A new commercial transaction formation method is evolving as a result of DLT and AI growth, replacing the traditional bilateral contract formation procedure with smart contracts that automatically execute upon meeting the predetermined conditions. This study explores whether these technologies are legally valid under the Indian Commercial Laws. Section 10A of the Information Technology Act provides for the legal recognition of electronic contracts. However, AI’s ability to independently determine the result of agreements can challenge the most important elements of the Indian Contract Act, including the need for mutual consent and the categories of contracts that can be created using AI systems. There are three reasons identified in the research that have led to legal conflict: first, the “Immutability Paradox”, which arises from an inability to modify the terms of an automated contract; second, the “Liability Gap” which relates to the uncertainty regarding the accountability for the decisions made by AI systems, as AI itself is not deemed a legal entity; additionally, the absence of legal authority is a problem in a decentralised world. Lex Cryptographia is a hybrid legal mechanism proposed by this paper and consists of legally binding rules embedded directly into the code and infrastructure of decentralized systems independent of traditional centralized oversight. By doing so, the proposed outcome reflects not only greater legal responsibility for the developers and users of the decentralized systems, but also provides a method for ongoing legal compliance in the future since the structure conforms to UNCITRAL’s Model Law on Electronic Commerce (MLEC) as a framework for a continuous regulatory scheme as technology advances.