Open Access Research Article
THE NATURE AND EXPLICATION OF ELECTRONIC CONTRACTS (By- Aditya Raj Pandey)
Published Paper
Article Details
THE NATURE
AND EXPLICATION OF ELECTRONIC CONTRACTS
Authored By – Aditya Raj Pandey
Student – Symbiosis Law School,
Hyderabad,
Abstract
Contract, the term and the concept
with which everyone is familiar with. It means an agreement between two or more
parties which is legally valid and enforceable[1].
The concept of contract prevailed in medieval world as well. During medieval as
well as some period of modern time, agreement are based on the papers further
leads to forming a contract which is also in offline mode that is based on the
paper. These agreements and contracts are governed by different laws like
Mughal laws, laws of different Hindu rulers and then finally by Indian Contract
Act of 1872[2]. With the unremitting development of the world
as well as India, there were several major advancements in technologies and
that’s eventually gives birth to the concept of E commerce. E commerce in most
simpler terms called the business carried out in online mode. Many business man
of both small scale as well as large scale started shifting their business on internet.
They started advertisement as well as selling of their products on different
websites and online market hubs. These all phenomena gave rise to the concept
of E – Contract. Electronic Contract (e contract) is the type of contract
signed between two or more parties at electronic medium. According to Sir
William Anson definition of E contracts is; “A contract is a legally binding
agreement executed between two parties or more than two parties by which rights
are acquired by one or more acts of forbearances on the part of the other party
or parties.” The concept of Electronic Contract is not much different from
the traditional form of contract which is based on the paper. A brief outline
is prepared in online form of contract as well and here also amenities and
products are exchanged for some consideration. Apart from amenities and
consideration, both the parties should agree on the same thing in the same
sense, then only E contract could be bring into the force/effect. Hence, almost
all the things are similar in e contract as that of traditional form of
contract but the major difference among two of them is that Electronic Contract
transaction always takes place through internet or online
portals. In Electronic Contract there are different
processes for getting into the contract. Initially, a proposal must be sent to
the other party ,then acceptance from them in the form of digital signature
along with some sought of consideration (can be in any form). After all these ,
an outline was drafted & formed which further get enforced by the rule of
law.
Key Words – Electronic Commerce,
Electronic Contract, Modernization, Globalisation
Introduction
In the last 2 to 3 decades, E
Commerce upsurge in the world due to rapid growth and development. E commerce although
exist even earlier than that but its not so significant. E commerce in general
means buying and selling of any types of goods and services in online mode
rather than conventional mode of commerce. This change from conventional form
to modern one came in greater significance when the internet giants started
influencing our life style in mass way. Before the transaction of goods and
money takes place, it is essential to form a valid contract between the two
parties. Similarly, in E commerce, a legal agreement must form in between the
parties and that is achieved by creation of an electronic contract. In
electronic contract, the assent is given by the parties by clicking on one key
which states “I Agree” which means the addressee gives the consent by reading
the documents and terms related to the contracts.
E Contracts came into larger
significance with the major developments of some online shopping as well as
food apps. Apps like amazon, flipkart, snapdeal etc. offers many different
kinds of product to their consumers. So, in general terms they are making
offers and when consumer selects any particular item and clicks on BUY icon and
also made a payment for that, then the offer is said to be accepted and hence
the contract is made which exist in electronic form. These all-major
development in e commerce and e contracts took place recently around the year
1980s and subsequently after that because of transforming world.
Although, the upgrowth and
development took place severely in the field of electronic commerce, but the
cases of online robbery and fraud also surges with the same pace. The consumers
or the customers are protected from buyers under COPRA but is the same applied
to the electronic platforms also. If so, then why such cases are rising with such
a higher pace. Not only this much, we have separate set of laws for this named,
IT Laws and Acts but the implementation should be made in the better way
because if we left the electronic contract and commerce unregulated then it
will harm the people in more dangerous way rather than providing ease to
them.
Research Question
The Researcher through his dedicated
and detailed research tried to find out the history, significance and further
up surge and development of electronic contracts. Along with all these, the
author also tried to find the related cases which shows the legal perspective
of electronic form of contract.
