THE LEGAL FRAMEWORK OF E-CONTRACTS IN INDIA

TABLE OF CONTENTS
I. INTRODUCTION....................................................................................................................2

II. ESSENCE OF E-CONTRACTS.................................................................................................3

III. VARIOUS KINDS OF E-CONTRACTS..................................................................................4

1. SHRINK-WRAP..................................................................................................................4

2. CLICK-WRAP....................................................................................................................5

3. BROWSE-WRAP................................................................................................................5

4. EMAILS............................................................................................................................5

5. ELECTRONIC SIGNATURES...............................................................................................5

IV. CONSTITUTIONALITY OF THE E-CONTRACTS...................................................................6

V. JURISDICTION OF E-CONTRACTS..........................................................................................7

VI. EXECUTION OF E-CONTRACTS.........................................................................................7

VII. LIMITATIONS OF E-CONTRACTS.......................................................................................9

VIII. CONCLUSION....................................................................................................................9
 1. INTRODUCTION
With rising consumer demand to buy a wide range of products and services from a global
pool, e-commerce is gaining ground in India. This has a big impact on contracts since they
are the most delicate and crucial documents in terms of business law. There is no question
that COVID-19 has accelerated the digitization of all nations. It has become commonplace to
take online courses, attend webinars, work from home, and sign contracts electronically. This
computer age was sparked by the rapid development of industrialization, globalization, and
technicalities, which served as a crucial foundation for the advancement of technology. One
of its by-products, electronic commerce, is a crucial component of the 21st-century economy.
As a result, the internet is a new way of life that is undeniably here to stay and, as it does, it
affects how we live. The wide range of activities carried out with the aid of the internet has
come to represent the traditional methods of carrying out those specific activities. Simply
said, e-contracts are agreements that are made electronically rather than on paper. In the
digital era, the entire transaction may be finished in a matter of seconds by merely having
both parties digitally sign the document or click on a link to an electronic version of it.
Therefore, the requirement for speed, convenience, and efficiency gave rise to e-contracts.
“E-contracts fundamentally resemble current traditional (paper-based) business agreements
extremely closely.1 Vendors or sellers explain their items, pricing, and agreements to
potential customers. Buyers weigh their alternatives as best they can, haggle over conditions
and pricing (if at all feasible), place orders, and make payments (which is vendor
expectation). An E-contract can be any type of contract formed in the course of e-commerce
by the interaction of two or more individuals using electronic ways, such as e-mail, or the
interaction of an individual with an electronic agent, such as a computer program, or any
software, or the interaction of at least two electronic agents that are programmed to recognize
the existence of a contract.” Then, the vendors deliver their products to the buyers of the
purchased products. Compliance with the basic prerequisites specified by the Indian Contract
Act, 18722 is the sole fundamental criteria to validate an electronic contract. The courts in
India also consider electronic contracts as required by this clause.

The legality is of the primary concern in the matter of E-contract. E-contracts are given
legality under Sections 4 and 10 A 3 of the Information Technology Act of 2000, which

1
Geetanjali Shastri, ‘E-contract legality: an introduction(5 September 2021) < https://blog.ipleaders.in/e-
contract-legality-introduction/>.
2
Indian Contract Act 1872.
3
Information Technology Act 2000.
equalizes the status of e-contracts and physical contracts in terms of their legality. By Section
4, a document that, under the legislation under which it is controlled, may be typewritten or
printed shall also be deemed to include the document prepared in electronic form, subject to
the prerequisite that it be accessible for the parties’ future use. A contract may not be ruled
void only because it was made and executed in electronic form, according to Section 10A of
the Act. In Trimex International FZE Ltd. v. Vedanata Aluminium Ltd4., the Supreme Court
also took a position in favor of the legality of e-contracts and permitted them to stand
alongside the traditional physical contracts.

