E-Contract

Ramesh Chalise
Lagrandee International College
 Syllabus: 4 hr
 Concept of generic services.

 Concept of generic services

• -Information,

• - negotiation,

• - archiving,

• - enforcement,

• -reconciliation;

 Structure of a contract;

 Digital signature;

 Legal affairs.
 Contract
• What is contract?
• Why do you do Contract?
• What are the essentials for the contract?
Contracts
E-contract
• Contract formed by negotiation of two or more
individuals through the use of electronic
means.

• It requires prof or origin for electronic

contracts (Electronic Signatures).

• Unlike other contract e-contract should have

offer and acceptance (Terms and condition)
Offer and Acceptance
Email; e-mail, faxes, telephonic discussions etc.

Website Forms: The seller can offer goods or services (e.g. air
tickets, software etc.) through his website. The customer
places an order by completing and communicating the order
form provided on the website.

Online Agreements: Users may need to take an online

agreement e.g. clicking on “I accept” while connecting
software or clicking on “I agree” while signing up for an email
account.

Online offers needs to include Return policy, Disclaimer,

Privacy policy
E-Contracting negotiation involve following
actions
• Valid recording of the negotiation positions
• Agreement of rights and obligation
• Electronic storage and administration of the
contract parts
• Legal Conclusion of a contract (with digital
signature)
• Monitoring fulfillment of terms and contract
E-Contracting negotiation involve following actions
(continue)

• Intention to create legal relation

• Parties must be competent to contract
• Must be genuine consent
• Object of the contract must be lawful
• All offer and acceptance need to made
• Must be certainty and possibility of
performance
 ISSUES IN ELECTRONIC CONTRACTS

Authenticity
As to source or origin of the communication
Integrity
As to accuracy, not duplicated, modified or deleted.
Non repudiation
As not being able to deny the communication
Writing and signature
Confidentiality
As to control the disclosure of information during transmission
 Structure of an electronic contract

• An electronic contract must include categories

of information that answer the following
questions:
• Who are the contracting parties?
• What is the content of the agreement?
• How is the electronic contract to be realized?
• Which basic legal conditions apply?
Business Phases of contracting Process
• Information
• Intention
• Agreement
• Settlement
• Information Phase
Collect information about market situation, sectorial trends, product
service, prices etc

• Intention Phase
Information phase provide information in an unstructured way and with
out any legal bind. In this phase information are presented in a structured
way for eg catalogs

• Agreement Phase
• Aims to establishing a contract. This phase starts and end with
offer and acceptance between partners
• If negotiations are successful this phase result a contract between
a partners

• Settlement
Execute define service , carry out logistic and payment services.
 Generic Services for econtracting
• Generic services for eContracting cover the
following aspects:
• Identifying the contracting parties
• Electronic negotiating (including concluding the
contract)
• contract archiving
• contract enforcement
• electronic arbitration
E-Contracting-negotiation process
Information Phase
Electronic representation of providers
Electronic representation of customers
(Identification of parties i.e through passport, citizenship,
contacts etc and issue certification)

Agreement Phase
Validation Services
Checks the contract framework, highlight problem and risk Suggest
Notification

Negotiation Services
Support negotiation through multimedia component and cooperative
negotiation environment
• Archiving Phase
Use electronic catalogs to optimize conditions for
exchange, classification of contract versions

• Arbitration Service
To Solve legal dispute (http://cybersettle.com/)

Execution Phase
Reconciliation Phase
XML Based E-Contract
• XML(Extensible Mark-up Language)-based procedures for producing
electronic contracts have been at the developmental stage for some
years now.

• XML is a standardized and application-independent document

format due to which electronic contracts can be exchanged.

• With the help of XML,Automatic processing and validation of

contracts are made possible

• The advantage of using XML format for contracts is that contracts

can be processed using machines, and contracts can be imported
into contract management and negotiation tools
XML Image
Digital Signature
• It is a type of asymmetric cryptography.

• A digital signature is a close parallel to a handwritten signature. Like

a handwritten signature, a digital signature is unique—only one
person presumably possesses the private key.

• To ensure the authenticity of the message, the sender encrypts the

entire block of cipher text one more time using the sender’s private
key. This produces a digital signature (also called an e-signature)

• It is “signed” cipher text that can be sent over the Internet.

• Companies like Docusign, Echosign and sertifi offer online digital

signature.
• To check the confidentiality of a message and
ensure it has not been altered in the transit, a
hash function is used.

