All You Must Know About E Contracts

Neelansh Gupta

21 Feb, 2020

Internet has completely revolutionized people’s way of communicating. Now the way people do business is totally different from what people used to a decade ago. Further, Internet is a new culture and is used across the globe. In the below article we would be discussing about E-Contracts. Since the internet is no more limited for just mere communication or computing and analyzing of data, online contracts popularly known as E–Contracts are now the order of the day.

However there is no difference between online and offline contracts. Hence, online contracts are still contracts and all the rules applicable to general contracts is equally applicable.

Some Facts about Contracts

• These days Contracts have become an important part of our lives. Be it buying a product from the market or hiring a taxi, we are governed by contracts in our daily lives. Apart from this we don’t even realize how frequently we become a part of.
• In today’s times, even from shopping a product online, to the signing of an international treaty by the authorities over the internet constitutes an e-contract.
• In an e -contract, the offer, invitation to offer, counter offer or acceptance to the offer etc. which are all by electronic means is nothing but an agreement.

Before knowing anything about e- contracts, we should know what an actual contract is and what its essentials are.

What are Contracts?

The Indian Contract Act, 1872 defines contract as an agreement between two or more parties for the buying and selling of goods or services for a valid consideration.

Essentials of a Contract

The essentials to a contract are also some of the essentials to an e-contract also which are as follows:

1. An offer and acceptance has to be made.
2. There should be a lawful consideration.
3. There should be a free consent between the parties to a contract.
4. The object or the purpose of the agreement should be lawful.
5. Parties must be competent enough to contract.
6. The contract must be enforceable by law.

Now since we are well aware about the basic contract and its essentials, now let us try to understand about the E-Contracts.

What are online or E – Contracts?

E – Contracts are contracts which are not paper based and are completely electronic in nature. Further it supports speedy contract or executed in accordance to the  convenience of the parties. Such contracts are best made between parties who live in two different parts of the world and have to enter into an agreement.

However, The requirement of a digital signature is also needed to enter into a contract. Even though both the parties to the contract are sitting miles away from each other e- contract is possible. It is the most convenient method to enter into a contract without being physically present and get exhausted.

Moreover, E-contract is also deployed by a software system.

Parties to an E-Contract

The two main parties to an e-contract are

• The Originator
• The Addressee.

Originator:

According to the IT Act, 2008, Originator is a person who sends, generates, stores or transmits an electronic message to be sent, generated, stored or transmitted to any other person and does not include an Intermediary.

Addressee:

According to the IT Act, 2008, Addressee is a person who is intended by the originator to receive the electronic record but does not include any Intermediary.

Are e-contracts valid and legally recognized?

Provisions of the Information Technology Act, 2000 (IT Act) especially Section 10-A of the Act give legal recognition to an electronic (E -Contract).  Section 10-A of the IT Act which states:

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.”

The above provision was introduced by the Information Technology (Amendment Act), 2008 after recognizing the growing dependence of the people on electronic means to reach commercial agreements. Moreover, the above provision applies where contract formation, communication of the proposal and acceptance of the proposal is totally carried out electronically.

Admission of e-contracts in courts

The High Court of Delhi in the case of Societe Des Products Nestle S.A and Anr Vs Essar Industries and Ors:

In this case legally recognize and lay the foundation for the immediate introduction of Section 65 A and 65 B in the Indian Evidence Act, 1872. This relates to the admissibility of the computer generated evidences in a practical way to eliminate the challenges to electronic evidence.

As per section 65 A of the said Act, the contents of the electronic records can be easily proved by parties in accordance with section 65 B of the Indian Evidence Act, 1872.

Similarly, in the case of “The Delhi High Court in the case of State of Delhi Vs Mohd. Afzal and Others”

In this case, the court  held and stated that “Electronic records are admissible as evidence.”

What are the types of E-Contracts?

E- Contracts can be broadly classified into:

• Shrink Wrap Agreements

• Click Wrap Agreements

How you can enter into E-Contracts?

The only essential requirement to validate an E-Contract is compliance with the necessary pre- requisites as per Indian Contract Act, 1872 like

• Offer and Unconditional Acceptance
• Lawful Purpose and Consideration
• Capacities of parties and their free consent

Moreover, E-mail, internet and fax are the different ways of communication through which e-contracts can be entered.  Some of them are as follows:

Well, if you are enough motivated to execute an e- contract. You can share the details with us and we will formulate a strong contract for you. We shall ensure that the correctly drafted and legally viable e-contract is executed through us.

Conclusion

You can simply attach digital signatures to the e-contract and then it will be executed in seconds. Further, there is no need for delayed couriers and additional travelling costs. This modern technology was not recognized by the legislatures initially. However, now many countries have passed laws to recognize electronic contracts.