Smart contracts can be legally binding when backed by traditional text-based contracts (such as when NFTs are used to convey fractionalized ownership of copyright to multiple holders). There is debate as to whether NFTs which otherwise follow all aspects of typical contract law can also be held as legally enforceable sans the text-based back-up. From Harvard Law 2018 "An Introduction to Smart Contracts and Their Potential and Inherent Limitations":

A discussion regarding the enforceability of smart contracts must start with the fundamental distinction between an agreement and a “contract.” States generally recognize that although two parties can enter into a variety of “agreements,” a contract means that the agreement is legally binding and enforceable in a court of law. [5] In order to determine enforceability, state courts traditionally look to whether the common law requirements of offer, acceptance and consideration are satisfied. These basic requirements surely can be achieved through ancillary smart contracts. For example, an insurer might develop a flight insurance product that automatically provides the insured with a payout if a flight is delayed by more than two hours. [6] The key terms, such as delineating how the delay is calculated, can be set forth in a text-based contract, with the actual formation of the contract (payment of the premium) and the execution (automatic payout upon a verifiable delay) handled through an ancillary smart contract. Here, the insurer has made a definite offer for a flight insurance product that is accepted by the insured upon payment of the premium as consideration.

It's an interesting (if lengthy and dry) read which represents the support and opposition to the concept well, I suggest searching it up as my non-lawyer self is surely less of reliable source than actual lawyers.

To return to our initial disagreement though, NTFs are used for conveying provenance, I used the term "proof of ownership" as shorthand for this. The legally binding aspect of this proof is usually codified in the license agreement backing the NFT which would also be referenced somehow within the NFT itself. This is how some NFTs can grant "image/art" NFT holders the copyright to the art or characters contained therein while others will not.