With the technological advancement, the electronic commerce has gained momentum in a dashing speed. When it comes to business no physical boundaries, no writing, hand signature, etc. are required anymore. It offers the flexibility to business environment in terms of place, time, space, distance, and payment. Furthering to the enhancement of the growth in e-commerce, e-contracts are entered day in & out. E-contract is a contract modeled, framed, specified, executed and deployed by any software system. Conceptually e-contracts are in consonance to that of traditional commercial contracts. However, ignorance of the common man about the fast changing technology does not grease the wheels for optimum utilization of this betterment.
Validity of E-Contracts & its relevance under Indian contract Act
Indian Contract Act, 1872, is applicable to contracts in general. Therefore, an electronic contract also cannot be validly executed unless it satisfies all the essentials of a valid contract.
- Section 10 of the IT Act, 2008 gives legislative authority to E-contracts. It says 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 two parties to an e-contract are- the originator and the addressee. According to the IT Act, 2008-
o Originator is a person who sends, generates, stores or transmits any electronic message to be sent, generated, stored or transmitted to any other person and does not include an Intermediary.
o An Addressee is a person who is intended by the originator to receive the electronic record but does not include any Intermediary.
- An offer and acceptance has to be made- The law already recognizes contracts formed using facsimile, telex and other similar technology. An agreement between parties is legally valid if it satisfies the requirements of the law regarding its formation, i.e. that the parties intended to create a contract primarily.
o Example: When consumers respond through an e-mail or by filling in an online form, built into the web page, they make an Offer. The seller can accept this offer either by express confirmation or by conduct.
- Unequivocal unconditional communication of acceptance is required to be made in terms of the offer, to create a valid e-contract. The critical issue is when acceptance takes effect, to determine where and when the contract comes into existence. The general receipt rule is that acceptance is effective when it comes to the notice of the party making the offer.
- here should be a lawful consideration- Contracts result only when one promise is made in exchange for something in return. This something in return is called ‘consideration’. The present rules of consideration apply to e-contracts. There is concern among consumers regarding Transitional Security over the Internet.
- Intention of the parties to enter into the e-contract is a must.
- There should be a free consent between the parties to enter into the e-contract there is a limited scope of negotiation in as the end user/accepting party has limited options.
- The object of the agreement should be lawful.
- Parties must be competent to enter into the contract.
- And lastly, contract must be enforceable by law.
If an electronic contract has been formed over a series of electronic communications where the essential elements of the contract are captured separately, then proper maintenance of all such electronic records and emails becomes essential to prove the record of the contractual arrangement between the parties.
Types of E-Contracts
E-contracts can be entered into by any software system, however the most common one’s include-
- Browse wrap agreements- This agreement is considered as a browse wrap agreement which is intended to be binding upon the contracting party by the use of the website. These include the user policies and terms of service of online shopping websites and are in the form of a “terms of use”, a “user agreement” or “terms of service”, which can be used as the links at the corner or bottom of website.
- Shrink Wrap agreements are those which can only be read and accepted by the consumer after the opening of a particular product. The usage of the product deems the acceptance of the contract by the consumer. The term is described after the shrink wrap plastic wrapping that is used to cover software or other boxes. Example: downloading a copy of Acrobat from Adobe's Website.
- Click Wrap agreements which are mostly found in the software installation process, are contracts where the user has to click either ‘Accept’ or ‘Decline’ to take or leave the agreement. They lack bargaining power. Choosing to make payments online or choosing to reject it is an example of using a click wrap agreement.
- Over mail contracts- Sometimes the contractual understanding is not consolidated in a single document, but can be in the form of a serious of E-mails. This clears that contracts made over emails are legally binding.
- Counterparts signed contacts- When it is impossible/not permissible for the parties to meet physically due to residence in different locations, then in such cases the agreed version of the contract can be signed and be sent to the other party in the form of scanned copy for reference. In such cases, there can be multiple physical copies of the contract each signed by a party are called as counterparts.
E-Signature
The E-signatures (digital signature) are identified to be legally valid. It functions for electronic documents like a handwritten signature and asserts that the named person agreed to the document to which the signature is attached.
Digital Signatures: Section 2(p) of The Information Technology Act, 2000 defines digital signatures as authentication of any electronic record by a subscriber by means of an electronic method or procedure.
The fundamental drawback of online contracts is that if there is no alternate means of identifying a person on the other side than digital signatures or a public key, it is possible to misrepresent one’s identity and try to pass of as somebody else. Secure digital signatures cannot be repudiated the signer of a document cannot later disown it by claiming the signature was forged. In other words, digital signatures enable "authentication" of digital messages, assuring the recipient of a digital message of both the identity of the sender and the integrity of the message.
Jurisdiction of courts in E-Contracts
Section 13 of the IT Act governs the provisions relating to the time and place of dispatch and receipt of an electronic record, and addresses the issue of deemed jurisdiction in electronic contracts, as under view of the foregoing, the place of contract in an e-contract for the purposes of determining jurisdiction (i.e., the place where the cause of action arose) would be deemed to be where the originator has his place of business and where the addressee has his place of business. However, since Section is subject to the mutual agreement of the contracting parties with respect to the agreed place of contract, it is recommended that all parties in their electronic contracts provide for a specific clause on jurisdiction. The determination of territorial jurisdiction for e-contracts becomes complicated in the absence of geographical or national boundaries for execution and implementation of such contracts.
Conclusion
E-commerce is expected to improve the productivity and competitiveness of participating businesses by providing unprecedented access to an on-line global market place with millions of customers and thousands of products and services.
With the e-commerce boom and the growing trend of commercial transactions being concluded by way of internet, execution of contracts by electronic means has become quite prevalent. The common legislative and judicial intent appears to be clear that any legally valid acts that are ordinarily performed would continue to be valid even if performed electronically or digitally, as long as such electronic/digital performance comprises of all the attributes of legally valid contract.
After all we can’t solve problems with the same kind of thinking!
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