E-Contract laws in India

Abstract

Today with remarkable advancement in the areas of computer technology, software and information technology have transformed the standard of living of people in an unimaginable way. The communication is no more restricted due to the curbs of geography and time. Information is transmitted and received widely and within seconds than ever before. And here comes the electronic commerce which offers the elasticity to business environment in terms of location, time, distance, and transactions. This e-commerce is associated with the buying and selling of information, goods and services via computer networks with the help of internet. It is a means of doing transactions electronically, usually, over the Internet. It is the tool that leads to organization integration. With the growth of e-commerce, there is a rapid increase in the use of e-contracts. But advancement of electronic contracts creates a lot of challenges like conceptual and implementation.

Meaning

E – contracts ask contracts that are created and signed over the web. Also mentioned as electronic contracts or e-contracts, these contracts provide a quick and convenient way for people and organizations to enter into legally-binding agreements with other parties.

Online contracts ask contracts that are created and signed over the web. Also mentioned as electronic contracts or e-contracts, these contracts provide a quick and convenient way for people and organizations to enter into legally-binding agreements with other parties. They’re now getting used for a good range of purposes, from consumer and business agreements to government filings.

Types

Online contracts can be mainly classified into shrink-wrap agreements, click or web-wrap agreements, and browse-wrap agreements.

Browse Wrap Agreements –

This agreement is considered as a browse-wrap agreement which is held to be binding upon the parties by the use of the website. These include the user policies and terms of service of websites such as Flipkart or Amazon and are in the form of the user agreement or terms of service which can be used as the links at the corner or bottom of the website.

Shrink Wrap Contracts – 

They are the contracts which are the license agreement by which the terms and conditions of the contract are binding upon the parties of contract and the terms and conditions are mentioned on the plastic or in manuals of the software products which the buys.

Click Wrap Agreements – 

These agreements require the user to give his or her consent to the terms and conditions which are known as end-user agreement and governs the licensed usage of the software by clicking “Ok” or “I agree” button.

Essentials

  1. Offer – Just like conventional contract, one of the most essential elements of online contract is the requirement of an offer to be made. There must be a lawful offer made by the one party known as the offeror and it is the initating point of a contract. By choosing the goods and services available on the website of the seller, the buyer makes an offer to purchase such in relation with the invitation to offer made by the seller                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
  2. Acceptance – In case of an online contract, offer and acceptance can be made through e-mails or by just filing a form provided on the website of seller. The offeree may also need to take an online agreement by clicking on ‘I Agree’ or ‘I Accept’ for availing the services offered by the seller.

 

  1. Intention to create legal relationship – It is an essential element of a valid contract that parties to the contract must have intention to create legal obligation. Agreement of social or domestic nature do not create any legal relationship, hence they are not contracts and are not enforceable by law.

 

  1. Lawful object – Parties to the agreement must contract for a object which is legal in the eyes of law. A contract is enforceable by law only when it is made for a lawful purpose. It must not violate any of the provision of law and must not be fraudulent in nature. Thus, a contract formed on a website for the purpose of selling illegal substances online is a void contract.

 

  1. Lawful consideration – Consideration is one of most important element of a valid contract. The basic rule is that when a party to a contract promises to fulfill his promise he must get something in return for the performance of his promise. Promises that are impossible to perform cannot be considered as real consideration. For example. an online site that offers purchase of whole nation.

 

  1. Capacity of parties – Parties to a contract must be competent in entering into a contract. The parties must attain the age of majority and must be of sound mind. They must not be disqualified by law. An agreement where either of the party is a minor has no significance. It is considered as void ab-initio.

 

  1. Free consent – Consent is defined under Section 13 of the Indian Contract Act, 1872 is an essential requirement of a contract. It is basically the meeting of minds of the parties where both parties agree upon the same thing in the same manner, they are said to consent. Or in other words it should be free from coercion, misrepresentation, fraud, undue-influence and mistake.

 

  1. Possibility of performance – The terms and conditions of an agreement must be reasonable and clear and must also be as such that are capable of performance. An agreement to do an impossible act in itself cannot be enforced as per section 29 of the Indian Contract Act, 1872.

Evidentiary Value of E-contracts

The electronic documents are recognized as evidence under Section 65-A of the Indian Evidence Act, 1872. The procedure of proofing electronic documents as evidence is mentioned under Section 65 (b) of the Indian Evidence Act, 1872.

According to Section 65 (b) of the Indian Evidence Act, 1872 any information in an electronic means produced by a computer in printed or stored form shall be considered to be a document and it can be shown as evidence in any proceeding without further proof of the original. But, validity of the same depends on various conditions mentioned under section 65 (b) of the said act. It is required that the document or e-mail means to be produced from a computer, was in regular use by a person having lawful control over the system at the time of showing it; the document was stored or received during the course of activities; the information was saved into the system on a regular basis; the computer was in a proper working condition and was not affected due to the accuracy of the data entered.

Remedies for breach

There is no specific rule in the case of breach of online contract but the rules regarding remedies for breach of contract can be followed as provided in The Indian Contract Act. A valid contract gives rise rights and obligations and they are enforceable by law when infringed by other party on breach of contract.

Section 73 and Section 74 of the Indian Contract Act, 1872 deals with the rules regarding the remedies of damages on breach of contract. The person whose rights are violated by the breach of contract may bring an action for damages or compensation for the loss suffered he had incurred. Section 73 to 75 provides rules regarding the assessment of damages based on the famous case Hadley vs. Baxendale. According to the rules laid down in this case, there can be damages which naturally arose on the course of action, for such damages the aggrieved party can get ordinary damages and secondly, the damages arose from special circumstances are called special damages. Nominal damages are those which are substantial damages awarded by the Court in recognition of right of the aggrieved party in cases where the party has not suffered any monetary loss on the breach of contract. Liquidated damages are those which are pre-determined damages or damages which are decided by the parties at the time of formation of the contract i.e amount of compensation payable in the event of breach of such contract.

Case laws

ProCD. Inc. v. Zeidenburg –  

It was held that the purchaser after reading the terms of the license featured outside the wrap if opens the cover then it is considered with the fact that he accepts the whole terms of the license that appears on the screen by a keystroke, denoting acceptance of the terms by conduct. Thus, it is confirmed that shrink-wrap agreements are valid contracts in the eyes of law and are enforceable against the buyer of the software. But the enforceability of the shrink-wrap agreement is extended till the general principles of a contract are not violated.

Bhagwandas G. Kedia v. Girdharilal Parshottamdas – 

It was held that it is the acceptance of an offer which results in a contract. The acceptance of the offer in e-contracts is done when the offeree click on “I accept” or “Yes” or something like that. Hence, even if there is no specific law validating e-contracts, they cannot be challenged because they are as much valid as a traditional contract.

Conclusion

The e-contract is designed and enacted with the aim of providing security to online transactions. It is made to check frauds and build confidence in genuine online transactions and provide legal status to the concept of the digital signature. The online contract is a much efficient concept in the interest of time and money in comparison to the traditional method of paper and writing contracts. But to keep pace with the fast advancement of the technology, separate legislation in regard to the electronic or online contract has to be enacted in India.

Author :

Deepanshu Kaushik

IIMT,GGSIPU