Validity and recognition of E-Contracts under the Information Technology Act

By Manisha Das

INTRODUCTION

Contracts have become an integral part of our lives. Beginning with purchasing any product from the market to hiring a cab, all of us are administered by contracts in our everyday lives of which some we are aware of and some we might unknowingly become a part of. In contemporary times, anything from shopping any online product to any international treaty signing over the internet forms an e-contract. In e-contracts the counteroffer or acceptance, offer, or invitation to an offer, etc. all are by electronic methods and this kind of communication leads or results to an agreement.


CONTRACTS

The Indian Contract Act of 1872 delineates contract as the agreement between two or more parties for purposes of purchasing/selling of services or goods for a consideration that is valid. The essentials to a valid contract are similar that of the essentials of an e-contract:-

  • Offer and acceptance should be there.

  • Presence of lawful consideration.

  • Presence of free consent/will between the parties to the contract.

  • The objective of the contract or agreement must be lawful.

  • Parties are to be competent enough to form the contract.

  • The contract should mandatorily be enforceable by the law.

RECOGNITION OF E-CONTRACTS

Section-10 of the Information Technology Act of 2008 provides the legislative powers to e-contracts. It mentions that ‘While forming a contract, the communication of proposals, the acceptance of proposals, the revocation of proposals and acceptances, as the case may be, are expressed in electronic method 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 motive.’

Signatures from the parties of both sides are mandatory for any contract to be considered valid. In cases of e-contracts, an electronic signature comes into the picture. An electronic signature is delineated by the Information Technology Act, section 2p since the substantiation of any kind of electronic record by its users/subscribers by the medium of the electronic technique stated in the II schedule and it apparently involves a digital signature. Furthermore, section V of the Information Technology Act states that where any law entails that sort of information or any other issue be substantiated by attaching a signature or any document which is signed by or bear the signature of any person, then such prerequisites shall be considered to have been contented. An electronic signature fulfils the exact purpose of a handwritten signature. Section-85(c) of ‘The Indian Evidence Act' determines that as far as any Electronic-signature/digital-signature is concerned, the Courts expect that information that were been provided in the certificate is deemed to be correct and true.

E-contracts are the kind of contracts that are not hard copies or paper-based and are electronic in nature. These types of contracts are usually made for expeditiously entering into any contract or especially for the convenience of the parties. They are exclusively formed between parties living in two distinct regions of the world and sought to enter into an agreement. An Electronic signature is what they require to infiltrate into any contract as a party even if both the parties to the contract are staying away for miles from each other. In this burgeoning world, it is amongst the most conducive means to infiltrate into a contract without having to be physically present. The main two parties to any e-contract are:-

  1. the Originator and;

  2. the Addressee.

An Originator, as per the Information Technology Act of 2008 is an individual who sends, stores, transmits or generates an electronic message to be stored, sent, transmitted or generated to any other individual and doesn’t involve an intermediary. (In the current scenario, the individual who begins the process of forming an e-contract to convey it to the other party.)

An Addressee, as per the Information Technology Act of 2008 is an individual who is being intended by the originator in order to get the electronic record but doesn’t involve any intermediary. (In the current scenario, the party which receives or collects the e-contract formed by the other party.)


VALIDITY OF ELECTRONIC CONTRACTS IN INDIA

The Indian Contract Act of 1872 has acknowledged the conventional agreements that involve the oral contracts constituted by the independent consent or the free will of the parties to the contract, for the lawful consideration competent to contract along with a lawful object that isn’t explicitly proclaimed to be void. Consequently, there isn’t any provision in this particular Act that forbids the electronic agreement’s enforceability contingent on the essential elements of a valid contract that should be there in this type of agreement.

Independent consent or free will is taken into consideration as the chief characteristic of the valid contract. Commonly, on e-contracts, there isn’t any purview for negotiations. The choice of ‘accept it or drop it' transaction, in any event, is obtainable to the user. There are abundant similar cases wherein the Courts of India had to deal with the e-contract’s validity like negotiation of the terms and conditions of the contract. In the case of L.I.C. of India & Anr vs. Consumer Education and Research Centre[1], the SC held that ‘In the bespeckle lines contracts there wouldn’t be an event for the less strong party to negotiate as to presume to have equal negotiating powers. He/she has to either accept or drop the goods or services in terms of the bespeckle/dotted lines contract. His/her choice should either be to accept the unfair or unreasonable terms and conditions or let go of the service permanently.’


E-CONTRACTS ARE BROADLY CATEGORISED INTO :

  1. Browse Wrap Agreements these agreements are considered as the browsewrap agreement that is deliberated to be binding on the party contracting through the website. These involve the subscriber terms and policies of the website’s service and are in the configuration of 'terms of usage’, ‘user agreement’ or ‘terms of services, which could be classified as the links at the bottom or corner of the website.

  2. Shrink Wrap agreements refers to agreements that could only be read and confirmed by the purchaser after the launch of a certain product. The term is delineated after the ‘shrink wrap’ that is plastic wrapping which is used to cover software or further boxes. Installing software from a Compact Disc into the Personal Computer is an instance of a shrink-wrap agreement.

  3. Click Wrap agreements are commonly found in the installation software process. The buyer has to press either ‘Accept’ or ‘Decline’ in order to accept or decline the respective agreement. In all of these agreements, there is a dearth of some amount of negotiating powers. Selecting to make online payments or deciding to decline is an instance of usage of a clickwrap agreement.


ADMISSION OF E-CONTRACTS IN COURTS

The Delhi High Court in the case of Societe Des Products Nestle S.A and Anr Vs Essar Industries and Ors[2]has paved the way for the urgent initiation of Section 65(A) and 65(B) in the Indian Evidence Act of 1872 relating to the pertinence of the computer developed in a practical method to abolish the challenges with respect to electronic corroboration. As per section 65(A), the content of the electronic records can be verified by the parties in conformity with section 65(B) of the Indian Evidence Act of 1872. Besides, Delhi High Court in the judgement of the case of State of Delhi vs. Mohd. Afzal and Others found that ‘Electronic records are to be considered legitimate as evidence.’


CONCLUSION

It might be added to conclude that where abundant steps of any contract have been influenced through electronic methods, the parties are said to be at consensus-id-idem and the said agreement accomplishes all the essentials/necessities of a valid contract under the Indian Contract Act of 1872 as it’s already mentioned, subsequently, this type of contract is regarded as legally enforceable and valid. The method of any e-contract is to be known as a revolutionary transformation in the evolving global technical aptitude though, it’s been also observed that the laws administering e-contracts are vague in nature and it requires to be more dynamic to accept the current transforming scenarios of e-commerce along with an e-contract.


[1] L.I.C. of India & Anr vs. Consumer Education & Research; 1995 AIR 1811, SCC (5) 482; [2] Societe Des Products Nestle S.A. vs. Essar Industries And Ors. (2016);


Author: Manisha Das

Year: 2year, student

College: Amity Law School Kolkata


50 views0 comments