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E Contracts

Posted by : Amit Kumar on | Jun 18,2015

E-Contracts   Introduction   Contracts have become a part and parcel of our lives. Be it buying a product from the market or hiring a taxi, we are governed by contracts in our daily lives of which some we know and some we unknowingly become a part of. In today’s times, everything from shopping a product online to the signing of an international treaty over the internet constitutes an e-contract. In an e contract the offer, invitation to offer, counter offer or acceptance etc. are all by electronic means and such a communication leads to an agreement. Before knowing anything about e- contracts, one should know what an actual contract is and what its essentials.   Contracts   The Indian Contract Act, 1872 defines contract as an agreement between two or more parties for the buying/selling of goods or services for a valid consideration.The essentials to a valid contract are also some of the essentials to an e-contract which are:   1. An offer and acceptance has to be made. 2. There should be a lawful consideration. 3. There should be a free consent between the parties to a contract. 4. The object of the agreement should be lawful. 5. Parties must be competent enough to contract. 6. The contract must be enforceable by law.
Recognition of E-contracts   Section 10 of the IT Act, 2008 gives legislative authority to E contracts. It says that, “Where in a contract formation, the communication of proposals, the acceptance of proposals, the revocation of proposals and acceptances, as the case may be, are expressed in electronic form 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 purpose.”   For any contract to be valid, signatures from both the parties are required. In the case of an e-contract, an electronic signature comes to play. An electronic signature is defined by the Information Technology Act, section 2(p) as the authentication of any electronic record by a subscriber by means of the electronic technique specified in the second schedule and it includes a digital signature. Further, section 5 of the Information Technology Act says that where any law requires that information or any other matter be authenticated by affixing a signature or any document signed by or bear the signature of any person, then such requirement shall be deemed to have been satisfied. Electronic signature serves the same purpose as a handwritten signature. Section 85 c of The Indian Evidence Act states that as far as a digital signature is concerned, the courts presume that the information provided in that certificate is true and correct.   E contracts are contracts that are not paper based and are electronic in nature. These contracts are generally made for speedy entering into a contract or for the convenience of the parties. They are best made between parties who live in 2 different parts of the world and have to enter into an agreement. A digital signature is all they need to enter into a contract as a party even though both the parties to the contract are sitting miles away from each other. In this proliferating world, it is the most convenient method to enter into a contract without being physically exhausted. The 2 main parties to an e-contract are - The Originator and the Addressee.   Originator according to the IT Act, 2008 is a person who sends, generates, stores or transmits any electronic message to be sent, generated, stored or transmitted to any other person and does not include an Intermediary.( In the present context, the person who initiates the process of making an e-contract to send it to the other party.)   An Addressee according to the IT Act, 2008 is a person who is intended by the originator to receive the electronic record but does not include any Intermediary.(In the present context, the party which receives the e-contract made by the other party.)   E contracts can be broadly categorized into :   1. Shrink Wrap Agreements 2. Click Wrap Agreements   Shrink Wrap agreements are those which can only be read and accepted by the consumer after the opening of a particular product. The term is described after the shrink wrap plastic wrapping that is used to cover software or other boxes. Installing software from a CD into your PC is an example of a shrink wrap agreement.   Click Wrap agreements are mostly found in the software installation process. The user has to click either ‘Accept’ or ‘Decline’ to accept or reject the agreement respectively. These agreements lack a certain amount of bargain power. Choosing to make payments online or choosing to reject it is an example of using a click wrap agreement.   Admission of e-contractsin courts   The Delhi High Court in the case of Societe Des Products Nestle S.A and Anr Vs Essar Industries and Ors paved way for the immediate introduction of Section 65 A and 65 B in the Indian Evidence Act, 1872 relating to the admissibility of the computer generated in a practical way to eliminate the challenges to electronic evidence. According to section 65 A, the content of the electronic records can be proved by parties in accordance with section 65 B of the Indian Evidence Act, 1872. Also, Delhi High Court in the case of State of Delhi Vs Mohd. Afzal and Others held that,” Electronic records are admissible as evidence.”   Conclusion   The mode of an e-contract is the product of a revolutionary change in the changing global technical know-hows but it also has been found that the laws governing such e-contracts are vague in nature and they need to be dynamic in order to accept the present changing scenarios of e-commerce including an e-contract.