Research Methodology
The writer in the research paper not
only confined his study on e - contracts and its significance with modernizing
world, rather the author also tried to site various different case laws which
clarifies the concept in a better way. In the paper, the author collects data
from secondary sources which includes articles, research paper which also
includes case laws and examples.
Scope Of The Study
The exploration and study about
electronic commerce as well as electronic contract is very vital in today's
era. It is because with the modernization and globalisation, many business
started developing themselves at online platform and the existing ones started
shifting which clearly shows the shift from offline mode to online mode. In
this process, the COVID upsurge the essentiality of electronic commerce as well
as contract. Hence, the knowledge of e contract and the laws related to it is
necessary in developing world to protect ourselves from various fraud and
scams.
Literature Review
1)
J.Pereira
Fernandes SA vs. Mehata[3]–
Mr Mehata, who is also the defendant in this case, sent an email to the company
to stop some process. In that email he didn’t put his electronic signature the
process didn’t get stopped even after that. The court held that if e signature
is absent from such e mails then the order or offer is considered as invalid
one.
2) Anvar P.V. vs. P.K. Basheer & Ors[4]–
In this case, the apex court is of the opinion that, any record which is present
in electronic form if presented as evidence in the secondary
form, then the same is not considered
as evidence if the requirements stated under section 65 – B of IEA[5] is
not fulfilled.
3) Hotmail Corporation vs. Van $ Money
Pie Inc[6] – This case is one of the landmark cases for
the electronic commerce and contract area. The case was registered under the
jurisdiction of district court of California. The court in this case checked
and upheld the legality of Click wrap contracts terms and services which is provided
by the e mail agreement way.
4) Trimex International FZE Ltd., Dubai
vs. Vedanta Aluminium Ltd[7] –
The honourable apex court of law in this case held that if the legally binding
agreements is assented from the parties of both side through electronic mail or
any other electronic form, then also, the contract is treated as valid one as
it satisfies the provision of Indian Contract Act.
5) LIC of India V Consumer Education and
Research centre[8] – Dotted
Line contracts are those contracts in which there is no option for the weaker
parties in contract to bargain for the price. The only option available is to
either accept or reject the offer presented by offeror. The Supreme Court
agrees to this point and hence opined that the other party should give consent by
properly investigating the terms and condition embedded in the contract.
6) JAIMALA CHAHANDE, An Analytical Study
on E-contract: Its Legal Validity and Jurisdiction – In this article, the
author mentioned the evolution and rapid development of electronic commerce,
electronic contracts and how it gains importance in recent years. The author
also mentioned the historical development, its types and legality in different
parts of the world.
PART B
History Of E Contracts
Electronic Contract existed in the
world from very long time and even some of the esteemed companies even used the
electronic data of the consumers and provides them the facility to make their
payments in online way, which is quite common these days. But the trend is so
new for majority of them at that time. The reputation and position of
Electronic Contract surges in late 1950s and early 1960. Although E-Contract
existed much before that period but the significance grows swiftly after major
advancement in technologies (technological revolution). Around the year 1990
and 91, several major companies of the world comes up and joined the trend of
providing facilities in both online as well as offline mode and they started
getting positive response more from online mode than the conventional mode.
After this incident, many more companies switched to online mode and hence
their profits increased severely. The primary reason that many companies
switched to online mode is the invention of WWW in 1990. It provides the
company a very easy method to create their website and started advertising and
selling their products on that. Amazon and E bay were one of the first largest
companies which completely switched themselves to electronic commerce.
In India, the concept of electronic
commerce hits lately and also the development took more time than usual. IRCTC,
online ticket and other services booking site of Indian Railway was among the
first Indian Company which provides online services through electronic commerce
platform to their customers or service takers. The rules and regulation which
governs the formation and breaking of electronic contracts came up in the year
2000 by the name of Information Technology Act. This act provides the set of
rules and regulations which governs the formation of an electronic contract
between the parties. Also, it checks the legality of an electronic contract as
well.