2. ESSENCE OF E-CONTRACTS
The Indian Contract Act, 1872 regulates the formation and fulfillment of contracts in India. It
establishes the procedures for carrying out a contract’s terms and specifies the consequences
of breaking a promise. Parties are allowed to enter into a contract on any terms they see fit
within the parameters of the Act. The Indian Contract Act specifies the conditions under
which a contract may be made, carried out, and its breach enforced. It simply offers a general
description of the laws and policies that control the formation and execution of contracts. In
the event of a default, the court takes action to enforce the agreement. Speed, appropriateness,
and efficiency are the driving forces behind the development of electronic contracts, which
are contracts that are executed entirely electronically rather than on paper. “Consider a deal
that an American buyer and an Indian exporter want to make. One possibility is for one party
to print off two copies of the agreement, sign them, and send them by courier to the other,
who will then sign both copies and send one copy back. The alternative is for the parties to
meet and sign the agreement there.” In the age of electronic commerce, signing a contract in
its entirety only takes a few seconds if both parties merely add their digital signatures to an
electronic copy of the agreement. “In such a case, there is no need for sluggish couriers or
unnecessary trip expenses. Legislators were first hesitant to acknowledge this contemporary
technology, but today several nations have established laws recognizing electronic contracts.”
A legally enforceable agreement could need to meet all the conditions outlined in the Indian
Contract Act of 1872, as amended by the Information Technology Act of 2000: First, when
one party declares its readiness to act or refrain from doing to secure the other party’s
approval to such act or refrain from acting, there should be a valid “offer” to be made. A bid
is regarded to have been made in an E-contract if the offeree is aware of it. “In a
straightforward sense, what they provide to the public is an “invitation to offer,” and by using
4
Trimex International FZE Ltd. v. Vedanta Aluminium Ltd, (2009) ARBITRATION PETITION NO. 10 OF
2009.
an online store, we agree to their terms and conditions in exchange for buying any item at the
set price “Offer or suggestion.

“If an offer is accepted by the individual, “acceptance” is deemed to have occurred following
Section 2(b)5 of the Indian Contract Act of 1872. A letter of acceptance to the bidder is
anticipated. By clicking “I accept” all of the supplier’s terms and conditions, we are
approving the link to the E-Contract. Another fundamental need is “consideration,” which
refers to the gain or advantages that the parties have agreed are necessary to fulfill the legal
obligations of the contract.” A pledge is defined as any act “when the promise agrees to the
promisor’s request to perform or refrain from executing any action under Section 2(d) of the
Indian Contract Act of 1872. Following Section 23 of the Indian Contract Act of 1872, a legal
contract must also have a good cause for being entered into. A legitimate contract must be
able to be entered into by the parties. The parties must be of sound mind, of legal age, and not
be prohibited by legislation, according to section 11 of the Indian Contract Act of 1872.”
However, in the event of an electronic contract, the seller is in charge of making sure the
other party has the legal right to sign the agreement. The contract should also not be vague,
imprecise, or nearly difficult to fulfill.6

3. VARIOUS KINDS OF E-CONTRACTS

4. Shrink-wrap

Software license contracts are frequently written as shrink-wrap contracts. The term comes
from the shrink wrap used to package CD-ROMs, which were once used to deliver software.
The contract starts when the user rips open the shrink wrap to utilize the program in situations
when license agreements are packed with the software. These days, licensing agreements
frequently appear before the installation of the program in question rather than being included
with the packing. The ability to return the merchandise gives shrink wrap contracts a distinct
edge over other forms of electronic contracts.7

5
Indian Contract Act 1872.
6
Shreyashee Mitra, ‘Electronic Contract: A New Normal’(4 july 2014) <
https://www.legalserviceindia.com/legal/article-5130-electronic-contract-a-new-normal.html >.
7
Archana Balasubramanian, ‘E-Contracts In India’ < https://www.mondaq.com/india/contracts-and-
commercial-law/1104590/e-contracts-in-india >.
 5. Click-wrap

The “terms and conditions for utilizing a web-based service, software, etc. are described in
clickwrap contracts, which are those recognizable and lengthy blocks of text that nobody
reads. Because the user often needs to click a button or check a box to indicate that they
accept the contract”, they are also known as clickwrap contracts. “You’ve probably observed
that clickwrap contracts are “less negotiable” than shrink-wrap contracts; in other words, the
user must accept them to go on to the next web page, use an application, etc. In essence,
clickwrap agreements set up a situation where the user is compelled to accept or reject it. As
a result, there are a variety of legal issues with the enforceability of click wrap contracts.”

6. Browse-wrap
They relate to phrases on websites like “By using these services again, you agree to the terms
and conditions” or “By registering, I agree to the terms of use.” In essence, browse-wrap
agreements from which the phrase itself derives—are contracts you accept just by using the
service or continuing to explore the website. Additionally, browse-wrap agreements typically
provide a hyperlink that allows users to examine their terms.

7. Emails

Although emails are not often included in a “list of electronic contracts, they have been found
in several instances to be legally enforceable contracts. For instance, in the 2010 case of
Trimex International FZE vs. Vedanta Aluminium Limited, India, the Supreme Court
confirmed the legality of an email-discussed contract that was neither registered nor signed,
so affirming that the contract by email may be enforced.” Emails may also be electronically
signed, which is a crucial factor in determining whether an agreement turns into a contract.

