E contracts are modern contracts, unlike traditional contracts they don’t use papers they are digital and are generally made for swift entering into a contract for the convenience of the parties. Parties sitting on a different corner of the world can enter into an E-contract smoothly through the Digital Signature without any inconvenience and getting physically or mentally exhausted.
Electronic Contract refers to a contract that takes place through e-commerce, often without the parties meeting each other. It refers to commercial transactions conducted and concluded electronically. A customer drawing money from an ATM machine is an example of electronic contract. Another instance of e-contract is when a person orders some product from an online shopping website. Globalization and diffusion of technology has accelerated the presence of e-commerce companies throughout the world. Online auctions are also gaining popularity whereby buying and selling takes place through bidding using the Internet.
the contracts which are not paper-based and are created electronically in nature are known as e-contracts. Normally, these kinds of contracts are made for speedy entering into a contract. These types of contracts perform the best role where the parties of the contract live in the different places of the world and it is very tough to meet in reality due to far distance. They can make contracts easily and fulfil their requirement online. The e-contracts are not just saving your time and fast the process but it is also beneficial and easy for parties to store and manage the documents of the contracts. If either of the party wants to recall the terms of the contract which they forget, they can easily read it again in just a few clicks.
LEGAL ASPECTS OF THE E-CONTRACT
Indian Contract Act 1872 mentions the ingredient which is necessary for the valid contract those are offer, acceptance, intention, free consent, lawful consideration and object, competency of parties to contract and the possibility of performance, but nowhere in the act, it is mentioned that an agreement has to be signed or that it must be in writing.
But nowhere in the act, it is explicitly mentioned that an agreement has to be signed by pen or that it must be in writing on paper. It’s a custom that is being followed so that consent of the parties can be shown and the contract can be provided as evidence for future references.
Section 4 of the IT Act, 2000, says that if any law which is applicable in India required a document or information to be in handwritten, Typewritten or Printed form then they have to consider such document or information valid if it is in the electronic form and can be used for future references.
The e-contract takes its legal authority from section 10A of the IT act. It says that “Where the formation of the contract, offer and acceptance of the contract, as the case may be, are expressed in electronic form, such contract shall not be deemed unenforceable mere on the ground that it was created electronically.” It means the E-electronic contracts, which follow the essentials of a valid contract and are made electronically, shall be enforceable by law.
Section 10A of the IT Act validates the E-Contract by saying that any contract can’t be declared void just because it uses an electronic means to create it. If in the contract formation the communication of proposals, the acceptance of proposals, the revocation of proposals and acceptances, either of these is communicated in an electronic form as the case may be, are expressed in electronic form or using an electronic record then it’s a valid contract.
The majority of state stamp laws do not specifically include electronic records within their ambit, but some state stamp duty laws do recognize electronic records within the purview of instrument. For example, Section 2(l) of the Maharashtra Stamp Act, 1958 specifically refers to electronic records in the definition of the term instrument.
Section 3 of the Evidence Act, 1872, says that all documents including electronic records produced for the inspection of the court. Section 65B of the Evidence Act provides that any information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer shall be deemed to be also a document and shall be admissible in any proceedings, without further proof or production of the original, as evidence of any contents of the original or any fact stated therein of which direct evidence would be admissible.
Further, Section 47A of the Evidence Act says that when the Court has to form an opinion as to the electronic signature of any person, the opinion of the Certifying Authority which has issued the electronic Signature Certificate is a relevant fact, and Section 85B of the Evidence Act stipulates that unless the contrary is proved, the Court shall presume that:
- the secure electronic record has not been altered since the specific point of time to which the secure status relates;
- the secure digital signature is affixed by the subscriber to sign or approve the electronic record.
ACCEPTANCE OF E CONTRACT
When an offer or a proposal is sent by one person to another through an electronic mode, the acceptance of an offer or a proposal must be shown through any electronic mode or by clicking on the button ‘I Agree’ or ‘I Accept etc.
Section 12 of the IT Act 2000 deals with the acknowledgment of the electronic records, now the acknowledgment of acceptance of the E-Contract is also kind of an electronic record so this section helps us in understanding the procedure of acceptance of E-Contract.