The importance of electronic commerce
and electronic contract increased severely when the whole world is badly hit
and affected by covid pandemic. The world is in lockdown for few months but the
life should be going on, and to make this phrase true, online companies and
stores continued their work and many companies who were not operational in
online mode switched to the mode and hence the craze of electronic commerce and
contracts upsurge during the pandemic period.
Electronic contract developed through
the portals, websites and applications of e commerce. E contracts formed by the
interaction of two or more parties in online mode or by the use of electronic
devices. Electronic Contract can takes place through e mail or through any
other
websites and computer programme. The
rules and regulations that are applicable to electronic contract are same as
that applied in traditional form of contracts.
Essentials Of E Contracts
The major requirements to enter into
the contract is called essentials of the contract and these are almost similar
for both traditional form which is based on paper and modern form which is
electronic based. The listed below are the essentials of the contract:
(I)Offer – It is the foundation of
any type of E Contract. Offer simply means the expression of views of one
person towards other to do some work or to abstain from doing it. In Electronic
Contract, the expression of offering any item or idea may be different but the
purpose always remains the same. In general, the person who is giving the offer
is known as promisor/ offeror whereas the other person to whom offer is made is
known as promise / offeree whereas the criteria is little different in terms of
E Contracts. IT Act of 2000[9]
primarily governs the formation and development of E Contract and in terms of
same, the person who sends the offer is known as originator and the person to
whom it is made is called addressee.
(II) Acceptance – Anyone made some
offer to any other person or company. So, the other person to whom the offer is
made must have to accept the offer in way or the other then only both the
parties get legally binded and hence contract is made. Similarly, here also,
the acceptance should be made to the online offer by the originator by ticking
on I agree switch.
(III) Communication or
Acknowledgement – The communication by the addressee is the vital part in
forming an E contract between the parties. If the addressee fails to
acknowledge the receipt by originator, then the contract is not binding in
nature. Therefore, the acknowledgement by any way is very much essential. Section
12 of IT Act deals with the same and provides the provision of non- binding
of any agreement if communication of acceptance is not made.
(IV) Along with all the above
mentioned essentials, several other provisions like Consent, Competency,
Consideration in Lawful manner & electronic signature plays a very crucial
role in the construction and development of electronic contracts. Among all
these, Electronic Signature is the most vital part because if it is absent from
the mail or from any other electronic document then, the contract is not
considered as valid one. E Signature is well recognized under section 5[10]
of Information Technology Act which was passed in the year 2000.
Types Of Electronic Contracts
The revolution in the technology
sector helps in the development of internet and other several related things
which in turn brings the globalisation and modernization in today's world. Due
to revolution and recent developments in various different sectors, the life of
the people becomes easy. Today we can search anything and also get answer of
any of our queries on the internet, which subsequently makes our life much more
easier than it was before. The world reached at the next level due to
development in IT sector.
Among all the major developments
which resulted due to revolution, electronic commerce is the most vital one.
Today in the modern world, we just sit in one room and order our choices and we
get delivery in the less time we expected without any effort. The electronic
commerce received its approval and significance around the year 1980 at the
international level. The craze rises and further necessary developments in the
electronic commerce takes place during the pandemic period. Electronic contract, the most significant
part associated with electronic commerce. In the world before revolution and
modernization in IT sector, when any commerce took place then there is an legal
agreement in between the parties. Similarly, in e commerce, this contract takes
place in virtual form which is termed as e contract.
As soon as electronic commerce
upsurges, the need of e contract also rises simultaneously which in turn rang
the bell at both national and international level that there are need of some
rules which regulate the terms and conditions of e commerce and contracts. To bind the electronic commerce and contract
within rules and regulations at international level, United Nations forms an
association named as UNCITRAL. The commission was supposed to draft and pass
laws on electronic commerce. On the 12th day of June 1996, a model law was
adopted internationally which further regulates the electronic commerce and
ensures that everyone getting equal chances to represent their company and
product and along with this, the law also aims to remove the trade barriers
which persist in online mode of commerce. The model law not only deals with e
commerce rather it had provisions for e contracts and its types as well. It
laid down several provisions which ensures that all the things should be lawful
and consent should be free of both the parties.
