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INTRODUCTION

In recent times, the conventionally functioned models of business have become out-of-date and in
many cases are not execution enough income to the owners or shareholders of the company. A usual
example of such a situation in the business of newspaper in the United State of America wherein
many of the noticeable newspaper have shut down or have lifted purely to the online medium. New
and inventive models and type of business need to be invented and worked. Existence of e-contract in
the market is accomplishing the need for innovativeness in the traditional business segments.
Businesses, both existing and new are trying to create an online individuality and an e-contract stand
keeping in view the needs of the modern times.

E-contract is one of the divisions of e-business. It holds a similar meaning of traditional business
wherein goods and services are switched for a particular amount of consideration. The only extra
element it has is that the contract here takes place through a digital mode of communication like the
internet. It provides an opportunity for the sellers to reach the end of consumer directly without the
involvement of the middlemen.

New models of business demands different organisational charters. E-contract demands an


organizational charter which caters to its new marketing needs. This mode of business enables
businesses to save time on product design and device products according to the individual customer
requirement, track sales and get immediate feedback from the customer.

Contracts have become so common in day-to-day life that most of the time we do not even recognize
that we have entered into one. Right from buying a vegetable and hiring a Cab or to buying an airline
ticket online, uncountable thing in our daily exists is governed by contracts.
The Indian Contract Act, 1872 rules the way in which contracts are made and completed in India. It rules the
way in which the requirements in a contract are implemented and codifies the effect of a breach of contractual
provisions.

Electronic contracts (contracts that are not paper based but relatively in electronic form) are born out of the need
for speed, ease and efficiency. Imagine a contract that an Indian manufacturer and an American exporter wish to
enter into. One selection would be that one party first draws up two copies of the contract, signs them and
couriers them to the further, who in turn signs both copies and guides one copy back. The other option is that
the two parties meet someplace and sign the contract. In the electronic age, the whole contract can be
accomplished in seconds, with both parties simply fixing their digital signatures to an electronic copy of the
contract. There is no need for behind couriers and additional travelling costs in such a situation.

There was primarily a fear between the legislatures to identify this modern technology, but now many countries
have legislated laws to recognize electronic contracts. The conventional law involving to contracts is not
satisfactory to address all the issues that arise in electronic contracts. The Information Technology Act describes
some of the irregular issues that arise in the formation and verification of electronic contracts.

RECOGNITION OF E- CONTRACT
Section 10 of the IT Act, 2008 gives legislative authority to E contracts. It says that, “Where in a contract
formation, the communication of proposals, the acceptance of proposals, the revocation of proposals and
acceptances, as the case may be, are expressed in electronic form or by means of an electronic record, such
contract shall not be deemed to be unenforceable solely on the ground that such electronic form or means was
used for that purpose.”

For any contract to be valid, signatures from both the parties are required. In the case of an e-contract, an
electronic signature comes to play. An electronic signature is defined by the Information Technology Act,
section 2(p) as the authentication of any electronic record by a subscriber by means of the electronic technique
specified in the second schedule and it includes a digital signature. Further, section 5 of the Information
Technology Act says that where any law requires that information or any other matter be authenticated by
affixing a signature or any document signed by or bear the signature of any person, then such requirement shall
be deemed to have been satisfied. Electronic signature serves the same purpose as a handwritten signature.
Section 85 c of The Indian Evidence Act states that as far as a digital signature is concerned, the courts presume
that the information provided in that certificate is true and correct.
E contracts are contracts that are not paper based and are electronic in nature. These contracts are generally
made for speedy entering into a contract or for the convenience of the parties. They are best made between
parties who live in 2 different parts of the world and have to enter into an agreement. A digital signature is all
they need to enter into a contract as a party even though both the parties to the contract are sitting miles away
from each other. In this proliferating world, it is the most convenient method to enter into a contract without
being physically exhausted.

The 2 main parties to an e-contract are- The Originator and the Addressee.

