In the 21st Century, with everything going digital and governments encouraging the same, each person is entering into E-Contracts without even being aware of it. Geographical barriers have vanished, technology has advanced & connectivity has improved, thus increasing the number of E-Contracts. With this article, we aim to look into the nature, scope and the legality of E-Contracts.
Introduction
Let us first look into “Contracts” to understand E-Contracts better. In India, the provisions relating to Contracts are mostly contained in the India Contract Act, 1872. According to Section 2(h) of the Indian Contract Act, 1872, a contract is an agreement enforceable by law. For a contract to be enforceable there must be a valid offer, acceptance, free consent, lawful consideration, lawful object & the capability of parties to enter into it.
What are E-Contracts?
E-Contracts may be considered similar to traditional contracts. The provisions of the IT Act 2008 mainly extend authority to E-Contracts in India.
Section 10 of Information Technology (Amendment) Act, 2008 talks about the validity of E-Contracts, Thus where, offer, acceptance and revocation, are expressed in electronic, contract is enforceable as well[1]
Legal Validity
Section 5 of The Information Technology Act 2008 gives validity & legal recognition to digital signatures. Section 2(p) of the Information Technology Act, 2008, defines digital signature. A digital signature is an electronic authentication of any digital record by a subscriber in a specified procedure and manner.
Provisions Contained in Section 3 provide for the authentication of electronic records by digital signature. The concept of e-AADHAAR in India is an example of the same.
Section 35 of the IT Act contains provisions for certifying authority to issue signature certificates.
Offer – How Made
Taking the example of an e-commerce website, let us understand how offers are made in the case of e-contracts. In most cases, it is not direct. The products offered for sale are generally an invitation to offer. An offer is said to be made when the buyer expresses his wish to purchase the items by the means available. There are many other ways in which an offer can be made such as e-mails, etc.
Acceptance
Acceptance is an essential element for formation of a contract. The most common example of this is when a person has to click on “I agree” or “I accept” while availing a service online. Most social networking sites do not allow a user to create an account unless they agree to be bound by the terms of E-Contract.
Consent – How Expressed
As consent is an essential element for a contract to be valid, it is generally expressed in the form of signatures in traditional paper based contracts. For e-contracts, an electronic signature replaces the same.
Parties to the Contract
While Parties to the traditional contracts are the offeror & the acceptor, the parties to an E-Contract are:
- The Originator
- The Addresee
According to Section, 2(za) of The Information Technology Act 2008, “originator” is the one by whom an electronic message is created, generated, stored or sent.
According to Section 2(b) of The Information Technology Act 2008, “addressee” is the one to whom the originator wishes to send the message.
Types of E-Contracts
Shrink Wrap agreements: contain terms and conditions which a consumer can read and accept only after opening certain product. The most common example of this is are CD ROMs. In Pro Cd, Inc v. Zeidenburg is a relevant case in this aspect.
Click Wrap agreements: contains conditions before the installation or purchase of a product. The purchaser cannot proceed unless he agrees to the terms of the same.
Jurisdiction of Courts
Although the provisions for deciding the jurisdiction of courts are contained in Section 13 of the Code of Civil Procedure, 1908, it becomes difficult to determine in the case of E-Contracts because they are not concluded physically and the traditional physical limits are thus not applicable to them
Protection of Data
When parties enter into an E-Contract, it may become necessary for the parties to exchange information with each other. When information is exchanged, it thus becomes necessary to protect the same. Thus Section 43A of the IT Act contains provisions for Compensation for failure to provide data.
Evidentiary Value under Indian Evidence Act
Sections 85A, 85B, 88A, 90A and 85C of The Indian Evidence Act deal with the provisions regarding electronic records and Section 65B provides for the admissibility of electronic records.
Challenges to E-Contracts and Conclusion
Even though most people are increasingly engaging in online transactions, they still remain unsure about the terms they would be generally bound by. As a result of which online transactions or e-contracts face a greater risk of breach and exploitation as compared to the traditional contracts. The jurisdiction of courts still remains unclear. Whether the offer was valid or the acceptance is valid remains hard to determine. Lack of legal provisions pertaining to online transactions or e-Contracts are equally contributing to the situation. It is the need of the hour that our judiciary focuses on improving provisions for e-Contract.
References-
[1] The Information Technology Act, 2008
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