INTRODUCTION
In the 21st century, there is a strong presence of technology for us to achieve our everyday activities. Due to the current situation of the covid-19 pandemic, the demand for these technologies is very high. From working in an office to working from home or from having face-to-face classes to having online classes, we as a society have developed and started depending more on these technologies. To adapt to this situation, e-contracts were introduced.
With the major advancement in the technology industry, communication is not limited to just an area. As a result, electronic commerce allows for greater flexibility in the business environment in terms of location, time, space, distance, and money. So the introduction of e-contracts has made it easier for 2 parties to enter into a contract.
WHAT IS A CONTRACT?
According to section 2(h) of the Indian Contract Act, a contract is an agreement enforceable by the law.
So this agreement is formed between 2 parties which contains any obligations or promise that is to be fulfilled by this party. If the promise is not fulfilled, then the contract is breached. Contract law is the result of industrial civilization.
For the contract to be valid, there are certain essentials that are to be fulfilled which are mentioned in section 10 of the Indian Contract Act, i.e, the existence of an offer, acceptance of this offer, and consideration is must for the performance of a promise, free consent, and certainty.
WHAT IS AN E-CONTRACT?
An e-contract is a contract in which the offer, acceptance, and consideration are all done electronically. All the essentials of a valid contract are applied to an electronic contract. We can now make contacts all over the world thanks to e-contracts. E-contracts have provided a big advantage to sellers to contact their consumers without even any help from agents or middlemen. These contracts can also be used to form a contract between 2 parties who live very far from each other. Individuals can easily create contracts and fulfill their requirements electronically. E-contracts not only save time and accelerate the process, but they also benefit and make it simple for parties to organize and maintain contract documents.
SECTION 10A OF THE INFORMATION TECHNOLOGY ACT
Section 10A of the IT Act provides legal authority for the e-contract. It states that “Where, in the course of forming a contract, the communication of proposals, acceptance of proposals, and revocation of proposals and acceptances, as the case may be, are expressed in electronic form or through the use of electronic records, such contract shall not be deemed unenforceable solely because such electronic form or means were used for that purpose.”
Section 4 of the IT Act allows electronic records to be legally recognized, declaring that if any legislation requires information or matter to be in a written or printed form, such need is deemed met if the information or matter is available and accessible in an electronic form.
E-CONTRACTS UNDER THE EVIDENCE ACT, 1872
Under The Evidence Act, 1872, an e-contract carries the same legal validity as a paper-based agreement. In section 3 of The Evidence Act, the term "evidence" refers to any papers, including electronic data, presented for examination by the Court as documentary evidence. Section 67 of The Evidence Act, applies to loan and financing documents when, in addition to a secure electronic signature, proof of the subscriber's electronic signature is considered necessary, which can be accomplished through the subscriber's own testimony.
TYPES OF E-CONTRACT
There are different types of E-Contract:
Click agreements: click agreement or also known as the web-wrap agreement is a mainly web-based contract that requires the consent or the approval of the user the “I Accept,” or “OK” button. It is important that the user must read the terms and conditions, and accept it for the usage of a specific program or software. Those who do not agree with the terms and conditions will not be able to use or purchase the product.
In the case of The Hotmail Corporation vs. Van $ Money Pie Inc, which is one of the first cases in which The Click Wrap Agreement's validity was recognized by the court. The plaintiff (Hotmail) claimed that the consumer violated the terms of the agreement by altering the messages and e-mails after submitting them once. The defendant was also charged with Computer Fraud and Abuse Act violations, breach of contract, fraud, misrepresentation, and other offenses.
After reviewing the terms and conditions of the agreement, the court concluded that it is a valid and enforceable agreement under the law. Because the customer violated them, he must pay compensation.
Shrink-wrap agreements: usually shrink-wrap agreements are introduced as a licensing agreement for software purchases, the majority of software is distributed on CD-ROMs. When a person opens the licensing software for his own use, he is agreeing to the terms and conditions of the software company.
Browse-wrap agreements: Browse-wrap agreements are most likely seen on several websites when searching for or reading anything on the internet. They are pop-ups that ask you to click "OK" or "I AGREE," but you can use the webpage without having to click there.
