This is a response to the USD$100,000 bounty to create a software-based platform to replace the Bitcoin Foundation as initially announced on http://www.reddit.com/r/Bitcoin/comments/25sf4f/100000_bount...
The interesting thing about these guys is they're a team of both developers and lawyers... part of this project is the packaging of the technology on top of Ethereum, but part of it is figuring out the legal frameworks needed to grant legal authority to a distributed crypto consensus network.
https://www.youtube.com/watch?v=MIVjAo4vres&feature=youtu.be is a good 10 min background interview with Preston Byrne, one of the members.
If you wanted to create an organization represented by a DAO in this system, then you would still need to register a legal entity with your government to represent your organization (for tax and regulatory reasons). But that organization could have exactly one bylaw saying, essentially, "this organization shall operate according to the DAO uniquely identified as ABCXYZ123". Then you do all further work in the DAO.
If you wanted to create a contract of some kind, you wouldn't need to do even that. A "contract" in law is fairly general: it's an agreement, entered into voluntarily, between multiple partners for their mutual benefit. It's often done on paper, but not necessarily: they can be created orally, or via email. There's no reason I know of that a DAO couldn't create a contract, as long as you could show to a court that it fits all the normal criteria for a valid contract.
The main complication in all this is that it's unusual and, at least at first, judges wouldn't know how it works and would want proof that it creates a legal contract.
There was a neat talk from the silicon valley ethereum meetup a few months ago where a lawyer dives into the technical definition of a legal 'contract' and what parts of that Ethereum code does and does not satisfy:
http://www.youtube.com/watch?v=jSLK3lbENRc
(One of the key insights there is although Ethereum uses the term 'contract' to describe its autonomous code, Ethereum contracts do not by themselves satisfy the criteria for a legal contract in common jurisdictions... 'autonomous agent' would be a better term for Ethereum to use)
All of these links I got from people on a discussion on r/ethereum the other week: http://www.reddit.com/r/ethereum/comments/27gdhc/are_you_all...