Presently, with modern advancements in the fields of digital technologies, telecommunications technology, software, and IT, people’s living standards have changed in an unprecedented manner. The contact is no longer limited due to the environment and time restraints. Data is passed on and processed quickly and quicker than ever before. And this is where e-commerce provides versatility in terms of place, time, space, distance, and payment to the business setting. This e-commerce involves the purchase and sale of knowledge, products, and services through computer networks. It’s a way of electronically transacting transactions, usually over the Internet. It is the mechanism leading to the ‘integration of enterprises.’ With the growth in e-commerce, the use of e-contracts is rapidly advancing. Although electronic contract delivery faces a multitude of barriers at three levels, namely conceptual, logical, and execution. This article has discussed the meaning, nature, types, legality, recognition, and a legal issue that arose while entering into an E-contract.
Electronic contracts are the contracts that take place via e-commerce, without the contracting parties meeting. These contracts are generally very similar to the paper-based commercial contracts in which the business transactions were electronically conducted and concluded. It has increased the existence of e-commerce firms around the world with the advent of technology and globalization. An E-contract is a contract that a software program models, establishes, implements, and utilizes. Conceptually, e-contracts are somewhat similar to conventional commercial (paper-based) contracts. Dealers are showing prospective buyers their goods, prices, and words. Buyers weigh their choices, (where possible) negotiate rates and terms, position reports, and make payments. Finally, the dealers must supply the items they purchased. Electronic trading, however, poses some new and interesting technological and legal problems because of the way it differs from conventional trade.
E-contracts are contracts that are not based on paper and which are digital. Usually, these contracts are made for the rapid completion of a contract or the convenience of the parties. We are best-made parties living in 2 different parts of the world and needing to sign an agreement.
Following three electronic contract forms are search wrap, shrink wrap, and click contract wrap:
- A shrink wrap contract is a licensing arrangement where the contract terms and conditions are imposed upon the customer as soon as the package is opened. In the case of sales of electronic goods, these contracts will usually be observed. The license agreement shall indemnify the customer for any infringement of the manufacturer’s copyright or intellectual property rights as long as the buyer opens the box (containing the software product).
- Clicking on a wrap or clicking via agreements allows the user to express approval or approval to the terms and conditions governing the approved use of the program by clicking on the chatbox on the “ok” or “I agree” push button. By clicking on cancel or close the window, a user can choose to disagree or reject the terms. Upon denial, such a customer won’t be able to buy or use the service. During online transactions, one frequently comes across such a form of contract when installing software or creating an email account. Unlike the shrink-wrap agreements for which terms of the agreement are concealed within the package, all terms and conditions are available before approval, either in the same window or through a hyperlink, in the case of clickwrap agreements.
In India, the validity of shrink-wrap and click-wrap agreements has no clear judicial precedent. Fortunately, courts have dealt with these forms of settlements in many nations.
VALIDITY OF E-CONTRACTS
In addition to standard agreements, the Indian Contract Act of 1872 has given approval to oral contracts provided that they are concluded by the free consent of the contracting parties, for a valid reason and with a legal purpose, and are not specifically considered void. Consequently, nothing else in the Indian Contract Act restricts the applicability of electronic agreements where such agreements have all the essential elements of a valid contract. Free consent is a fundamental aspect of a legal contract. There is typically no room for E-Contract agreements and it is normally a ‘take it or leave it’ contract.
Courts in India have dealt with cases where contract agreements have been agreed between parties whereby the party to the contract was in an unequal leading position and unjust contracts have been held void.
The emphasis is the bargaining power of the parties, for example when an individual accepts unfair terms of contracts to obtain goods or services or means of subsistence. Nevertheless, in cases where the parties are in equal or almost equal bargaining positions, the courts should not interfere. Therefore, if a customer was to take the protection of an E-Contract as unfair and the presence of difference in the parties’ bargaining power, he must also show that the services or products he requested under the E-Contract were of utter necessity and that he did not have any other means of making use of the products or services.
RECOGNITION OF E-CONTRACT
There is no law governing E-Contracts in India. Many provisions of the Information Technology Act, 2000, and the Indian Proof Act, 1872 provide for the identification and enforcement of E-Contracts. The I.T. Act provides specific provisions for the allocation, recognition, and dispatch of electronic documents and electronic procedures that are protected. The recent amendments to the Maharashtra Stamp Act provide that an electronic record is included in the word ‘book.’
The IT Act acknowledges that notification of proposals, approval of proposals, revocation of proposals and acceptances, as the case may be, must be conveyed in electronic form or via an electronic record, and shall not be presumed to be unenforceable solely on the ground that such electronic type or means have been used for that purpose.
Additional authorization is provided under the Indian Evidence Act, whereby the expression document includes computer output which is all information found in an electronic record that is printed on a paper, stored, documented, or copied in computer-generated optical or magnetic media (hereunder referred to as cyber output). Such knowledge in compliance with the conditions lay down in Section 65B shall be enforceable in any litigation, without any further evidence or creation of the original, as evidence of the substance of the original or any fact suggested therein which concrete evidence would be permissible.
Capacity to contract:
To establish a legally binding contract of any kind, both parties must have the legal capacity to sign a contract. This provision prohibits groups like minors from signing legally binding agreements. For virtual contracts, where parties do not negotiate face-to-face for each other and transactions may be done secretly and remotely, it can be difficult for companies to determine other parties’ capabilities. Hence, businesses run a greater risk of their electronic contracts becoming unenforceable. Online transaction anonymity also raises the possibility of fraudulent transactions and safety concerns. The Australian Electronic Commerce Guidelines suggest that companies take action to check the age and overall ability to transact parties to prevent any capability issues that might arise.
Privity of contract:
The doctrine of contract privacy holds that it is legally bound by only the parties to a contract and is entitled to enforce it. An online vendor must be in a position to recognize the party they negotiate with and ensure that the contract is enforceable. In several situations, this can cause difficulties for electronic contracts.
Virtual procurement requires businesses facing a complex range of risks and challenges. As a business person, it is necessary to take additional steps to ensure your online transactions are secure. First and foremost, getting familiar with the law and your legal obligations is critical.
The electronic contract is designed and enforced to ensure electronic transactions are safe. It is created to check frauds to encourage and build trust in legitimate online transactions and to give the idea of digital signature a legal status. But to keep up with the rapid development of the technology, separate electronic or online contract legislation in India has to be implemented.
- Bakshi P.M & Suri R. K, Cyber and E-commerce Laws, Bharat Publishing House, edn 1, 2002
This blog is written by Akriti Sharma, Banasthali University
Some of her blogs-
- INTRODUCTION TO INDIAN EVIDENCE LAW
- INDIAN EVIDENCE AMENDMENT BILL, 2016
- BURDEN OF PROOF (Section 101-114)
- INHERENT POWERS OF THE COURT
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