 Originator according to the IT Act, 2008 is a person who sends, generates, stores or transmits any
electronic message to be sent, generated, stored or transmitted to any other person and does not include
an Intermediary.
 An Addressee according to the IT Act, 2008 is a person who is intended by the originator to receive the
electronic record but does not include any Intermediary.

Essentials of an electronic contract:

As in every other contract, an electronic contract also requires the following necessary requirements:

 An offer requirements to be made

In many contacts (whether online or conventional) the offer is not made directly one-on-one. The consumer
‘browses’ the available goods and services showed on the seller’s website and then chooses what he would like
to purchase. The offer is not made by website showing the items for sale at a particular price. This is essentially
an invitation to offer and hence is revocable at any time up to the time of acceptance. The offer is made by the
customer on introduction the products in the virtual ‘basket’ or ‘shopping cart’ for payment.

 The offer needs to be acknowledged

As stated earlier, the acceptance is usually assumed by the business after the offer has been made by
the consumer in relation with the invitation to offer. An offer is revocable at any time until the
acceptance is made.
 There has to be legal consideration

Any contract to be enforceable by law must have legal consideration, i.e., when both parties give and
receive something in return. Therefore, if an auction site eases a contract between two parties where
one Ecommerce – Legal Issues such as a person provides a pornographic movie as consideration for
purchasing an mp3 player, then such a contract is void.

 . There has to be an intention to create lawful relations

If there is no intention on the part of the parties to create lawful relationships, then no contract is
possible between them. Usually, agreements of a domestic or social nature are not contracts and
therefore are not enforceable, e.g., a website providing general health related data and instructions.

 . The parties must be able to contract.

Contracts by minors, lunatics etc. are void. All the parties to the contract must be lawfully competent
to enter into the contract.

 There must be free and unaffected consent

Consent is said to be free when there is absence of coercion, misrepresentation, undue influence or
fraud. In other words, there must not be any agitation of the will of any party to the contract to enter
such contract. Usually, in online contracts, especially when there is no active real-time
communication between the contracting parties, e.g., between a website and the customer who buys
through such a site, the click through process ensures free and genuine consent.

 The object of the contract need to be lawful

A valid contract presumes a lawful object. Thus a contract for selling narcotic drugs or pornography
online is void.

 . There must be conviction and possibility of performance

A contract, to be enforceable, must not be ambiguous or unclear and there must be possibility
of performance. A contract, which is impossible to perform, cannot be enforced, e.g., where a
website promises to sell land on the moon.
Types of E-Contracts

Shrink Wrap Contracts: These contracts are packed with the products and the usage of the particular products
is deemed as an acceptance of the terms and conditions of the Contract. The user always has the option of
returning the software if the new terms are not to his liking for a full refund. These contracts are generally
containing in the CD Rom or software, and using of the CD Rom is considered as an acceptance of such terms
and conditions.

Click Wrap Contracts: A click wrap Contract is mostly found as a part of a software. These agreements are
rigid in nature and there is no chance of negotiation in it. Because the user of such software has only two
options, that is to agree and use that particular software or to disagree with terms and conditions and not to use
that particular software.

Browse Wrap Contracts: A browse wrap agreements are generally found in a website or a downloadable
product, these contracts are published on a particular webpage and user have to find these terms and conditions
by browsing to that particular web page. Because generally these contracts are hidden.
Challenges posed by electronic contract:
The advent of electronic commerce in modern commercial transactions has posed a great challenge on the law
of sale of goods. E commerce allows consumers to purchase goods through transactions that are agreed, settled
and transferred in an open network environment. As a result, there are several problems that are of concern to
consumer which needs to be addressed are:

1. PRIVACY AND DATA PROTECTION :

Technology has a played a great role in enhancing the capacity of internet companies to collect and analyze
huge amount of data relating to customers who merely visit their websites , which raises concerns about how
this data is treated. Many businesses around the world collect a variety of information on a regular basis about
their own customer in order to understand their client better, improve their business processes, and target special
offers. Before internet, companies used to track the purchases made by individuals, while now there is no one to
take care of, as a company can also record pages of websites that grab customer’s attention. 1 For instance, lots
of companies request their customer to register with the company through websites by providing information.
However some websites decline to provide their services to those who reject registering, as well as, consumer
who register may mistakenly believe that the information must be used by the company solely for the current
transaction. In fact, the company may sell the information to the third party or may use it for some other
purposes.