Section 12 of the IT Act 2000 says that the acknowledgment of the receipt of acceptance but it hasn’t mentioned any specific mode by which the acknowledgment of the acceptance should be sent, the party can send the acknowledgment of the acceptance of the through any mode they prefer.
Further Section 12 of the IT Act 2000 says that acceptance will not be considered valid if the acknowledgment of acceptance of the offer is not received by the party who made the offer.
If the party receiving the offer is failed to give the acknowledgment within a reasonable time, then the party who initiated the offer may give notice to the other party, that he has not received an acknowledgment and again provides a reasonable time for the receipt of acknowledgment. Even then also the other party is failed to provide the acknowledgment then the party who offers the contract can withdraw the contract.
TYPES OF E-CONTRACTS
While using any website or any software, we are very familiar with the “I agree” phase, and we press the button without thinking twice. However simple it may appear; it may land us in serious trouble as it gives rise to a legally enforceable valid contract. This type of contract can be legally enforced against the user.
Click-wrap agreements are generally referred to as those agreements or long blocks which nobody reads, these blocks contain terms and conditions of the agreement. But it happens many times that we just click on I agree and continue to the next page.
After clicking on the “I agree” button, it means we accepted all written terms and conditions of the agreement. Such types of agreements are less negotiable and the user has to accept this if he really wants to use that software or any other thing related to this agreement.
For example, you have seen two options: either pay or back while sending the money. Or, while installing software
The terms of services, privacy policies, copyright policies and non-disclosure policies are commonly used for the click-wrap agreement. Since it is a convenient way with minimal hassles to enter into a contract, it is gaining a lot of popularity nowadays.
Structure of Click Wrap Agreement
A click-wrap agreement is normally provided in a check box wherein the user is asked to agree to terms of services and other information asked by the website or the software concerned. However, sometimes, for dual confirmation, the user had to press the agree button in addition to marking the check box.
Attributes of Click Wrap Agreement
These agreements are non-porous i.e., there is no other way to move ahead without clicking the “I agree” button. In this type of contract, the acceptance is very clear as the user will either accept or reject the offer. On the screen, the user should be informed that this is an enforceable contract and a binding on him for his action. The terms and conditions of the agreement shall be in a readable font with sufficient visibility. All the terms and conditions of the agreement shall be consistent with Section 10 of the Indian Contract Act, 1872.The information fed by the user is generally retained by the consumer to avoid any future dispute or litigation.
Case Laws on Click Wrap Agreement
Long v. Provide Commerce, Inc. (2016)
The company was running a flower business through their website named Proflowers.com. The plaintiff purchased a flower arrangement from the website, which was advertised as a “completed assembled kit”. The feature of this item was that the item will be delivered as a “do-it-yourself” kit and the customer had to assemble it accordingly.
When the plaintiff received the arrangement, he claimed that the company had defrauded him and sued the defendant company. He claimed that though the terms and conditions were mentioned on the website, the user was not provided with a chance to go through them.
The court decided the case in the favour of the plaintiff with the reasoning that in the whole order making procedure, there was no such instance when these terms and conditions appeared on the screen. There was an issue of accessibility and the consumer shall be compensated for the same.
The Hotmail Corporation vs. Van $ Money Pie Inc.
It was one of the first cases in which the validity of the Click Wrap Agreement was upheld by the court. The plaintiff (Hotmail) alleged that the consumer has violated the terms of the agreement as the messages and e-mails were altered after submitting them once. The defendant was also accused of violating the Computer Fraud and Abuse Act, breach of contract, fraud, misrepresentation, etc.
The court after going through the terms and conditions of the agreement clearly held that it is a valid and enforceable agreement in the eyes of the law. Since the customer has violated them, he is liable to pay compensation.
For example, you have seen two options either pay or back while sending the money. Or, while installing software.
Shrink-wrap agreements are mostly related to computer software. The software is mostly distributed in CD-ROMs. When the licensing software is opened by the person for his use, it means he accepts the terms and conditions of that software company.