Emails: emails are usually something that is not expected to be seen in the list of electronic contracts but it has been ruled in several cases to constitute a legally binding contract. The Supreme Court of India upheld the validity of an unregistered and unsigned contract discussed via email.
In the case of Trimex International FZE vs. Vedanta Aluminium Limited, India 2010, confirming the enforceability of the contract via email.
Emails can also be electronically signed, which is an important factor in determining when an agreement becomes a contract.
THE PROS OF E-CONTRACT
E-contracts have been proven to be beneficial in so many ways, especially for business transactions, for example, when you work with international partners (and paper contracts would indeed be time-consuming and costly because of the geographical distance) or when you need to sign a large number of new contracts on a regular basis. Some of the benefits of e-contracts are:
1. Unlike a traditional contract, an e-contract is not time-consuming: forming and executing a traditional contract is said to be a very time-consuming process which may lead to canceling a job proposal or sales negotiation because it takes more time for your prospective client to receive, interpret, consider, and sign a legally binding contract.
E-contracts overcome this issue by enabling your prospects to instantly view and sign a proposal on a computer, smartphone, or tablet, or on your e-commerce site. Sometimes, they may only need to click an "I agree" button to complete the transaction.
2. E- Contracts are easier to use: in a traditional contract, parties must physically meet to inform each other and any middlemen they hire about the contract's terms and conditions, whereas in E-contracts, there are ready-to-use templates for numerous types of contracts. Parties simply need to fill in the basic details such as name, address, terms and conditions, and so on in these templates. When both parties digitally sign the contract, it is considered completed.
3. Elimination of errors: in a traditional contract, the contract is written by a man which may lead to a high chance of making many errors and mistakes. But in E-Contracts, there are templates available that have been verified by lawyers and contain all of the necessary information that eliminates the possibility of any contract errors.
4. Low transaction cost: In paper contracts, middlemen are involved, which raises the cost of contract execution. Not only are middlemen involved, but so are labor and material costs such as paper, printing, and so on. Whereas in E-Contract, Middlemen, as well as the costs of paper, printing, and electricity, are eliminated in E-contracts. Using e-contracts, provides the user or parties with low transaction costs.
5. Enhances security: In a traditional contract, there is a high chance of the agreement being tampered like signatures being forged, etc. whereas in E-Contract, digital signatures are attached to digital contracts. This prevents any tampering with the contracts. Even if they try, the tampering will be detected and recorded.
THE CONS OF E-CONTRACT
Even though E-Contract is one of the best concepts introduced in the business world, it still contains some disadvantages, which are mentioned below:
1. Unassured security: there’s no proper assurance that the vendors would provide protection for business deals, as a result, you should exercise extreme caution when dealing with potentially dangerous electronic software, which can be a disadvantage of electronic signatures.
2. Reliance on proprietary software: One disadvantage of electronic signatures is the reliance on proprietary software, which may be a concern for businesses that do not want to contract with other vendors.
3. Restricted storage: one of the disadvantages of E-Contract is that some of the electronics companies you sign with have limited storage, making it difficult for them to store all of the documents on their servers. This makes these businesses depend on other sources but many are concerned about the security of customer information.
CONCLUSION
E-Contracts have made a big impact globally, E-contracts are becoming more popular as development and e-commerce expand, particularly in India. E-Contract includes many advantages like saving cost, reducing time, enhancing security and removing any sort of human error, etc.
However, these E-Contracts have many disadvantages. To determine the legality of E-Contracts in India, there is no specific provision that validates the E-contract or a rule that ultimately decides the acceptance of the contract, location of the business, Jurisdiction of court, and so on. Even though the Indian Contract Act of 1872 exists, however, these laws are not drafted with the idea of e-contracts in mind.
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1. Yash Thakur‘E-Contracts, Types of E-contracts’ (legal study material. September 30,2021) <https://legalstudymaterial.com/e-contracts/> accessed 25 august 2022
2. Information Technology Act, 2000, section 10A
3. Information Technology Act, 2000, section 4
4. The Evidence Act, 1872, section 3
5. The Hotmail Corporation vs. Van $ Money Pie Inc, 1998 WL 388389 (N.D.Cal.)
6. Trimex International FZE vs. Vedanta Aluminium Limited, India 2010 (1) SCALE 574
This article is written by Anjoom Anver of Amity University, Dubai.
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