E Contracts

Electronic Contracts & its Legal Scenario

Authors: Saurav Malhotra & Prachi Dembla, Symbiosis Law School, Noida.

INTRODUCTION

Today, the internet has revolutionized the way of communication among different people around the world and in addition to this, the internet has also changed the way of doing business, a new kind of trade has been created i.e. E-Commerce. In layman’s language, the author defines e-commerce as all the types of commercial transaction that includes both the Organisation as well as the Individuals based upon the processing and transmission of digitalized data consisting of text, visual images and sound.

If we have a look over our generation, E-contracts have become common means of contracting with people, online shopping being the most common example.  According to Hemant Goel’s book on Law and Emerging Technology[1], Cyberlaw, E-commerce is “the conducting of transactions using a network of computers and telecommunication i.e. internet”

E-Contracts is a type of contract that arises by the interaction of entities through electronic means such as e-mail, a computer system, or two electronic agents interaction. With each day, rising manufacturing industries are also evolving with rapid technological advances. To achieve full income, both companies aim to build a customer-friendly relationship with their customers. The Uniform Computer Information Transactions Act[2] includes laws about the creation, regulation and specific terms of an e-contract. The rules and procedures relating to contract law relate to e-contracts. E-contracts with e-signatures are technically enforceable, much as typical paper contracts. All are needed of the same basic requirements of a binding contract: an offer, acceptance, consideration, competency, capability, etc.

The more popular licenses are “End User License Agreement” or EULA[3] where a click on the I accept/ I agree button is necessary to install applications or terms/conditions/user agreement on the website.  On perusing of the national and global laws, e-understandings are substantial and enforceable in the courts; be that as it may, since the hazard related to e-marks are high, for high stake exchanges, parties despite everything demand wet marks on physical understandings. For fintech substances, who have been enthusiastically utilizing e-method of documentation and execution, to evade misrepresentation or imitation, e-marks can be utilized with an extra layer of security.[4]

RESEARCH METHODOLOGY

The doctrinal research has been followed by the researcher all through the exploration of auxiliary sources like books, articles and websites have been referred for the accomplishment of the research.

FORMATION OF E-CONTRACTS

E-contracts consisting of an offer and acceptance are enforceable as is an ordinary contract. The parties’ actions, such as exchanging e-mails or agreeing with the provision or conditions, or uploading it, may also indicate a deal. Several electronic/online contract formation methods are given:

  • Website Forms: In certain cases, an e-commerce website sells products or services purchased by consumers for sale, by filling in and uploading an order form on the computer. When the order has been approved the vendor must enter into a deal. The goods and services can be physically shipped off-line. A contract will also be applicable for a website’s terms of use until the customer acknowledges the agreement by clicking on “I Agree.”
  • Electronic Mail: By exchanging e-mail messages, the parties can establish a binding contract. Offers or acceptances may be shared in whole via e-mail, or mixed with paper documents, faxes and oral discussions.
  • EULA: The End User License Agreements often form legal contracts where end-users press “I Allow” or “I Agree with the Terms.”

In brief, an e-contract is somewhat distinct from a conventional contract: it is paperless and there are occasions where the participants cannot negotiate face to face. We’re attempting to describe and explore various facets of a traditional online contract here.

Concept of Offer and Acceptance

For the formation of a contract, the principle of offer and acceptance is the central element of successful communication. E-commerce presents a big challenge on this issue. This is important to define the offer and acceptance because they decide the precise date and location of the contract and thus the jurisdiction applies.

As regards to bilateral contracts, an offer is a simple statement of the terms and conditions by which an individual (the offeror) undertakes to be bound; the offer is approved by the other party (the offerer). On the web, it’s hard to decide if a page is a bargain or an opportunity to handle it.

The terms used in an online advertisement may also be considered deceptive, so various regulatory structures may cope differently with such problems. Acceptance is a binding unqualified commitment to the terms and conditions of the offer.

The ‘Postal Approval Law’ specifies that the arrangement shall be considered to have been signed until the Offeror delivers the letter of acceptance, whether the Offeror accepts it or not, whether a Party wishes to enter into a postal agreement. But this law does not apply to e-commerce[5].

Place of Execution/Jurisdiction of a Contract

Jurisdiction is a region or operation area to which the judicial power of a tribunal or other body is expanded. Throughout the wider context, it relates to the government or nation whose legislation extends during the implementation duration of some contractual agreements or in case of a conflict.

However, for Electronic Contracts, the parties can freely apply themselves to a specific jurisdiction which may be the location for one of the contracting parties company or an entirely separate jurisdiction decided by all the contracting parties.

