E-CONTRACTS

By Prof. Madhura Bhangle

 What are E- Contracts?
• Paperless contract between parties.
• These contracts are generally made for speedy entering into a contract or for
the convenience of the parties.
• It is based on Digital signature.
Parties to E- Contract are :

Originator Addressee
 Parties
• Originator the person who initiates the process of making
an e-contract to send it to the other party
• Addressee the party which receives the e-contract made by the
other party
 Electronic signature
• 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.
• Section 85 c of The Indian Evidence Act states that as far as a digital signature is
concerned, the courts presume that the information provided in that certificate is
true and correct.
• The Controller of Certifying Authority (CCA) has appointed Certifying Authority
(CA) for issuing Digital Signature Certificate (DSC)
https://cca.gov.in/digital_signature.html
 Forms of E- contract

Website forms Online agreements

E-mail

Browse-wrap Shrink-wrap
Click-wrap
contracts ( contracts ( software
contracts (I agree)
Downloading apps ) agreement)
 Issues related to e-contracts?

• Privacy issues with Social Media Platforms

• Privacy issues with OTT platforms
• Standard form of Contract under Click wrap
• Inadequacy of Contract Act- Enforceability
• Specific Exclusions by IT Act 2000- (Negotiable Instruments, Power of Attorney, Trust Deed, Will , Sale Deed or
Conveyance deed with respect to the immovable property of any documents relating to any interest in an
immovable property)
• Inadequacy of Stamp Act – (Maharashtra : The Maharashtra ePayment of Stamp Duty and Refund Rules 2014 the
stamp duty required to be paid under the act, may be paid online into the Virtual Treasury through Government
Revenue and Accounting System (GRAS)
• Cyber Crime
• Jurisdiction of Contract
 Validity
• Indian Contract Act, 1872
• Information Technology Act, 2000
• Indian Evidence Act
• E-contracts are regulated by the basic principles of contract, such as offer and
acceptance, free consent, capacity, and legitimate consideration, and are based on
Section 10 of the Indian Contract Act, 1872.. According to Section 10 of the Indian
Contract Act, “All agreements are contracts if they are made by the free consent of parties
competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly
declared to be void.”
• As a result, if an agreement is reached between freely consenting parties for lawful
consideration and the capacity to enter into a contract with a lawful object, and the
agreement is acknowledged in a legally binding manner, the agreement is a
contract.This is also true for E-contracts; nevertheless, one of the most distinctive
characteristics of E-Contracts is that they are accepted through electronic signature or
other electronic ways of acceptance.
• Any legal requirement of physical records that requires information to be typewritten or printed is deemed satisfied if
it is in electronic form and accessible for future reference under Section 4 of the Information Technology Act, 2000
(IT Act).Furthermore, Section 10(A) of the IT Act establishes legality by acknowledging contract creation, acceptance,
and revocation in electronic form. An e-contract is stored/recorded in electronic form with the involved parties as an
electronic record after it is executed. It will not be unenforceable solely because it is in electronic form.. Section 10-A
of the Information Technology Act, 2000 highlighting the validity of E-Contracts states that:
• “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 provision mentioned above was included by the Information Technology (Amendment Act), 2008 supposedly
after marking the growing subservience of commercial agreements on electronic means. This includes electronic
communication of the proposal, its acceptance and finally the formation of the contract between the parties.
• It suggests that, notwithstanding its clarity, an E-Contract is just as valid as a traditional written contract.As a result, all
E-Contracts that meet the requirements of a valid contract are legally binding, and there is legal redress if these e-
contracts are breached.
• These provisions have been applied and upheld by the Chennai High Court in the case of Tamil Nadu Organic v. State
Bank of India (2019). The outcome of the electronic auction was upheld and the Court said that liabilities may arise
from such electronic contracts and means as long as general principles of the contract are being fulfilled and are
enforceable under law as provided in the Contract Act. Therefore, e-contracts are largely legally valid and can be
enforced in a court of law.
Evidentiary Value of Electronic Records: The courts in India recognize electronic documents under
Indian Evidence Act, 1872. Under the Evidence Act, 1872, an e-agreement has the same legal effect as
an ordinary paper based agreement. The definition of “evidence” as provided under Section 3 of the
Evidence Act includes “all documents including electronic records produced for the inspection of the court.” Section
65A and 65B validates the e- contracts.
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. But, admissibility of
the same is subject to various conditions prescribed under section 65-B of the said act. 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.
Section 47A of the Evidence Act stipulates that if the Court has to take a decision as long as the validity
of the electronic signature is concerned, the Certifying Authority’s opinion, who in fact issued the
electronic Signature Certificate, is the basis.