Another concern that consumers suffer from invading their own information is called “identity theft” when a
thief gains access to personal information of a consumer which lets him impersonate the consumer and starts
buying whatever goods and services which are to be billed to the consumer. Furthermore, usages of credit card,
debit card and smart card may lead to recording, tracking and selling consumer’s shopping and banking
practices.

2. PRODUCT RETURNS AND REFUNDS :

The other issue which arises in electronic contract is the right of the consumer to cancel the product after it is
ordered by a party. Since the customer does not feel and touch the product and consequently when the product
arrives, the customer might not be satisfied with the product. It may be possible that consumer finds it eye-
catching when he looks it on the screen but when he observes it in his hands, the appearance of the product may
not be as attractive as it seemed on the screen .This may defraud the consumers and as in electronic contract the
consumer is not provided with the right to inspect the goods, there must be a sufficient cooling-off period which
must permit the consumer a reasonable time to cancel the goods and send it back to the trader.

It must be noticed that the goods once cancelled, the refund by trader to consumer may broaden out to
unreasonable stretch of time which maybe injustice to the consumer as his money is blocked for a certain period
of time. Hence even refund time has to be re-stipulated by law exceeding which the online trader would be
liable for fine.

1
Rohitashwa Prasad , Topical issue in the regulation of E Commerce in India, US INDIA BUSINESS COUNCIL
3. DELIVERY OF FAULTY GOODS :

The other issue in electronic contract related to the consumer when he receives faulty goods for totally wrong
goods. www.shopclues.com was served a legal notice for selling fake JBL speakers Premium audio devices
manufacturer Harman International Pvt.2 Recently there has been a case where a person who allegedly ordered a
laptop got brick instead.3A vim bar in place of Samsung Galaxy Core 2, pieces of stones instead of iPhone 4S,
Rs. 600 heater instead of Mac Book Pro4, man orders smart phone gets bar of soap instead 5and there are many
other instances when the Indian customers receiving shocking surprising at their doorsteps.

4. FIXATION OF LIABILITY :

Another challenge with electronic contract is that it is very ambiguous to know as to who will owe the liability
in case of some dispute arises in the manner as for delivery of faulty goods, late delivery etc. As and when the
goods services are purchased from websites like Flipkart, Snapdeal, etc and then a dispute arises, can there be
any case against them as they are concerned in owning and managing a web portal for a commission and is not
engaged in the purchase or sale of goods and services.6

Therefore the provision defining their liability has to be incorporated in the separate law in such a way that the
consumer must have an option to sue the portal, the manufacturer or both of them. By this the consumer will be
saved from findings the appropriate to sue and can get compensation from both of them.

2
Harman send legal notice to Shopclues.com for selling fake JBL speaker, THE INDIAN EXPRESS
3
Bosco Dominique, TEEN orders on laptop for Rs. 14000 online, get brick, THE TIMES OF INDIA
4
SambitSatpathy, 4 unexpected things Snapdeal delivered to buyers and one that Flipkart didn’t, BGR
5
Adrja Bose The Big Snapdeal screw up : man orders smartphone , gets bar of soap instead, FIRSTPOST(October 3 2014)
6
Ashish Ahuja v. Snapdeal, Case No 17 of 2014, (Competition Commission of India, May 19, 2014).
Jurisdictional Issues

