Contracts have become an inextricable aspect of our daily lives. We are regulated by contracts in our everyday lives, some of which we are aware of and some of which we are unaware of, whether we are purchasing a commodity from the market or renting a cab. In today’s world, an e-contract can be anything from purchasing a product online to signing an international treaty via the internet. In an e-contract, the offer, invitation to offer, counteroffer, acceptance, and other communications are all done electronically, and the result is an agreement. We all know what contracts are but what exactly is an e-contract.
When parties enter into contracts with each other and engage face to face, it is significantly easier to avoid mistakes than when they are separated and contract with each other using the internet as a medium. Electronic contracts are those that are made through e-commerce and do not need the parties to meet in person. These contracts are essentially the same as paper-based commercial contracts, with the exception that the business transactions are undertaken and closed electronically. The growth of e-commerce enterprises throughout the world has been propelled by technological advancements and globalization.1
Kinds of E-Contracts
- Browse Wrap Agreement
- Shrink Wrap Contracts
These contracts are the licencing agreements, which impose the agreement’s terms and conditions on the contractual parties and are usually seen on the packaging or in the manuals that come with the software products that consumers purchase.
- Click Wrap Agreements
Those agreements require the person to click “ok” or “I agree” to agree to the terms and conditions, which are known as end-person settlements and regulate the licenced use of the software application. There are certain types of examination that ensure that the terms of the agreement are binding on the contractual parties.
Execution of E-Contracts
Various legislation, including the Indian Technology Act of 2000 and the Indian Evidence Act of 1872, have contributed to the popularity and legality of E-Contracts. The I.T. Act specifies the attribution, acknowledgment, and transmission of digital statistics, as well as safe electronic procedures. The IT Act acknowledges the agreement’s core capabilities, which include proposal communication, proposal attractiveness, proposal revocation, and acceptance, as the case may be, which will be conveyed either in digital form or by means of a digital record. Furthermore, under the Indian Evidence Act, a settlement’s popularity is determined by the time period “record,” which includes any records included in a digital record that is delineated on paper. Furthermore, the Indian Evidence Act recognizes the popularity of a settlement by defining “record” as any records contained in a digital record that is sketched on paper, stored, recorded, or replicated on optical or magnetic media created by a computer. Such facts will be acceptable in any procedures, with no similarly proof or production of the authentic document before the concerned authorities, and shall be appeared as proof of any content of the authentic or any reality described therein of which direct evidence would be admissible. 2
In India, the validity of e-contracts is debatable
The Indian Contract Act of 1872 acknowledged customary agreements, which are created by the voluntary assent of contracting parties who are able to contract for a lawful consideration with a legitimate intent and are not specifically ruled void. As a result, there may be no provision in this Act prohibiting the enforceability of electronic agreements as long as they contain the essential elements of a legitimate settlement. The ability to freely agree is one of the most important aspects of a legal contract. On E-contracts, there is frequently no room for discussion.3
Issues and Challenges of an e-contract
- Capacity to Contract
It’s important to make sure that the people who are signing the electronic “contract” have the legal authority and capacity to do so. Often, a contract is entered into by an anonymous individual. The service provider has no way of knowing if the person who clicked the “I Agree” text or symbol is legally capable of entering into a contract. According to the Indian Contract Act, 1872, one of the essential requirements of a legal contract is the capacity of the parties. Parties’ competence is addressed under sections 10, 11, and 12 of the Act. Contracts put upon by those who are unable to contract are null and void. There may be a circumstance where infants who are not old enough to engage in a contract are involved. Infants who are not old enough to enter into a contract with the service provider may enter into an online contract with the service provider by clicking on the “I Agree” text or symbol.
- Free Consent
Free consent is a legal need for every contract to be legitimate. There is no room for bargaining with online contracts. For the user, this is a significant drawback. However, the user always has the choice to “take it or leave it” in a transaction. The Supreme Court stated in the case of LIC of India vs Consumer Education and Research Centre that “there would be no reason for a weaker party to bargain as to presume equal negotiating strength under dotted line contracts.” In terms of the dotted line contract, he must either accept or reject the service or goods. Either he accepts the unreasonable or unjust conditions or he refuses to use the service in the future.” As a result, it may be stated that the user should exercise caution while granting his agreement in order to avoid problems.
Decision on the Applicable Law
The law of the forum, or the law of the transaction, or the occurrence that gave rise to the litigation in the first place, are the two options under Indian law for applying personal jurisdiction, i.e., the law of the forum, or the law of the transaction, or the occurrence that gave rise to the litigation in the first place. The courts do have the authority to select the applicable law by finding the system of law with which the transaction has the strongest and most direct link. There is no rule against the application of foreign law or the subjecting of an Indian party to a foreign jurisdiction. The emphasis is on choosing the right law. 4
Decision on the Court Jurisdiction
E-contracts provide for a wide range of causes of action to arise in a variety of geographical places. This might result in cases being filed in many locations. Defending litigation in several places might be both costly and time-consuming. As a result, all online contracts should include a forum selection provision. Limiting the vulnerability of online service providers to a single jurisdiction makes strong legal sense. As a result, the online service provider has no alternative but to submit to a single set of rules and related laws. The user has no alternative but to accept the service provider’s Standard Terms and Conditions by clicking the “I Agree”, “I Accept” or “Yes” text or button onscreen.
The mode of an e-contract is the result of a revolutionary shift in changing global technical know-how, but it has also been discovered that the laws governing such e-contracts are ambiguous in nature and must be dynamic in order to accommodate the current changing scenarios of e-commerce, including an e-contract. In India, the law covers all aspects of e contracting. However, technological advancements will provide new obstacles for legislators and government agencies. To stay up with changing technology, laws must be updated and improved on a regular basis.
- Sethuram Sundaram, E-contracts in India: The legal framework, issues, and challenges, Researchgate, 2018.
- Nikhil Nair, E-contracts, Indian National Baar Association.
- S.R. Subaashini and Shaji.M, Legal issues arising in E-contracts in India: An analysis, International journal of pure and applied mathematics, 2017.
- K. Prethev and Aswathy Rajan, A critical analysis of E-contracts in India and Enforceability with respect to Sec-65 of India Evidence Act, International journal of pure and applied mathematics, 2018.
Written by Muskan Patidar student at Kirit P. Mehta School of law (NMIMS), Mumbai.