In Casio India Co. Ltd. vs. Ashita Tele Services Pvt. Ltd., the Delhi High Court ruled that if the website is accessed from Delhi, it is enough to invoke the territorial jurisdiction of Delhi.

The requirement of the Signature

Signature usually involves signing a signature in one’s face. The key role of signing an agreement is to affirm the identities of the contracting parties and to offer consent to the contractual terms and to deny repudiation, i.e. when an individual appends his signature he cannot decline to be a contracting party afterward.

According to the Indian Contract Act, which specifies that a legal contract may also be an oral arrangement between parties, a signature is not necessary. Therefore, for it to be valid a contract must not be physically signed.

Moreover, other laws stipulated registration conditions; The IT Act thus provides a tangible signature for online signatures. Competent authorities must sign electronically under the IT Act but the central government has not notified electronic signatures.

Types of Electronic/online Contracts

  • Shrinkwrap Agreements: Such forms of agreements take their name from the shrink-wrap packaging, which usually protects the products to be purchased. This is generally seen on CDs. The terms and conditions needed to access the individual program are written on the CD’s shrink-wrap cover, and the vendee effectively removes the seal to obtain entry to the CD.

The Shrink-wrap Policy offers immunity by exonerating the producer of the goods against the violation of copyright or intellectual property rights as long as the consumer breaks the package[6] or shielding to obtain it. However, in India, there is no legitimacy of the shrink-wrap arrangements with a clear decision or precedence.

  • Clickwrap Agreements: The customer shows his approval in a click-wrap arrangement by clicking on either ‘I Accept’ or ‘I Disagree’ on the website. Essentially, a user passes through the terms and conditions laid out in a particular webpage or system and needs to adhere to a click-wrap arrangement to continue with permission.

Everyone performs Web-wrap deals almost daily. The terms of usage shall be set down by the consumers before approval. Digital-shopping deals for example, etc.

This kind of acceptance is generally seen before any product purchased is delivered. Such contracts are presented on the internet only and are often recognized as click-through agreements.

  • Browse Wrap Agreements: An arrangement that is to be binding on two or more people by the usage of the website may be considered browsing wrap agreements. An ordinary user of a specified Website is to acknowledge the terms and conditions of access and other website rules for continuous usage in the case of a browsing agreement. We normally experience electronic contracts of this type in our daily lives.

These documents are generally often noticed when the consumer is bothered to search about and check for a tiny asterisk or hyperlink.

While this online arrangement is becoming popular in many of our industries[7], there is no clear legal precedent for its legality and enforceability.

As a consequence, opponents contend that browse-wrap terms cannot be applied because they do not fulfil the essential requirements of the Contract.

LEGALITY OF E-CONTRACTS UNDER INDIAN TECHNOLOGY ACT 2000

With the adaptation of new technology, numerous governing bodies across the world have revised the legislation to understand electronic contacts, despite the underlying concerns about the same. As far as the case in India is concerned, The Indian Contract Act.1872 i.e. the conventional law[8] deals with all types of contracts but when it came to handling the E-contracts it seemed to be incompetent.

Where India’s rise as a noteworthy player in computer programming and assets was a fascinating element in the field of computer innovation there was a perplexing question too and that was how an underdeveloped nation which is almost at the basis of improvement could bring such potential to bear in one of the segments located in the world’s most welcome technology and development.

This extraordinary growth of the internet & the related administrative apprehensions that go with it and the necessity to provide a legal structure to web-based industries in India shape and value the Information Technology Act, 2000 (the Act).

Hence, The Information Technology Act, 2000, was authorized by the Indian Parliament[9] to understand some of the exceptional issues that arose in the arrangement and verification of Electronic Contracts.

Section 10A of the act gives the lawful portrayal to lawfulness and implementation of E-contracts under IT act 2000. It gives that “were in contract development, correspondence of proposition, the denial of the proposition and acknowledgement as the case is communicated in electronic structure or by an electronic record. It was added in the act by the amendment in 2008. On the other hand, Section 11 of this Act talks about attribution of digital statistics in which an electronic report shall be attributed to the originator, (a) if it changed into sent through the originator himself; (b) utilizing an individual who had the power to follow up in the interest of the originator in regard of that advanced record, or (c) through a data machine customized through or for the benefit of the originator to work mechanically. 

Apart from these sections, Section 2(p) of The Information Technology Act, 2000 defines digital signatures as authentication of any electronic record by a subscriber employing an electronic method or procedure[10] which has been already discussed thoroughly above. 