8. Electronic signatures 
The digital and verified equivalents of traditional wet signatures are referred to as electronic
signatures. Online document signing is done with electronic signatures, and there are
normally two ways to achieve this:

1) OTP-based Aadhaar-based signatures

2) “Digital signatures that allow users to sign documents with a password and make use of
hash methods and an asymmetric public key system. The IT Act, 2000, which contains
measures assuring the legal validity and enforceability of documents signed using electronic
signatures, recognizes electronic signatures. Therefore, any agreement that meets the
requirements of Indian Contract Law and is signed using an electronic signature online is
considered to be a legitimate electronic agreement in India. Digital signatures are recognized
by the Information Technology Act of 2000 as validating e-contracts”.8

9. CONSTITUTIONALITY OF THE E-CONTRACTS

E-contracts are becoming more and more valuable, and as a result, different parties are
continually learning about and evaluating the legal difficulties that surround them in India
and throughout the rest of the world. the participation of several service providers, such as a
payment gateway, the primary website, the bank, or card verification, in an electronic
contract transaction. “These are what they are:

1) Indian Contract Act, 18729

2) Consumer Protection Act, 198610

3) Information Technology Act, 200011

4) Indian Copyright Act, 195712

The Indian Contract Act, 1872 governs and forms the foundation of contracts in India.” It
controls how a contract’s clauses are carried out and specifies the consequences of a clause
being broken. The fundamental guidelines outlined in the Contract Act apply to e-contracts as
well. To bring about legal uniformity between nations, the United Nations Commission on
International Trade Law (UNCITRAL) issued the Model Law on Electronic Commerce in
1996. India passed the Information Technology Act in 2000 as a result of this. According to
Section 10A of the Information Technology Act of 2000, “Where in a contract formation, the
communication of proposals, the acceptance of proposals, and the revocation of proposals
and acceptances, as the case may be, are expressed in electronic form or using an electronic
record, such contract shall not be deemed to be unenforceable solely on the ground that such
electronic records.”

8
Information Technology Act 2000.
9
Indian Contract Act 1872.
10
Consumer Protection Act 1986.
11
Information Technology Act 2000.
12
Indian Copyright Act 1957.
 10. JURISDICTION OF E-CONTRACTS
By the passage of the Information Technology (Amendment) Act13 of 2008, the phrase
“digital signature” was replaced with the word “electronic signature.” “A digital signature is
unique to the document and the signer and is particular to the technology. An electronic
signature, on the other hand, is neutral in terms of technology and generic. There isn’t a
standard for electronic signatures, though. Either a typed name or a digital facsimile of a
handwritten signature may be used. Email-based contracts are recognized by Indian courts.
For instance, the Supreme Court of India ruled in Trimex International FZE Limited, Dubai
vs  Vendata Aluminum Ltd. that the parties’ e-mail contract was legitimate and unreservedly
accepted, meeting the provisions of the ICA.” Legal acceptance of electronic contracts To
practically remove the objections to electronic evidence, the Delhi High Court cleared the
door for the immediate adoption of Sections 65 A and 65 B into the Indian Evidence Act,
1872 in the matter of Societies Des ProductsNestle S.A and Anr vs Essar Industries and
Others.14 Following section 65 According to section 65 B of the Indian Evidence Act of
187215, parties may establish the contents of the electronic recordings. Additionally, the Delhi
High Court ruled that “Electronic recordings are admissible as evidence” in the case of State
of Delhi vs. Mohd. Afzal and Others.

11. EXECUTION OF E-CONTRACTS

“In India, there is no regulation to govern E-Contracts. Recognition and regulation of E-
Contracts are provided by some of the provisions of the Information Technology Act, 2000
and the Indian Evidence Act, 1872. The I.T. Act contains detailed provisions for attribution,
acknowledgment, and dispatch of electronic records and secured electronic procedures. The
recent amendments to Maharashtra Stamp Act provide that the term ‘document’ includes an
electronic record.” “The IT Act recognizes that communication of proposals, acceptance of
proposals, revocation of proposals and acceptances, as the case may be, could be expressed in
electronic form or utilizing an electronic record, and shall not be deemed to be unenforceable
solely on the ground that such electronic form or means was used for that purpose.” Further
recognition is provided by the Indian Evidence Act, which defines a document as any
information included in an electronic record that is printed on paper, saved, recorded, or
replicated in optical or magnetic media, as well as any computer output that satisfies those

13
Information Technology (Amendment) Act 2008.
14
Societies Des ProductsNestle S.A and Anr vs Essar Industries and Others, (2006) (33) PTC 469 Del.
15
Indian Evidence Act 1872.
criteria (hereinafter referred to as the computer output). 16 “Such information in conformity
with the conditions of Section 65 B shall be admissible in any proceedings, without further
proof or production of the original, as evidence of any contents of the original or any fact
stated therein of which direct evidence would be admissible.” Additionally,

1) Electronic signatures were replaced with the word “electronic signature” by the
Information Technology (Amendment) Act of 2008. A digital signature is unique to the
document and the signer and is dependent on technology. An electronic signature, on the
other hand, is general in nature and technology agnostic. Electronic signatures are not subject
to any standards. It might be a typed name or a handwritten signature’s digital picture. The
phrase digital signature has been replaced with electronic signature to expand the range of E-
contracts in an e-commerce environment. It is important to highlight those other nations,
including the US, have also passed appropriate legislation to ensure that a signature cannot be
refused legal effect just because it is in electronic form or does not adhere to the required
technological method.”