• A hash function is a mathematical function

that converts a numerical input value into
another compressed numerical value. The
input to the hash function is of arbitrary
length but output is always of fixed length
 Digital Envelope
• It is a technique that uses symmetric
encryption for large documents .

• Symmetric key encryption is computationally

faster and this method saves time because
both encryption and decryption are faster
with symmetric keys.
 Legal Rights of the E-contract
• Data protection and data security: protection
against misuse, loss, falsification.
• Copyrights and patents.
• Right to a domain name and trademark law
• Digital signature.
• Telecommunications law.
• International advertising guidelines.
 Advantages of Digital Signatures
• Authentication: Identification of the person(
Public key, private key)

• Non Repudiation; cannot be denied

• Security; contains a high level of security( Cannot

be altered, destroyed or intercepted)

• Cost: with the low cost

• Convenient; easy to conduct and quick as well

Advantage of Digital Signature
• 1. Added security
• A digital signature offers more security than an
electronic signature. The unique identifying
“fingerprint” data in a digital signature remains
permanently embedded within a document.

• The coded message in a digital signature uniquely

identifies the signer and links him or her with a
particular recorded document
A high standard
• The PKI (Public Key Infrastructure) standard
mandates that vendors make and save keys in
a safe and secure fashion.

• Each signer has safe and secure access to his

or her own key. The algorithm works as an
encrypted code to produce data that match
the “hash” — the signed document in
question — and then to encrypt the same
data.
Global acceptance and legal compliance
• More countries are starting to accept digital
signatures on legally binding documents
because they understand that the security
protocols offered by vendors such as DocuSign
are in compliance with international standards
in the field.
Independent verification
– Digital signatures from companies such as
DocuSign can withstand stringent independent
verification and cannot be altered by
unauthorized parties.

• Long-term retention and access

– The signatories to a digital signature document do
not need to rely on a vendor’s continued presence
in the marketplace in order to continue to verify
its authenticity.
 Disadvantages
• Expiry: The period of operation expires after certain
time
• Certificates:, both senders and recipients may have to
buy digital certificates at a cost from trusted
certification authorities.
• Software: both partie should have verification
software.
• Law: In some countries, cyber and technology-based
laws & issues are weak or even non-existent. Trading
might be risky at that time
• Compatibility: Sometime Digital Signatures might be
incompatible with each other softwares.
Legal Affairs
• Five Basic elements in contract that must be
present for court enforcement.
• These elements will be apply to all contract
(electronic, oral or paper based communication)

a. Offer
b. Acceptance of offer
c. Certainty
d. Intention
e. Consideration
Offer
An offer is an open call to anyone wishing to accept the
promise of the offer and generally, is used for products
and services.

Acceptance of offer.
Acceptance occurs when an offeree agrees to be
mutually bound to the terms of the contract by
giving consideration, or something of value like money.

Certainty
Court must be able to ascertain (make sure) what
parties have agreed.
Intension
• Parties must intend that their agreement must
be legally binding.

• Consideration
Price or services that is paid in return for a promise.
• If legal disputes come about the despite of
precautionary and security measures, then
online arbitration court can be consulted for
the purpose of conciliation. (European Union
(EU) jurisdiction), http://cybersettle.com/)
Legal Effect of an e-contract
• Basic legal conditions for using electronic information
and communication services have existed for some
time now. The most important of these laws and
regulations concerns the following areas

• Data protection and security: Data protection means

the protection of personal data from incorrect use. In
contrast data security is the protection of data from
loss and unauthorized use.

• Copyrights: Dealing with digital goods requires

adjusting and extending appropriate bills relating to
copyright protection.
• Right to domain name and trade mark law: Each computer connect to
the internet possesses a specific number. In addition , a specific
name can be assigned to computer to identify it.

Meanwhile in international level there is not any specific rule to

provide domain name while in national level (Nepal) mercantile
company provide domain name under the rules and regulation
defined by ministry of education and information technology

• Digital signature: signature laws regulate how the allocation of

private and public keys and the issuance of the certificates are
organized. In the simple word A signature is generally
understood as evidence that the signatory approves of a
document’s contents. But does this ring true also for a person’s
name printed on a telex or fax, or reproduced in electronic mail?
• International advertising guidelines: the
international chamber of commerce in paris
has developed guidelines concerning online
advertising. The points of this is that every
provider must reveal its identity to internet
user.
Any Queries ?