Jurisdiction in general refers to “A government’s general power to exercise authority over all persons and things
within its territory”. Same situation with regards to court’s jurisdiction also, it is the geographical area within
which the judiciaries have the authority to adjudicate the disputes. If we talk about cyberspace jurisdiction the
situation is different from physical world. The term “cyber jurisdiction’ generally encompasses the system
operators or users power to frame rules and enforce them in an “apparent virtual community” interacting in
cyberspace, or virtual space in the cyber world which is perceived as a place on the Internet and is independent
from the normal government regulations. In this virtual world the cyber jurisdiction can be exercised. As a
result of internet a market place has developed in the virtual world. The users of any computer connected
through internet can access to the website and enter into contract anywhere in the world. Such a contract is
called e-contract. The e-contract is entered in the e-commerce. It means that all the obligation of valid contract
is there in e-commerce. The existed of offer from one side and acceptance from the other side is there in a
business transactions through internet. All the obligations in e-commerce need not be in only electronic form,
there may be a situation where one party may perform their obligation in a physical form. It is not so important,
the only thing is important is the conclusion of contracts is to be done throng an online medium only. In such a
case the question regarding the time ‘when’ and the place ‘where’ where the contract was actually concluded is
inevitably arises.

The jurisdictional issue in e-commerce is very important to discuss. For instance, an Indian company accepts
an offer from an American company over the internet to render certain service in Singapore and the ISP of the
Indian Company (and its server) is in London and that of the American company is in Colombo, the
determination of the choice of law would indeed be a challenging task, leading to consequences not intended by
the contracting parties. In the cyber space quite often parties physically located in different countries may enter
into a contract. A legal issue which arises is: which country (or which state within in a country) will have
jurisdiction. One possible solution that would be given is: it will be decided on the basis of the ‘choice of
forum’ clause. But it is no simple there also the problem arises related to choice of forum court having the
jurisdiction to decide arises under the e-contract, otherwise the clause related to forum would be invalid and
hence, unenforceable.

The main trouble and problem about the internet jurisdiction is the presence of multiple parties in various parts
of the world who have a virtual nexus with each other. The question arises in such cases that if one party wants
to sue the other, then where can one sue? The municipal laws traditionally require two areas, the place where
the defendant resides, and where the cause of action arises. However, in the context of internet, both these are
difficult to establish with any certainty. In addition to this a situation of conflict of laws among nations may also
arise. For example some websites may be obscene in India but legal in US. They can be viewed in India by
assessing the websites & may amount to an offence under the Indian Law, but they are not illegal in US where
these sites are hosted. How can these situations be handled is a serious concern.
CONCLUSION

Today with the recent advancement in the areas of computer technology,


telecommunications technology, software and information technology have resulted
in changing the standard of living of people in an unimaginable way. The
communication is no more restricted due to the constraints of geography and time.
Information is transmitted and received widely and more rapidly than ever before.
And this is where the electronic commerce offers the flexibility to business
environment in terms of place, time, space, distance, and payment. With the growth
of e-commerce, there is a rapid advancement in the use of e-contracts.

E-contracts are well suited to facilitate the re-engineering of business processes


occurring at many firms involving a composite of technologies, processes, and
business strategies that aids the instant exchange of information. The e-contracts
have their own merits and demerits. On the one hand they reduce costs, saves time,
fasten customer response and improve service quality by reducing paper work, thus
increasing automation. And on the other hand the law governing e-contract lacks
certain provisions like -There is nothing to determine the intention of the parties to
enter into a legally enforceable contract.

With this, E-commerce is expected to improve the productivity and competitiveness


of participating businesses by providing unprecedented access to an on-line global
market place with millions of customers and thousands of products and services .
BIBLIOGRAPHY

Books:
1) Vakul Sharma, Information Technology (Universal Law Publishing Co. 2011 first
Edition)at 391

2) Dr. Jyoti Rattan, Cyber Laws (Bharat Publication 2011 First Edition )

3) Singh Avtar, “Contract & Specific Relief”, 10th Ed, Lucknow: Eastern
Book Company, 2010.

Website:

1) https://www.lawteacher.net/free-law-essays/contractlaw/electronic-
contracts.php

2) http://www.legalservicesindia.com/article/1943/A-study-of-
formation-and-challenges-of-electronic-contract-incyberspace.html

3) https://indiankanoon.org/doc/187283766/

4) https://www.lawctopus.com/academike/legal-issues-involved-
econtracts/

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