2) Maharashtra Stamp Act17: According to Section 3 of the Act, there is a stamp duty that
must be paid on each document listed in Schedule I. “This indicates that if an instrument is
classified in Schedule I, stamp duty is likewise due on contracts entered into in electronic
form.” In the aforementioned Act, “execution” is used interchangeably with “signed” and
“signature.” The word “signed” and “signature” are defined in this section’s explanation to
include attribution to electronic records as per section 11 of the Information Technology Act.
The word “mark” is used when referring to a person who is unable to write his name. Thus,
an instrument may be executed in electronic form and be legally binding.

“The receipt, which is given by the online vendor to the consumer after a transaction, is one
of the crucial records attesting to an online transaction. According to the Indian Stamp Act of
1899, a receipt is any letter, memo, or writing that acknowledges the receipt of money, a bill
of exchange, a check, or a promissory note. The Indian Stamp Act of 1899 stipulates that a
receipt for any money or other property, the amount or value of which exceeds INR 5000
(Rupees Five Thousand), must be stamped; the Maharashtra Stamp Act makes no mention of
this requirement.” The receipt, which serves as proof of the whole transaction, must be

16
Badrul Alam Nill, ‘Assignment on E-contract based on Indian Laws’(January 2021) <
https://www.researchgate.net/publication/348849273_Assignment_on_E-
contract_on_the_basis_of_Indian_Laws>.
17
Adv Hashim Wafa, ‘e-Contracts: Are they Legal and Enforceable in India ?’(17 July 2017) <
https://legacypartners.in/insights-and-research/e-contracts-are-they-legal-and-enforceable-in-india>.
stamped even when the entire transaction is carried out online and without the signing of any
documents by the seller and the buyer.

12. LIMITATIONS OF E-CONTRACTS

Although the idea of e-contracts is a widely praised innovation that has revolutionized the
distant execution of contracts through a paperless path, the idea is still relatively new and is
still in the early stages of development. As the protection that may be assigned to physical
contracts cannot be deemed to be present in e-contracts, this system is not without legal snags
that continually arise. E-contracts require that all terms and conditions be communicated by
email, which might cause misunderstandings between the contractual parties. Face-to-face
communication is, in this regard, a far better way to guarantee that the parties to the contract
are in agreement with the terms and conditions of the agreement.

The Information Technology Act only permits electronic signatures and signatures that are
connected to an Aadhar number in e-contracts. An ongoing effort has been made to make the
signing procedure simple and efficient. The Securities and Exchange Board of India
permitted utilizing DigiLocker and other applications for fulfilling KYC requirements during
the epidemic, when there was a rapid upswing in the use of e-contracts, to guarantee that the
entire procedure could be completed without any difficulties. Globalization has increased
interactions between various company units registered in several nations, necessitating the
use of electronic contracts. However, restricted ways of signing may provide issues for
foreign nationals, particularly in nations with various rules on the signature. Executing an e-
contract becomes challenging in certain circumstances.

Additionally, any document stating rights must be stamped under the Indian Stamp Act and
other state stamp laws. However, in the case of online contracts, this is not feasible. A receipt
indicating receipt of the consideration is necessary in cases of online transactions, particularly
contracts between buyers and sellers, and stamping a receipt is a requirement under the
Indian Stamp Act.18

13. CONCLUSION
The common legislative and judicial intent seems to be crystal clear: any legally binding act
that is regularly performed would remain legally binding even if it were performed
electronically or digitally, provided that such electronic/digital performance includes all of

18
Shreyans Ranka, ‘All About E-contracts- Meaning, Types and Law’< https://taxguru.in/corporate-law/all-
about-e-contracts-meaning-types-and-law.html>.
the characteristics of a legally binding contract, as prescribed by the applicable laws.
However, it looks that the ongoing COVID-19 dilemma and the new digitalization trend will
ultimately force people to accept contracts made using electronic means, and our legal system
has already started to put the necessary regulations in place to recognize and enforce such
contracts. It is reasonable to assume that in the upcoming years, e-contracts will either
voluntarily or involuntarily replace the current system of contract execution.