Electronic contracts came into
existence as soon as someone either tried to buy the goods or render the
services provided. There are various different types or the ways through which
one can enter into e contract:
(1) E Mail / Browse Wrap: A legally
binding agreement can be made through electronic mail very easily and speedily
as well. The written matter which is present in the mail in considered
similar to those which are written in
a letter. Also, the advertisement as well as offer can be made through an email
very easily and it can be accepted through e mail only by replying on the
message of offer.
Although there were some limitations
and hindrance in forming a contract through email. First is, sometimes some
kinds of interruptions may be possible in sending an electronic mail and second
is an email may not reach to the receiver due to technical and network error on
the part of sender. One another kind, which is very much similar to email is
Browse wrap. In this, the other party need not require to click any bottom for
giving the consent on the offer. Rather by reading or ignoring also the given
terms and conditions, the legally binding agreement takes place in between the
parties as soon as buyer pays the amount.
(2) Click Wrap - It is very different
from the above discussed types which are email & Browse Wrap. In the Click
Wrap contract, the other party who intends to make a contract should press the
bottom I agree or I accept in order to give the consent to the contract. The
click wrap one is mostly found in world wide web. In the click wrap agreement,
a series of events takes place before signing the final contract in between the
parties. Initially, the company or some sellers who want to sell their goods
and services placed them on the websites and mark the particular amount for
which they want the particular goods to be sold. By making the advertisement,
they impliedly makes the offer to the buyer and when the other party or the buyer
visits the platform and gives the consent to the offer by pressing I agree and
buys the product by clicking on the key "Buy now" then, the legal
agreement binds both the parties and hence the contract forms in between them.
(3) Shrink Wrap - It is very much
different from normal forms of electronic contract. It is the combination of
offline as well as online mode as in this type, the agreements or the terms and
conditions of the contract are printed on the CD ROM and other software’s of
similar kind. These products are fitted inside a plastic coating and as soon as
the coating is removed by the user or the promisee, then the T&C gets
legally enforced upon the parties and hence the contract is formed. Apart from
all these, one major advantage resides on the side of user or customer is that
if he or she didn't like the product or the items in software then full refund
return or exchange policy is always available.
Concluding Remarks
The topical growth and development of
the internet and online facilities lead to the modernization of the world hence
this further helps in up rising the living standard of the individuals. With
the modernization and globalisation, electronic commerce developed and thrived
swiftly in the last two decades. Although the existence was from since 1950s
but the recognition and upsurge of electronic commerce and contract is a recent
phenomenon. E contracts is just similar to the contract which is signed in the
offline mode but the slight difference among them is that, electronic contract
is drafted and executed in the online mode. Commercial websites like Amazon,
flipkart, E bay, Swiggy etc all works on the principles of electronic contract.
The online commercial websites offered various range of products on their site
and the customers or the users when select and agree to buy the services or
goods, then electronic contract comes into existence which is executed as soon
as customers clicks on the I agree key as the parties agrees to the terms and
conditions. The craze of electronic contract goes up during the pandemic period
as the major countries are under lockdown and the necessary items to support
life is needed. These online commercial platforms provided them with every
necessity and hence it intensifies the users. Last but not the least, these
commercial websites although flourished rapidly in world as well as in India
but it should not be free from any kind of jurisdiction. Therefore, to make
them under laws and statutes, many different laws were drafted and passed in
different parts of the world as it also safeguards the right and dignity of
individuals and also protects them from unlawful activities of these commercial
websites.
Article Information
THE NATURE AND EXPLICATION OF ELECTRONIC CONTRACTS (By- Aditya Raj Pandey)
Author Name: Aditya Raj Pandey
Title: THE NATURE AND EXPLICATION OF ELECTRONIC CONTRACTS
Email Id: arpandeylaw@gmail.com
- Journal IJLRA
- ISSN 2582-6433
- Published 2022/07/04
About Journal
International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
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