The term “shrink-wrap” refers to the plastic wrapping which covers the software boxes. This wrapping can be understood as the legally enforceable terms and conditions. As soon as the user removes that wrapping, he is entering into a contract. In simple words, a shrink-wrap agreement is a boilerplate or license agreement containing some terms and conditions packaged with the product. The customer automatically gives his consent when he uses the product.
PC programming organizations are mainly dependent upon this type of agreement. It is a sort of unsigned undertaking given by the customer while submitting to the terms and conditions.
Following are the terms and conditions which can be made through the Shrink-wrap agreements-
- Fees and payments
- Limitations of liability
The legality of the Shrink Wrap agreement
The validity of the shrink-wrap agreement came into question in the case ProCd Inc vs. Zeidenberg. In this case, the manufacturer has included a shrink license in its packaged software. The customer purchased the software but didn’t follow the license restricting its commercial usage. To enforce the license, the appellant filed for an injunction. The court denied the injunction while stating that though the terms and conditions are not explicitly provided, the license was to be treated as an ordinary contract. Thus, it is enforceable.
Browse-wrap agreements are probably seen on many websites while searching or reading anything on websites. They are some kinds of pop-ups that ask you to click “OK” or “I AGREE” though, you can use the website with or without clicking there.
In this agreement, there is a hyperlink or website containing the terms and conditions over the screen of the website. When the person agrees to the above-stated terms and conditions, he can access the material available and download the product available therein.
For instance- Electronic commerce websites such as Amazon and Paytm provide a disclaimer while entering their website stating that by accessing or browsing the website, the user has consented to all the terms and conditions. The terms and conditions clause are hyperlinked. However, it is also observed that sometimes the browse wrap clause is hidden or not explicitly shown on the website page. It may lead to conflict in the future.
The legality of Browse Wrap Agreements
The legality of the Browse wrap agreement is not very clear. Unlike the click-wrap agreement, this type of agreement doesn’t ask for any explicit consent from the user. So, the court presumed that it is not binding or enforceable against the customer. The Burden of proof lies on the website owner to demonstrate that the user has complete and actual knowledge of all the terms and conditions mentioned therein.
JURISDICTION OF COURT IN E-CONTRACTS
Jurisdiction is an extent of the power of the court to hear a case i.e., to take cognizance of the case and to make legal decisions and judgements. It is the legal authority of the court to resolve the dispute. E-contract involves instant communication of offer and acceptance. Wherein the contract is complete at the end of originator where acceptance is received.
The Supreme Court of India in case of Bhagwandas Goverdhandas Kedia vs. Girdhari Lal Parshottamdas & Co30 held that “at the place of proposer where the acceptance is received shall have the jurisdiction for enforcement of contracts entered into by means of computer internet.”
In India, the Code of Civil Procedure, 1908 provides the manner of determining the jurisdiction of Civil Courts, which is based on the place of residence and the place where the cause of action arises. Generally, the contracts insert a specific clause to determine the territorial jurisdiction to resolve the dispute arising under such contracts.
An E-contract crosses the jurisdictional boundaries as it can be created from any place in the globe. This raises the question of jurisdiction of the court in case of any dispute between the parties to E-contracts.
If there is any dispute among the parties belong to the same jurisdiction related to E-contract, then such dispute can be resolved similar to the traditional contract disputes. However, the challenges would arise when the parties to E-contract are belong to the different countries. Jurisdictional problem in E-contract has been resolved under IT Act in India. Specifically, Section 13 of the IT Act deals with the time and place of despatch and receipt of an electronic record and electronic contracts.
the E-commerce grow exponentially so the use of E-contract increasing day by day. Online businesses spread across the global markets and reach to the millions of consumers. Eventually, E-contract becomes essential part to govern under statutory law to avoid any uncertain disputes in online transactions. The E-contract in India govern under many legislations to validate it. Indian Courts also upheld the validity and passed the judgements in the cases related to jurisdiction of E-contract; it becomes helpful to solve the disputes related to these issues. There is a need to cover all the aspects of E-contracts in a single, comprehensive, and updated legislation to the protection of consumers and traders in E-commerce and for enforcement of E-contracts.