E-Contracts in Contemporary India


Bonani Goswami,

Content writer

Contracts are standard processes that we undertake in our daily lives, but we hardly realize and recognize it. Buying and selling vegetables, groceries, land, properties and any essentials all comes under the definition of Contract. According to The Indian Contract Act, 1872 "Any agreement which has legal enforceability is a Contract" (Section 2(h))[i]. So the validity of a contract depends on certain essentials like there should be a legal consideration (monetary or any other), a free consent of the parties contracting, a lawful object, and parties contracting should be major.

E- Contracts have become part and parcel of our life for many of us in recent times though digitalization has not touched a larger part of our country. Buying online railway/ flight tickets, bank transactions, online purchase of essentials, online food orders, and online movie tickets, etc. are part of daily contracts that we undergo. Still, we hardly realize or recognize them as contracts. E-contracts are paperless electronic practices that are time-saving, cost-effective, physically inexhaustible, and suitable in this electronic age.

E-Contract is modelled and executed by a software system. Procedures of e-contracts are complex because it requires the main website, payment gateway, payment credentials (bank card, internet banking, payment wallets, Google pay, etc.) verification website, security authorization website and shipping agent, etc. for services or selling/buying of goods.

India has achieved vital importance in e-contracts at present. The journey of e-contracts started in 2000 with the establishment of the first online Indian market by the name of bazee.com. In the year 2002, Indian Railway Catering and Tourism Corporation (IRCTC) was established to facilitate online rail ticket booking and catering services which later on even became a service provider for online flight tickets and hotel bookings. In these two decades, India reached a remarkable height in this sector with the digital India flagship program. In this era of globalization and Industrialisation India's active participation in e-commerce, the process is very effective, resulting in ample employment opportunities.

Laws Governing E-Contracts in India

There is no definite and specific law at present to regulate the E-Contracts in India. Its regulation is governed by the Indian Contract Act, 1872, Consumer Protection Act, 1986, Information Technology Act 2000, and Indian Copyright Act, 1957. E- Contracts are structured by the Indian Contract Act, 1872. Conceptually e-contracts are the same as conventional contacts where papered documents are replaced with electronic parallels. General essentials required for the validation of contracts also apply to E-contracts which include a lawful consideration and object, free and unaffected consent of the parties, offer and acceptance, legal enforceability, and competency of parties entering into a contract.

According to the Information Technology (Amendment) Act, 2008 there are two main parties in an e-contract-- The originator and the addressee. The originator is the one who initiates the process of making an e-contract to send it to the other party. An addressee is one who receives the e-contract made by other parties. The Information Technology (Intermediaries Guidelines) Rules were framed in the year 2011, according to which foreign intermediaries providing services can also be sued in India[ii]. The legal frameworks for payment gateways in e-contracts are regulated by the Payment and Settlement Systems Act, 2007. Moreover, Payment and Settlement Systems Regulations, 2008 came into effect from August 2008. In the said Act Reserve Bank of India added additional guidelines for compulsory registration of such payment gateways and processors[iii].

In several e-contracts, digital signatures have been made a compulsory procedure under government policy. Digital signatures in most e-contracts become essential elements for verification. This aspect is also controlled by the Information Technology Act, 2000. According to Section 2(p) of Information Technology Act, 2000, digital signature means authentication of any electronic record by a subscriber using an electronic method or procedure[iv]. This Act also governs a reasonable mode of acceptance of the offer and even revocation of offer and acceptance pertaining to e-contracts.

Types of E-Contracts[v]

Employment Contracts: These types of contracts are prevalent at present. Many employees are hired nowadays through e-process and employment is regulated by the Information Technology Act. The general essentials of Indian Contracts are applied in these kinds of contracts. These kinds of contracts are also made between parties residing in two different countries.

Consultant Agreement: Online consultancy a service whether marketing, medical, legal, etc. becomes valid e-contracts if essential conditions as per Indian Contract Act, 1872 are fulfilled.

Non-disclosure Agreement: A non-disclosure agreement is generally done between business parties entering into negotiation with another. Here parties agree not disclosing any sensitive information to others.

Licensing agreement: In this kind of agreement, the manufacturer gives authorization to a user for use of software. These licenses are issued for a limited period. Licensing agreement forbids reverse engineering, decompiling, or any other manipulation of the software. This agreement protects the user from a copyright violation of the manufacturer.

Shrink-wrap Agreement: This is a licensing agreement for the purchase of software. The terms and conditions for access to such software products shall be enforced by the person buying it. If the buyer disagrees with the additional condition, he may revoke the agreement.

Click-wrap contracts: These e-contracts grab the consent of users through the terms "I Accept," or "OK" button. The user clicks the button if he agrees to the terms and conditions specified. The acceptance to the offer is revoked once the user disagrees with the terms and conditions specified.

Browse wraps contracts: These are common e-contracts seen in our daily lives. An ordinary user of a given website is to accept the terms and conditions for the continuous use of other websites. There is no judicial precedent justifying the validity of these types of contracts.

With the increase in the number of internet users, there is tremendous growth in e-contracts. Online sales and purchases have increased especially in this Covid-19 pandemic. E-education has become a significant service during this Covid-19 pandemic. It can also be categorized as an e-contract now because service providers, i.e. schools/teachers and guardians /parent are competent parties and educational services are provided against a legal consideration, i.e. money. But the harsh reality is that a large section of the Indian population still cannot afford to avail of these services. In this way, children's right to avail of compulsory education gets infringed. At this point focus of the Government should be to digitalize the remotest part of the country. The right to children's health and education holds equal importance. Due to inaccessibility to digital channels, even unemployment is still an issue in a large portion of our country. The Digital India flagship program introduced in 2015, which aims to empower individuals digitally is still a dream for many.

Disclaimer: Kindly note that the views and opinions expressed are of the author, and not Law Colloquy.

References: [i] http://uputd.gov.in/site/writereaddata/siteContent/indian-contract-act-1872.pdf [ii] https://www.indianbarassociation.org/e-contracts/ [iii] http://legislative.gov.in/sites/default/files/A2007-51.pdf [iv] https://www.indiacode.nic.in/bitstream/123456789/1999/3/A2000-21.pdf [v] https://blog.ipleaders.in/all-that-you-should-know-about-e-contracts/ #law #lawcolloquy #contract #econtract #consumer #company

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