Importance Of Electronic Contracts In Today’s Era

Author: Ashwini Vernekar Student, Mumbai University


Introduction to Electronic Contracts

A Contract in common parlance is an agreement that is legally binding by the parties to such agreement which define their duties and rights. It is a promise enforceable by law. An agreement to be considered as a contract there are certain requirements to be fulfilled such as 1. Offer and Acceptance 2. Free Consent 3. Capacity to enter into a Contract 4. Consideration. With modernization and developing markets the need for electronic trade and business are increasing day by day and the efficiency of such businesses is upgrading. From renting a car to buying groceries online, contracts are unknowingly become a part and parcel of our lives. contracts are called e-contracts that are not paper based and are electronic in nature. E-contracts comes very handy and feasible in terms of place, time, distance and payment.

Electronic Contracts

Section 10 of the Information Technology Act, 2008 gives legislative authority to E- contracts, “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 enforceable 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 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. Under Indian Evidence Act, 1872, section 85A of the Evidence Act: “The court shall presume that every electronic record purporting to be an agreement containing the electronic signature of the parties was so concluded by affixing the electronic signature of the parties.” Now with changing circumstances the business transaction is over the internet, without any face-to-face interaction between the parties. Any transaction such as insurance, real estate contracts, credit cards, and entering into financial agreements are just a few actions performed electronically.

E-contract is a contract modelled, specified, executed and deployed by a software system. An e-contract can also be in the form of a “click to agree” contract, which commonly comes with downloaded software: The user clicks an “I agree” button on a page containing the terms of the software license before being able to complete the transaction. For Acceptance of offer in case of e-contracts, the acceptor can either consider in buying by click on the “I Agree” or “Click to Agree” option for indicating the acceptance of the terms presenter by the seller or can sign electronically.

Types of electronic contracts[1]

  1. Shrink wrap contracts – It is a type of license which is associated with the product, it’s a boilerplate contract and the usage of the product is acceptance of the contract. It generally includes specific terms and conditions of the product such as price, guidelines, warranties etc.

  2. Click wrap contracts – It is also called as a click-through agreements or click-wrap license. It is found as a part of the installation process of software packages.  The term is derived from the fact that such agreements most times require clicking an on-screen icon to signal acceptance.

  3. Browse- wrap contracts- It is used to refer to a contract or license agreement covering access to or use of materials on a website or downloadable product. Only if the person agrees to the terms and conditions on the web page then only the person can access to the contents of the web page.

  4. Emails- By exchanging emails messages, the parties can establish a binding contract. E mail contracts are similar to any other form of contracts and therefore governed under the provisions of Indian Contract Act.

  5. Electronic Signatures- Electronic Signatures are basically sign or symbol, which states that the person intended to sign the contract or file. Digital Signatures are considered to be more secure, the digital identification to authenticate the signer.

Evidentiary Value of the Electronic Records

As per Section 65-B of the Indian Evidence Act, 1872 any information contained in an electronic record produced by a computer in printed, stored or copied form shall be deemed to be a document and it can be admissible as evidence in any proceeding without further proof of the original. It is required that the document or e-mail sought to be produced from a computer, was in regular use by a person having lawful control over the system at the time of producing it; the document or the e-mail was stored or received during the ordinary course of activities; the information was fed into the system on a regular basis; the output computer was in a proper operating condition and has not affected the accuracy of the data entered.

In Harpal Singh Chota v State of Punjab, the Supreme Court in this case held that any electronic evidence cannot be admitted as an evidence if it is in form of secondary evidence, unless a certificate under section 65B of the Evidence Act, 1872 is presented.

Development in E-Contracts in Modern Era

Now, in the current scenario of global pandemic wherein the physical distancing has become one of the essentials for life, in such circumstances electronic contracts are playing major role in the trade and businesses. E-contracts have gained a lot of importance in the current scenario especially with the government encouraging a digital environment. With e-contracts the ease of access has been increased and documents attested via online is much faster. It is time friendly and it is easier for any party from any place to do business. It is zero paper work and manual documentation. By digitizing contract work flow, online contracts remove the chances of mistakes or error than that of the physical contract.

Disadvantages of E-contract[2]

Since, majority of Indian population are not well versed with the technology, it becomes difficult for them to adapt such method and they end up being involved in various frauds and problems. It was recently revealed in a survey that the emerging e-contracts have severely impacted the small business and business owners. Execution of most of the contracts require attested witness which later have evidentiary value, such is not available in case of e-contracts. Not all the vendors in the business provide enough security for business deals. The free consent is considered as one of the requirements of the valid contract. But in e-contract generally there is no scope for negotiation. The option of “take it or leave it” transaction is always available to the user.

In the case of LIC India vs Consumer Education and Research Centre[3], the Supreme court had held that “in dotted line contracts there would be no occasion for a weaker party to bargain as to assume to have equal bargaining power. He has either to accept or leave the service or goods in terms of the dotted line contract. His option would be either to accept the unreasonable or unfair terms or forgo the service forever.”

Conclusion

The pandemic has witnessed a lot of evolvements in online world, from work from home to conducting various businesses and meetings virtually. The importance of e-contract is increasing and people are eventually shifting from traditional paper contracts to e-contract. Tip would be to ensure that you understand exactly what are you signing even if it is just a “I agree” tabular or any other thing.

Neither the contract act or the IT act was enacted with the intention of adapting Indian contract to a long-term electronic format, there is a need to formulate a separate legislative framework which help the remote parties with execution of contracts.

[1] https://blog.ipleaders.in/all-that-you-should-know-about-e-contracts/

[2] https://www.lawyered.in/legal-disrupt/articles/electronic-contracts-pros-and-cons/

[3] https://indiankanoon.org/doc/1513693/


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