Authored By: Konika Lakhera
Law center 1, Faculty of law (University of Delhi)
Introduction
Indian law does not specifically state the definition of an e-contract. The e-contract is prescribed under Section 2(h) of the Indian Contract Act, 1872[1], which states that an agreement enforceable by law is a contract. To understand the concept of an e-contract, we need to read this with Section 10A of the Information Technology Act, 2000[2], which states the validity of contracts formed through electronic means.
E-contract stands for electronic contracts, in which an agreement is created in an electronic or digital form, such as platforms, emails, apps, websites, etc. In an e-contract, there is no need for physical presence and paper. After the pandemic, e-contracts have increased as people shifted themselves from paper-based forms to electronic forms, which saves time and is economically beneficial. With the benefit of paperless agreements, there is a risk of paperless transactions, which we cannot neglect. However, in the modern economy, digital agreements have become very important to expand businesses, in day-to-day dealings, etc.
Evolution of E-Contracts
Traditionally, contracts were executed in physical presence with paperwork, in which every work was done through papers and the parties physically signed the paper. This was time-consuming as well as not financially friendly. It was a little inconvenient for people to enter into a contract, especially when they were too far apart or in different countries.
With time, technology has advanced at a rapid pace. The development of computers and emails has changed the picture of traditional contracts. Earlier, the parties used to negotiate and finalize the terms and conditions by sharing copies of the documents. With the expansion of the internet, people started dealing electronically with each other. E-contracts are also convenient for the parties, as they can enter into a contract speedily.
Types of Contracts
In daily life, we engage in different types of work. Through these activities, knowingly and unknowingly, we enter into agreements. Also, after the emergence of e-contracts, the area or scope of e-contracts has increased. Let us understand some kinds of e-contracts.
Clickwrap Agreement
In this kind of electronic agreement, the user gives their consent just by clicking on “I agree”.
Browsewrap Agreement
In this agreement, it does not require the user to click anywhere; the user gives their consent simply by using it.
Email-Based Contract
This contract is based on the exchange of an offer and acceptance through email and other essential elements of a contract, such as lawful consideration, lawful object, intention to create a legal relationship, etc.
App-Based Contract
In this contract, the user agrees to the terms and conditions the moment he/she installs the application.
Above, we understood some types of electronic contracts. We can also say that e-contracts are mouse-click contracts in which a person enters into contracts without any traditional paperwork or physical presence. E-contracts give the same validity as traditional contracts.⁵
Legal Framework
The Indian Contract Act, 1872[3], mentions the essential elements required to form a contract, such as offer, acceptance, lawful consideration, lawful object, an agreement not expressly declared as void, and some other factors, such as competency of the parties, free consent, etc. To understand the concept of e-contracts, we have to read the Contract Act with the Information Technology Act, 2000. Section 10A of the IT Act gives recognition to e-contracts[4] in the same way as traditional contracts, provided that they fulfil the basic requirements of a contract as mentioned in the Indian Contract Act, 1872. This means that contracts made through websites, emails, apps, etc., can have legal validity.
In the same way that a traditional contract may require a physical signature, an e-contract may also require a signature. In such a case, signatures are made by electronic means on an electronic document.
Judicial Approach Towards E-Contracts
Trimex International FZE Ltd v Vedanta Aluminium Ltd
In this case, the Supreme Court held that once the essential terms are fulfilled through electronic means, such as email, the contract is valid[5]. Through this case, we can understand that a physical signature is not always essential to form a contract. An e-signature can also be valid like a physical signature if the conditions of a contract are fulfilled
Suggestion and legal reform
To counter the one of the biggest challenges that is identity theft in this we can use strong digital logs which helps to know who signed and when the agreement have been signed also make stricter laws against those who theft the identity of the person and fraudulently agreed upon the agreements.
Another in case of hidden terms it should be specifically direct about the hidden terms and conditions that there should be a specific font in which T&C has been written otherwise it considered as absence of meeting of minds.
Conclusion
E-contracts and traditional contracts contain the same value if they fulfil the essential conditions, as we have also seen in the case of Trimex International FZE Ltd v Vedanta Aluminium Ltd[6]. With the rapid growth of technology, it is necessary to develop new methods. Also, in these types of contracts, it is necessary to ensure clarity and avoid ambiguity.
Bibliography
Indian Contract Act 1872, s 2(h).
Indian Contract Act 1872, ss 2, 10, 11, 13-14.
Information Technology Act 2000, s 10A.
Trimex international FZE Ltd v Vedanta Aluminium Ltd (2010) 3 SCC 1.
[1] Indian Contract Act 1872, s 2(h).
[2] Information Technology Act 2000, s 10A.
[3] Indian Contract Act 1872, ss 2, 10, 11, 13-14.
[4] Information Technology Act 2000, s 10A.
[5] Trimex international FZE Ltd v Vedanta Aluminium Ltd (2010) 3 SCC 1.
[6] Trimex international FZE Ltd v Vedanta Aluminium Ltd (2010) 3 SCC 1.
