Insights & Research
Adv Hashim Wafa
Partner- Cyber Law & IPR Specialist
In the time of social distancing and virtual business meetings, electronic contracts (e-contracts) are gaining momentum as an alternative to the conventional paper-based contracts. Right from ordering food from Zomato to booking flight tickets online via MakeMyTrip, innumerable things in our day to day lives are governed by e-contracts. People from all walks of life are knowingly or unknowingly entering into e-contracts in everyday life. In this article, I would like to touch upon the legal aspects of e-contracts, its types, modes of e-contracts and their enforceability in India.
What is e-contract:
E-contracts are simply contracts that are not paper-based but rather in electronic form. In the digital age, the whole transaction can be completed in seconds, with both parties simply affixing their digital signatures or clicking to a hyperlink to an electronic copy of the contract. Hence e-contracts are born out of the need for speed, convenience, and efficiency. There is no need for delayed couriers and additional traveling costs in such a scenario. There were initial apprehensions amongst the legislatures to recognise and enforce this modern technology, but now many countries including India have enacted laws to recognise electronic contracts.
Legal framework for e-contracts in India:
In India, contracts are governed and based on The Indian Contract Act, 1872. It governs how the provisions in a contract are implemented and codify the effect of a breach of contractual provisions. E-contracts are also governed by the basic principles provided in the Contract Act. Globally, in 1996, the United Nations Commission on International Trade Law (UNCITRAL) adopted the Model Law on Electronic Commerce to bring uniformity in the law in different countries. Based on this, India enacted the Information Technology Act, 2000.
Section 10A of the Information Technology Act,2000 expressly provides for the validity of contracts formed through electronic means and 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.”
Essentials of an e-Contract:
The only essential requirement to validate an e-Contract is that it should comply with the necessary prerequisites provided under the Indian Contract Act, 1872. Which are:
Admissibility of e- agreements as evidence:
Under the Evidence Act, 1872, e-contracts has the same legal effect as a paper-based agreement. Section 3 of the Evidence Act defines “evidence” as “all documents including electronic records produced for the inspection of the court.” Section 65B(1) 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 of any fact stated therein of which direct evidence would be admissible”.
Specific Exclusions from e-contracts
In particular, the Information Technology Act 2000 excludes electronic transactions and agreement on the following documents:
How e-Contracts can be entered into:
E-Contracts can be entered into through various electronic modes such as e-mail, website forms, digitally signed document docu, and fax, etc.
Common Types of e-Contracts in e-commerce business.
In electronic commerce (e-commerce). Browse wrap, shrink wrap, and clickwrap are common types of agreements used by the e-commerce and service providers.
2. Shrink-wrap contracts: These are license agreements or other terms and conditions which can only be read and accepted by the consumer after opening the product. The term ‘shrink-wrap’ describes the plastic wrapping used to coat software boxes, though these contracts are not limited to the software industry.
3. Clickwrap agreement: A clickwrap agreement is mostly found as part of the installation process of software packages. It is also called a clickwrap license or "click-through" agreement. The term"clickwrap" derived from the use of "shrink wrap contracts" in boxed software purchases. Click-wrap agreements can be of the following types:
Upon rejection, the user can no longer use or purchase the product or service. A clickwrap contract in other words is a “take-it-or-leave-it” type of contract that lacks bargaining power. The terms of service or license may not always appear on the same webpage or window of the particular website, but they must always be accessible before acceptance.
Indian laws are not reluctant to the idea of e-contracts and the courts have consistently upheld the validity of e-contracts provided they satisfy the prerequisites of the Indian Contract Act. However, many aspects of an e-Contract, in particular, the requirements of signature, stamping, remain uncertain and confused among the general public that comes in the execution of e-contracts in regular business transactions. But It appears that the current crisis of COVID-19 and the new trend of digitalization will eventually force people into accepting contracts in electronic modes and our legal system has already set in motion the required laws for recognition and enforcement of such contracts. It would be safe to conclude that an era of e-contracts is going to take over the traditional mode of execution of a contract, either willingly or unwillingly in the coming years.
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