RELATED CASE LAWS

  • Harpal Singh Chota v. State of Punjab

In this case, honourable Supreme Court of India has reiterated the case that any electronic record in form of secondary evidence cannot be admitted as Evidence unless a certificate of evidence under section 65B of the Indian Evidence Act is presented.

  • Hyderabad E-tender plan hacking case

For this situation, programmers have hacked the whole E-delicate plans and purportedly charged RS.15000 per delicate data to the administration of Telangana.

  • Anwar Basheer v. P.K.Basheer[11]

In this case, the Court updated the law on electronic proof. The Judgment will affect the way wherein wiretaps are brought under the watchful eye of the court

  • Mehta v. J Pereira Fernandes[12]

In this case, the appellant had someone in his company send an email requesting an adjournment and giving a personal guarantee to a certain amount. The application was adjourned, but the applicant then did not honour the guarantee, saying that it was not enforceable, the email not being signed. It was held that the email address had been included by the litigant’s specialist organization as a component of the header of the email, and was absent when sent and was not a mark: ‘a gathering can sign a record for the motivations behind Section 4 by utilizing his complete name or his last name prefixed by a few or the entirety of his initials or utilizing his initials.[13]

CONCLUSION

E-contracts are appropriate to encourage the re-building of business forms happening at numerous organizations including a composite of advances, procedures, and business systems that guides the moment trade of data[14]. The e-contracts have their benefits and bad marks. From one perspective they reduce costs, spares time, affix client reaction and improve administration quality by diminishing desk work, in this way expanding automation.

With this, E-trade is relied upon to improve the profitability and intensity of taking interest organizations by giving extraordinary access to an on-line worldwide commercial centre with a huge number of clients and a great many items and administrations. Then again, since in electronic agreement, the proposition centres not around people who settle on choices on explicit exchanges, yet on how hazard ought to be organized in a mechanized domain. In this manner, the article is to make default rules for ascribing a message to a gathering to maintain a strategic distance from any extortion and inconsistency in the agreement.

COVID-19 will also serve as a mechanism for pushing India Inc. towards paperless and quicker forms of document execution. Nevertheless, as the IT Act specifically only accepts digital signatures and e-signs from Aadhaar, international signatories who do not possess digital signatures or e-signs from Aadhaar would not be allowed to e-sign. Throughout that situation, the global signatories can depend on the signing technique at their disposal and prove their legitimacy through proof such as email correspondence or the parties’ actions to determine the purpose.


[1] GRIN – E-contracts. Essentials, variety and legal issues Grin.com, https://www.grin.com/document/427203 (last visited Aug 6, 2020)

[2] All that you must know about E-Contracts: Types and its Requisites iPleaders, https://blog.ipleaders.in/all-that-you-should-know-about-e-contracts/ (last visited Aug 7, 2020)

[3] ibid.

[4] Moving towards Digital India: Are e-agreements valid? – Vinod Kothari Consultants Vinodkothari.com, http://vinodkothari.com/2019/10/validity-of-e-agreement-and-e-signature/ (last visited  Aug 13, 2020)

[5] E Contracts: Everything You Need to Know UpCounsel, https://www.upcounsel.com/e-contracts (last visited Aug 13, 2020)

[6] All that you must know about E-Contracts: Types and its Requisites iPleaders, https://blog.ipleaders.in/all-that-you-should-know-about-e-contracts/ (last visited Aug 15, 2020)

[7] All that you must know about E-Contracts: Types and its Requisites iPleaders, https://blog.ipleaders.in/all-that-you-should-know-about-e-contracts/ (last visited Aug 15, 2020)

[8] E-Commerce and E-Contracts: Overview And Analysis Legal Bites – Law And Beyond, https://www.legalbites.in/e-commerce-e-contract/ (last visited Aug 17, 2020)

[9] Acadpubl.eu, https://acadpubl.eu/hub/2018-120-5/4/377.pdf (last visited Aug 17, 2020)

[10] E-Contracts and Its Legality Legalserviceindia.com, http://www.legalserviceindia.com/articles/ecta.htm (last visited Aug 18, 2020)

[11] Anwar Basheer v. P.K.Basheer  2014 AIR 2014 SCW 5695

[12] Mehta v. J Pereira Fernandes  [2006] EWHC 813 (Ch)

[13] Mehta v J Pereira Fernandes SA: ChD 7 Apr 2006 – swarb.co.uk swarb.co.uk, https://swarb.co.uk/mehta-v-j-pereira-fernandes-sa-chd-7-apr-2006/ (last visited Aug 20, 2020)

[14] E-Contracts and Its Legality Legalserviceindia.com, http://www.legalserviceindia.com/articles/ecta.htm (last visited Aug 20, 2020)

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