract.Create() }
                `fails with`("The sender and the recipient cannot be the same entity.")
            }
        }
    }

    @Test
    fun `cannot create negative-value IOUs`() {
        ledger {
            transaction {
                output { IOUState(-1, MINI_CORP, MEGA_CORP) }
                command(MEGA_CORP_PUBKEY, MINI_CORP_PUBKEY) { IOUContract.Create() }
                `fails with`("The IOU's value must be non-negative.")
            }
        }
    }
}

public class IOUTransactionTests {
    static private final Party miniCorp = getMINI_CORP();
    static private final Party megaCorp = getMEGA_CORP();
    static private final PublicKey[] keys = new PublicKey[2];

    {
        keys[0] = getMEGA_CORP_PUBKEY();
        keys[1] = getMINI_CORP_PUBKEY();
    }

    @Test
    public void transactionMustIncludeCreateCommand() {
        ledger(ledgerDSL -> {
            ledgerDSL.transaction(txDSL -> {
                txDSL.output(new IOUState(1, miniCorp, megaCorp));
                txDSL.fails();
                txDSL.command(keys, IOUContract.Create::new);
                txDSL.verifies();
                return null;
            });
            return null;
        });
    }

    @Test
    public void transactionMustHaveNoInputs() {
        ledger(ledgerDSL -> {
            ledgerDSL.transaction(txDSL -> {
                txDSL.input(new IOUState(1, miniCorp, megaCorp));
                txDSL.output(new IOUState(1, miniCorp, megaCorp));
                txDSL.command(keys, IOUContract.Create::new);
                txDSL.failsWith("No inputs should be consumed when issuing an IOU.");
                return null;
            });
            return null;
        });
    }

    @Test
    public void transactionMustHaveOneOutput() {
        ledger(ledgerDSL -> {
            ledgerDSL.transaction(txDSL -> {
                txDSL.output(new IOUState(1, miniCorp, megaCorp));
                txDSL.output(new IOUState(1, miniCorp, megaCorp));
                txDSL.command(keys, IOUContract.Create::new);
                txDSL.failsWith("Only one output state should be created.");
                return null;
            });
            return null;
        });
    }

    @Test
    public void senderMustSignTransaction() {
        ledger(ledgerDSL -> {
            ledgerDSL.transaction(txDSL -> {
                txDSL.output(new IOUState(1, miniCorp, megaCorp));
                PublicKey[] keys = new PublicKey[1];
                keys[0] = getMINI_CORP_PUBKEY();
                txDSL.command(keys, IOUContract.Create::new);
                txDSL.failsWith("All of the participants must be signers.");
                return null;
            });
            return null;
        });
    }

    @Test
    public void recipientMustSignTransaction() {
        ledger(ledgerDSL -> {
            ledgerDSL.transaction(txDSL -> {
                txDSL.output(new IOUState(1, miniCorp, megaCorp));
                PublicKey[] keys = new PublicKey[1];
                keys[0] = getMEGA_CORP_PUBKEY();
                txDSL.command(keys, IOUContract.Create::new);
                txDSL.failsWith("All of the participants must be signers.");
                return null;
            });
            return null;
        });
    }

    @Test
    public void senderIsNotRecipient() {
        ledger(ledgerDSL -> {
            ledgerDSL.transaction(txDSL -> {
                txDSL.output(new IOUState(1, megaCorp, megaCorp));
                PublicKey[] keys = new PublicKey[1];
                keys[0] = getMEGA_CORP_PUBKEY();
                txDSL.command(keys, IOUContract.Create::new);
                txDSL.failsWith("The sender and the recipient cannot be the same entity.");
                return null;
            });
            return null;
        });
    }

    @Test
    public void cannotCreateNegativeValueIOUs() {
        ledger(ledgerDSL -> {
            ledgerDSL.transaction(txDSL -> {
                txDSL.output(new IOUState(-1, miniCorp, megaCorp));
                txDSL.command(keys, IOUContract.Create::new);
                txDSL.failsWith("The IOU's value must be non-negative.");
                return null;
            });
            return null;
        });
    }
}

Copy these tests into the ContractTests file, and run them to ensure that the IOUState and IOUContract are defined correctly. All the tests should pass.

Progress so far

We've now written an IOUContract constraining the evolution of each IOUState over time:

• An IOUState can only be created, not transferred or redeemed
• Creating an IOUState requires an issuance transaction with no inputs, a single IOUState output, and a Create command
• The IOUState created by the issuance transaction must have a non-negative value, and its sender and recipient must be different entities.

The final step in the creation of our CorDapp will be to write the IOUFlow that will allow nodes to orchestrate the creation of a new IOUState on the ledger, while only sharing information on a need-to-know basis.