E-CONTRACTS
The author of this blog is Mr. Anubhav Shukla 1
at the University of Petroleum and Energy Studies (UPES).
With the recent advancement in computers and technology, there is an immense change in
the standard of living of people. The communication is no more restricted to a
particular geographic area. Information is transmitted and received widely and rapidly
than ever before. We live in a world today where everything we need is
available online and at the click
of a button from the convenience of our homes. We often click the box of
acceptance to agree with the terms and conditions given on a website, this is,
in fact, is a type of contract. So what exactly are the nature of these
contracts and what legal ground they hold?
What is an E-Contract?
The
Indian Contract Act, 1872 defines a contract as an agreement which is enforceable
by law[1]. E-Contracts or Electronic
Contracts are nothing but a contract which is made through electronic mode, or
where two or more parties are far from each other. E-Contract is an agreement
that is modeled, signed, and executed electronically mainly over the internet. The
concept of online contracts is very similar to the pen-paper contract and it
is also drafted as same as the traditional one is drafted. The seller or vendors
who want to sell their products, prices, and terms to prospective buyers. In turn, buyers who are interested in the
products consider their options, place their orders, and made their payments. The online contract is brought to
help people in the way of formulating and implementing policies of commercial
contracts within business directed over the internet. Online Contract is modeled
for the sale, purchase, and supply of products and services to both consumers
and business associates.
Types
of E-Contracts-
1. Browse Wrap Contract- These are the types of
contract which are binding on the users when they visit the website. In the case of
browsewrap agreement a regular user of a particular website deemed to accept
the terms of use and other policies of the website for continuous use. Classic
examples of such websites are E-Commerce websites such as Amazon and Flipkart.
2. Shrink-Wrap Contract-These agreements are
usually licensed agreements applicable in the case of software buying. In this case, the terms and conditions are
enforced by way of a manual that generally accompanies the product. The
examples of these contracts are agreements that are delivered in the form of a
manual when we purchase software products.
3. Click Wrap Contract- Click Wrap Contracts are
the agreements where the user is required to give his consent by clicking on the “I Agree’ or “I Accept” or “Ok” button. The user who disagrees with the terms and conditions will not be able to proceed further and the transaction failed. Once the consent given the terms and conditions will not
change.
Formation
of E-Contract
As per the Indian Contract Act, 1872
e-contracts have a lawful status if they follow the common contractual rule.
Three elements that are necessary for forming a valid contract are- free
consent of the parties, lawful objects, and valid consideration. The same goes for
the e-contracts also. A contract can be written, oral, or a combination of both,
so there is no separate legislation for e-contracts. Online contracts are
formed byways of email and telephones and are similar to traditional pen-paper
contract.
In the case of Trimex International FZE Ltd. Dubai v.
Vedanta Aluminium Ltd., India [2]and an offer was
made by the petitioner through e-mail, for the supply of Bauxite to the
respondent on October 15, 2007. Several emails were then exchanged between the
two companies and thereafter acceptance was conveyed by the respondent through
e-mail on October 16, 2007. The acceptance mail was read by petitioner at 3:06
PM on 16.10.2007. The Supreme Court held that acceptance conveyed by the
respondent satisfied the requirements of Section 4 of the Indian Contract Act, 1872
and the irrevocable contract was concluded when the acceptance came to the
knowledge of proposer/petitioner i.e. at 3:06 PM on 16.10.2007.
VALIDATION
OF E-CONTRACT
The Information Technology Act, 2000 provides various procedural, administrative
guidelines and regulates the provisions relating to all kinds of electronic
transactions. Under Section 10 of the Information Technology Act, 2000 e-contracts
are valid and enforceable. This section
states that “Where in a contract formation, the
communication of proposals, the acceptance of proposals, the revocation of
proposals and acceptances, as the case may be, are expressed in electronic form
or by means of an electronic record, such contract shall not be deemed to be
unenforceable solely on the ground that such electronic form or means was used
for that purpose”[3]
The Information
Technology Act, 2000, gives clear guidelines for the procedural, administrative, and provisional regulations related to e-contracts. Moreover, famous cases in
India and worldwide prove that consenting by clicking on “I Agree” and entering
into the user agreement makes it a valid contract and legally enforceable.
EVIDENTIARY
VALUE OF E-CONTRACT
In India, a lot of people do not do online
transactions because terms and conditions are not transparent. Another
major issue is the nature of the law governing electronic contracts. Even
the IT act makes it legalized then also it has no provision separately for
online contracts.
Section 65-B of the Indian Evidence
Act, 1872, lays down
the procedure for furnishing electronic documents as evidence. The section
states that any information contained in an electronic record produced by a
computer in printed, stored, or copied form shall be deemed to be a document and
it can be allowed as evidence in any proceeding without further proof of the
original. However, the admissibility of the electronic record is subject to
various conditions prescribed under the section.[4]
CONCLUSION
It may be concluded that where a number of steps of contract
have been affected through electronic means, the parties are at consensus-id-idem and such an agreement
which fulfills all the essentials required for a valid contract under Indian
Contract Act, 1872 then such a contract is valid and legally enforceable.
[1] Indian Contract Act, 1872 (Act
9 of ) s. 2h
[2] (Arbitration Petition No. 10 OF 2009).
[3] The Information Technology Act, 2000 (Act 21 of 2000), s. 10.
[4]E-Contracts and its validity in India, available at: https://www.indialawoffices.com/legal-articles/e-contracts-and-validity-india
(last visited on May 16, 2020)
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