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EADigest > Contract law

Validity-Of-E-Contracts-In-India

4 mons ago

Validity Of E-Contracts In India.

Author: EA Digest
Category : Contract law

We live in the digital age today where everything we need is available online at the click of a button from the convenience of our homes. We often click the box of acceptance to agree with the terms and conditions given on a website, this is, in fact, is a type of contract. So what exactly is the nature of these contracts and what legal ground they hold? Read on to know more.

What is an E-contract?

The Indian Contract Act, 1872, defines a contract as an agreement which is enforceable by law. E-contracts or electronic contracts are nothing but contracts which are entered into through electronic means, where two or more parties to the contract are far away from each other. With the growing use of technology and globalisation, the e-contracts are on the rise and here to stay. Let us now study them further in detail.

Types of E-Contracts

The e-contracts are divided into three major parts based on the ways by which the enforcement works. These three parts are:-

  1. Browse Wrap Contract- These are the types of contract which are binding on the user when they visit the website. The website carries the details regarding this feature in fine print. The classic example of such e-contracts are the e-commerce websites Flipkart and Amazon.
  2. Shrink Wrap Contract- Shrink wrap contracts are the contracts which are licence agreements. In this case, the terms and conditions are enforced by way of a manual which generally accompanies the product. The classic example of these contracts are agreements that are delivered in the form of a manual when we purchase software products.
  3. Click Wrap Contract- Click wrap contracts are the agreements where the end user is required to give his consent by clicking the ‘ok’ or ‘I agree’ button. It can be often observed that unless we expressly provide consent by clicking on ‘I agree’ these contracts are not finalised and the transaction fails. Once the consent is given the terms of the agreement cannot be changed.

 

Formation of E-contracts

As per the Indian Contract Act, 1872, e-contracts have the lawful status if they follow the common contractual rule. The three essential elements that form a valid contract are a lawful object, free consent of the parties and a valid consideration. These are the same rules that are applied to e-contracts as well. Since a contract can be written, verbal or a combination of both, there is no separate legislation incorporated for e-contracts. E-contracts are generally formed by way of emails and telephones and are similar to commercial paper contracts.

In the case of Trimex International FZE Ltd. Dubai v. Vedanta Aluminium Ltd., India (Arbitration Petition No. 10 OF 2009), an offer was made by the petitioner through e-mail, for the supply of Bauxite to the respondent on October 15, 2007. Several emails were then exchanged between the two companies and thereafter acceptance was conveyed by the respondent through e-mail on October 16, 2007. The acceptance mail was read by petitioner at 3:06 PM on 16.10.2007. The Supreme Court held that acceptance conveyed by the respondent satisfied the requirements of Section 4 of Indian Contract Act, 1872 and irrevocable contract was concluded when the acceptance came to the knowledge of proposer/petitioner i.e. at 3:06 PM on 16.10.2007.

 

Validity of E-Contracts

Under Section 10A of the Information Technology Act, 2000, e-contracts are valid and enforceable. The section states 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."

The Information Technology Act, 2000, gives clear guidelines for the procedural, administrative and provisional regulations related to e-contracts. Moreover, famous cases in India and worldwide prove that consenting by clicking on ‘I Agree’ and entering into the user agreement makes it a valid contract and legally enforceable.

Evidentiary value of E-Contracts

Section 65-B of the Indian Evidence Act, 1872, lays down the procedure for furnishing electronic documents as evidence. The section states that any information contained in an electronic record produced by a computer in printed, stored or copied form shall be deemed to be a document and it can be admissible as evidence in any proceeding without further proof of the original. However, the admissibility of the electronic record is subject to various conditions prescribed under the section.

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