News By/Courtesy: Ritwik Guha Mustafi | 01 Apr 2020 9:59am IST

HIGHLIGHTS

  • Increase in the trend of e-contracts due to growth of e-commerce
  • E-contracts are mostly time-efficient and inexpensive
  • Jurisdiction, free consent, and identification of parties are major challenges

'The bargain that yeilds mutual satisfacton is the only one that is apt to be repeated'. As per sec. 2(h) of the Indian Contract Act, 1872, an agreement enforceable by law is a contract and this legally binding agreement governs the rights and duties of parties to the agreement [1]. The internet has revolutionised the exchange processes in the modern society. Due to the increase in commercial transactions via electronic means, the trend of electronic contracts (hereinafter e-contracts) is increasing. These contratcs assist people in formulating commercial contract policies in e-businesses and contain model contracts for sale of goods and services [2].

There are two broad types of e-contracts:-

a.) E-mail agreements- Clear intention of parties to enter into a legal relationship has to be indicated. Formalization of contract isn't necessary [3].

b.) Online agreements- Includes 3 sub-categories, namely Click-Wrap agreements (End user agreements, require an explicit manifestation of assent usually by clicking 'I Agree' icon next to the terms and conditions) [4], Shrink-Wrap agreements (License agreements through which terms and conditions are enforced upon the contracting parties) [5], and Browse-Wrap agreements (Explicit mutual consent isn't necessary, terms are usually accessible through hyperlink) [6].

The e-contracts have to clearly identify the contracting parties, time-period of validity, intention to create legal relationship, subject-matter of the contract, and e-signatures of the parties involved [7]. In the case of India, the statutes governing e-contracts are The Indian Contract Act of 1872, The Indian Evidence Act of 1872, and The Information Technology Act of 2000. 

Every e-contract has to be within the purview of a valid contract as mentioned in section 10 of Indian Contract Act which provides for essentials of a valid contract, namely free consent, competency of parties, lawful object, and not expressly declared to be void [8]. Sections 65-A and 65-B of the Indian Evidence Act enable the e-mails or other electronic communications forming a contract to be valid evidences in the eyes of law [9]. The Information Technology Act provides for the enfoceability of e-contracts (sec. 10), the determination of time and place for reciept and dispatch of electronic record (sec. 13), and digital signatures for verification of the electronic documents (sec. 3) [10]. 

The United Nations Commission on International Trade Laws adopted model laws on e-commerce and e-signatures in 1996. The European Union has its rules regarding e-contracts which focus on broad general rules, the disclosure obligations, and mandatory requirements for exchange of offer and acceptance in online contracting [11].

Despite the increasing awareness and demand of e-contracts and a plethora of laws governing them, e-contracts face some challenges. These are:-

a.) Jurisdiction challenges- Advancement in technology transends jurisdictional boundaries. The location of parties in e-contract may be very different. A strict determination of jurisdiction is lacking in the place of execution.

b.) Identification of parties- Competency of parties is a major essential in contract law. Competent party means a person who is mentally sound as well as a major as per the laws of the land. In e-contracts, even a minor can enter into a contract by clicking 'I Agree' icon. The visual identites linked to facebook or email accounts aren't a concrete proof of competency of parties entering into the contract.

c.) Free consent of parties- E-contracts have very limited bargaining opportunities. The terms and conditions are extremely detailed and most consumers don't read them fully. So, there is a lack of mutual assent [12].

Finally, it can be concluded that although the laws in place have attempted in a commendable way to cover the lacunae of e-contracts, there is still a scope of improvement. Stringent rules are required for the identification of parties. The terms and conditions should be as lucid and summarized as possible. Flexibility is required for facilitating negotiations between consumers and sellers. The laws concerned with e-contracts are to be constantly updated. All this will help in improving the efficiency of e-contracts. 

References:-

1.) R. DUXBURY, CONTRACT LAW 1-2 (7th ed., 2006).

2.) B. Srivastava & B. Bhushan, Legal Issues involved in e-contracts, LAWOCTOPUS (April 1, 2020, 11:47 A.M.), https://www.lawoctopus.com/academike/legal-issues-involved-e-contracts/ 

3.) Trimex International FZE v/s Vedanta Aluminium Ltd. , (2010) 1 S.C. 474 (India).

4.) K. Kumar, All that you must know about e-contracts, IPLEADERS (April 1, 2020, 11:53 A.M.), https://blog.ipleaders.in/all-that-you-should-know-about-e-contracts/ 

5.) Dr. S. Sethuram & Ms. D.C. Kumar, E-contracts in India: The legal framework, issues, and challenges, 4 International Journal of Emerging Innovations in Science and Technology 12, 13 (2018).

6.) K. Kumar, supra note 4.

7.) S. Srivastava, E-contratcs, and Challenges faced, ACADEMIA EDU (April 1, 2020, 11:59 A.M.), https://www.academia.edu/35769590/E-contracts_and_challenges_faced.docx 

8.) Tarsem Singh v/s Sukhminder Singh, (1998) (2) All MR 528 S.C. (India).

9.) M.R. MALLICK, J. , CRIMINAL MANUAL (CRIMINAL MAJOR ACTS) 33-34 (2015).

10.) B. Srivastava & B. Bhushan, supra note 2.

11.) M.C. BHANDARI, LAW OF CONTRACT AND TENDER 1351-1410 (4th ed. 2017).

12.) Dr. S. Sethuram & Ms. D.C. Kumar, supra note 5, at 15.

Section Editor: Pushpit Singh | 01 Apr 2020 15:29pm IST


Tags : E-contracts, trend, time-efficient, inexpensive, jurisdiction, free consent, identification, parties

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