A contract means an agreement between two or more parties that is enforceable by law. An E-contract is a type of contract between two individuals or between two electronic agents. E-contract is specially used for e-commerce purposes. In India, the Indian Contract Act, 1872 deals with contracts that also include e-contract. This article discussed the requirement of e-contract what are the types of e-contract. This article also gives a fair and brief idea about the legal provisions and what are the different legal issues related to e-contract.
The electronic contract is generally known as E-contract is a kind of contract, between two or more individuals, or between an individual and an electronic agent (i.e computer programmer), or between two electronic agents. In India, E-contracts are governed by the Indian Contract Act, 1872. E-contract is those contracts that are not based on paperwork but are electronic in nature. There are two parties involved in E-contract, one is the Originator, who sends, creates, stores any electronic message to be sent. Another one is the Addressee, who is intended by the originator to get the electronic message.
NATURE OF E-CONTRACT
- Parties do not meet physically.
- No handwritten signature is required, but nowadays digital signatures are necessary.
- Electronic documents work as a shred of evidence in court.
- Mainly there are three methods for E-contract -: i) E-Mail) worldwide web (WWW) iii) cyber contract
ESSENTIAL OF E-CONTRACT[i]
As another contact, an E-contract has the following essentials:-
- One party’s offer and the other party’s acceptance.
- There must have a lawful consideration.
- There must be a lawful object. It must not be illegal or violate public policy.
- All the parties forming the contract should be legally competent.
- Parties must have free consent to the contract.
- The contract must be possible to perform.
TYPES OF E-CONTRACT[ii]
Mainly there two types of e-contract namely:-
- Shrinkwrap contract. Shrinkwrap agreements are those contract which can only be read and accepted by the party after the opening of a particular product.
- Clickwrap contract. In this type of contract, the user has to click on either accept or decline to accept the agreement.
LEGAL FRAMEWORK OF E-CONTRACT
With the developing significance and estimation of E-contract in India and around the world, the demand for a new legal blueprint for it is increasing. Till now in India, there is no particular law guaranteeing the purchasers and dealers of products and progress over the online-based business.[iii]“However, a few laws are acting in unification to direct the business exchanges of E-contract. Such as:
- Indian Contract Act,1872
- Buyer Protection Act,1986
- Data Technology Act,2000”
Earlier, there was no specific law to control the middle man, for instance, to check on distributors and delivery agents to protect the items or whether service is properly transported or not. However, the government has newly made the Information Technology (Intermediaries Guidelines) Rules 2011[iv] to put a check on it.
The Proclamation of the Payment and Settlement System regulation 2007 along with Payment and settlement System regulations, 2008, the government puts a check on the primary process of the payment for the e-commerce. The Reserve Bank of India also issued some guidelines on the payments process.
The authority of E-contract is set up under the Information Technology Act, 2000 (IT Act, 2000). It clarifies the technique of acceptance of the offer. IT Act, 2000 also provides provisions for the cancellation and acceptance of the offer. However, any transaction done through the internet, are always dubious. Several international deals are being conducted without guarding customer’s interest or privacy.
And there is no such law to put a check on this matter. To make sure about the identity of the transacting parties, the government has made digital signatures obligatory in E-contract transactions. The IT Act, 2000, provides the rules for digital signature, their issues, and their corroboration. As a whole, this act safeguards the trust between the parties, provides verification of identities, and also helps in preventing cybercrimes, and secure cybersecurity.
However, the current laws concerning e-contract and their connected tasks are not appropriately fulfilling the requirements. Engendering laws are providing chaos in the effortless methods of e-contract procurement. Further, the current laws are notable on highlights of e-contract.
LEGAL ISSUES RELATED TO E-CONTRACT[v]
The main issue of an E-contract is to decide the jurisdiction, as there are several parties in various parts of the world, having a virtual nexus with each other. According to Civil Procedure Code, 1908, “a party may choose the jurisdiction either based on the cause of action or the place of business of the defendant.” Similarly, section 13 of the Information Technology Act also provides that “an electronic record is deemed to be dispatched or received is where the originator or the addressee has his/her place of business.”
- Capacity to contract
According to the Indian Contract Act, 1872, a minor, a lunatic, a person of unsound mind can not entry into a contract. In E-contract it is difficult to know whether the party or parties involved in the transaction are competent to contract or not.
- Issue of consent
Giving consent by an individual means there is the absence of compulsion, fabrication, undue influence, or cheating. Free consent gets narrower in E-contract as there is no physical appearance of the parties, it becomes difficult to know whether the consent given is free consent or not.
- Probability of loss of personal data
In E-contract there is a possibility of misuse of personal information. The service providers must maintain security procedures so that there is no misuse of such personal information.
Today the progress in the fields of programming and information technology has brought an incredible change in the standard of living of people. The correspondence isn’t any more bound as a result of the restrictions of geography and time. Also, this is where the online business offers the flexibleness to business as far as spot, time, distance is concerned. With the improvement of online business, we can see snappy progress in the utility of e-contracts.
E-contracts are prepared to support the planning of business estimates happening at various organizations including a composite of advancements, cycles, and business approaches that manages the trading of data. The e-contracts have their own advantages and negative imprints. From one viewpoint they decline costs, reduce time, append customer feedback and enhance the organization’s productivity by lessening paperwork, in a like manner extending robotization.
Simultaneously, e-contract doesn’t have certain plans like – There is nothing to choose the objective of the get together to go into a really binding arrangement. With this, E-trade is needed to enhance the benefit of organizations by giving extraordinary induction to an online overall business community with numerous customers and an immense number of things and organizations.
This article is written by Mr. Golak Bihari Mahana, a 6th semester B.A LL.B Student with a specialization in TAXATION at KIIT School of Law, KIIT University, Bhubaneswar, Odisha.
[ii] Article “E-Contract”, Indian National Bar Association.
[iii] Article “The Future of E-Commerce in India”, LAW WIRE
[iv] Information Technology (Intermediaries Guidelines) Rules 2011 of India.
[v] Article “issues involved on E-Contract”, Academic