The author of this blog is Mr. Anubhav Shukla 1
st-year student pursuing BA LL.B.(Hons.)
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. 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-
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 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”
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.
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.