Smart contracts on the blockchain represent a novel form of electronic contracts. These contracts are distinguished from both traditional and digital (other electronic) contracts by their self-execution, which occurs without human intervention due to their AI-based nature. This paper aims to address the following question: Given the self-execution feature of these contracts, is it possible to breach them? If so, how would the smart contract respond? These contracts are new and, as a result, there are no particular laws governing them. To answer the said question, this paper analyzed smart contracts within the context of established legal principles and regulations. While such contracts reduce the likelihood of contractual violations significantly, it is not possible to eliminate this probability entirely. As a result, it is essential to examine the role of sanctions for the execution of smart contracts. In examining instances of non-performance of obligations, this study focused on the role of the self-execution feature of smart contracts in applying the sanctions. To be applicable, a sanction needs be coded in the contract in advance because the principle of immutability governs the blockchain. It also merits mention that some sanctions need human intervention to be applied, and the smart contract cannot automatically self-execute them. Therefore, smarts contracts execute and apply these sanctions directly and indirectly