By

Satvik Dhingra
Introduction
 One of the essentials of a valid contract is that the parties
should enter into the contract with their free consent.
 Two or more persons are said to consent when they agree
upon the same thing in the same sense i.e. consensus ad idem
Consensus Ad Idem
.
In online contract, the consent is said not free when it is dominated by three factors,
namely:
(1)Fraud
(2)Misrepresentation
(3) Mistake.
Fraud In E- Contract
 In an online contract it is very difficult to circumscribe all
different acts of fraud with a simple and precise definition of
online-fraud
 The essentials of online fraud are that there is false statement of
fact by a person who himself/herself does not believe the
statement to be true.
 There must be wrongful intention to deceive and induce the other
party to enter into the contract.
 Cont........
 The offences of Spamming and Spoofing have been originated to
cheat innocent customers
 Contract concluded under the cover of spamming and spoofing can
never be considered as a legal contract
 Spam is the use of electronic messaging systems to send
unsolicited bulk messages like advertising, indiscriminately.
 The most widely recognized form of spam is e-mail spam
 Spamming remains economically viable because advertisers have no
operating costs beyond the management of their mailing lists
 Most spam is commercial advertising, often for dubious products,
get-rich-quick schemes, quasi-legal services
 Other type of Spam are like: instant messaging spam, web
search engine spam, spam in blogs, wiki spam, online classified
ads spam, mobile phone messaging spam, Internet forum spam,
junk fax transmissions, social networking spam, social spam,
television advertising and file sharing network spam.
 Spoof
 spoofing refers tricking or deceiving computer systems or other
computer users
 This is typically done by hiding one’s identity or faking the identity
of another user on the Internet
 One common method is through e-Mail. e-Mail spoofing involves
sending messages from a bogus e-mail address or faking the e-mail
address of another user
 Another way of spoofing takes place on the Internet is via IP
spoofing. This involves masking the IP address of a certain
computer system.
 Cont.......
 By hiding or faking a computer’s IP address, it is difficult for
other systems to determine from where the computer is
transmitting data.
 IP spoofing makes it difficult to track the source of a transmission, it
is often used in denial-of-service attacks that overload a server.
 Software security systems have been developed that can identify
denial-of-service attacks and block their transmissions
 Other Examples of online frauds are: Phishing, Pharming, Fraudulent
e-mails, Virus or Malware Attacks and Internet Auctions.
 Misrepresentation in E – Contract
 Misrepresentation is defined under Section 18 of Indian
Contracts Act
 Misrepresentation means misstatement of a fact relevant to the
consent.
 the distinction appears to be operative in an online sale
 For example In a brick and mortar showroom the buyer has
the option of examining the product he/she buys and assuring
himself/ herself of the quality of the product by touch and
hence chances of being misled by the seller are few.
 The principle of ‘Caveat Emptor’ is strictly applicable in brick
and mortar world.
 Where as in the case of online transaction where a purchaser
is at a disadvantage and is not in a position to actually verify
the quality of the product he/ she is buying so the principle of
Caveat Emptor will not be applicable on online product
Cont.....
 Newly emerged doctrine in the era of Human Rights of
consumers Caveat Venditor must strictly adhere to in online
transactions which mean let the seller be beware .
 There is a thin line of distinction between innocent
misrepresentation and fraudulent misrepresentation is obliterated
in an online transaction
 Most of the Misrepresentation is happening in online shopping
Mistake in E – Contract
 Mistake means an erroneous belief about something
 Mistake may operate upon a contract in two ways:
(i)It may defeat the consent altogether
(ii) may mislead the parties as to the purpose which they
contemplated
 certain facts are essential to the agreement, i.e. identification of
parties, subject matter of contract and nature of promise.
Fundamental error does not prevent a contract from coming into
existence unless there is mistake as to the identity of other party-
as opposed to this attribute, as to the substance of the subject-
matter-as opposed to its qualities, or as to the nature of transaction
as opposed to its terms
 The general principle of contract clearly states that a mistake of
law is no excuse to avoid contractual obligations
Cont.....
 The only exception to this principle would be a mistake of foreign
law.
 A mistake of foreign law would render the contract void.
 A mistake of fact can take place in three ways-common mistake,
mutual mistake and unilateral mistake.
 The plea of non est factum i.e., absence of consent, is available for
all such mistakes.
 Considering the complexities involved in online transaction where
the likelihood of the occurrence of mistakes is very high, the plea of
non est factum can be made available as provided in general
principles of contract
 A common mistake of fact may take place in various ways, one of
them being, a mistake as to the nature of contract
 Cont.....
 A party to an online contract may not be permitted to avoid the contract
on the plea of mistake because an omission to look into the terms and
conditions will not bail a party out of his contractual obligations
 Another facet of mistake of fact can be regarding mistake as to a person.
In online contracts, chances of misrepresentation are very high.
 Identity of parties is never certain.
 An online contract concluded under the mistake of identity would be void.
 With the growth of e-Commerce, such commercial transactions occur
frequently and the likelihood of the occurrence of such mistakes is very
high
 The result would be that an innocent purchaser of goods would be
put to prejudice in the absence of an equipped legal regime laying
down the rules for online sale of goods
Relationship between the UNCITRAL Model Law 1996 and
the Information Technology (IT) Act, 2000 & (2008)

 The United Nations Commission on International Trade Law

(UNCITRAL) Model Law on Electronic Commerce (MLEC)
was promulgated in 1996 (and amended in 1998) to assist
countries in the framing of legislation which would enable
and facilitate electronic commerce and electronic governance
in the world
 This the first legislative text to adopt the fundamental
principles of non-discrimination, technological neutrality and
functional equivalence that are widely regarded as the
founding elements of modern electronic commerce law
 The principle of non-discrimination ensures that a document
would not be denied legal effect, validity or enforceability
solely on the grounds that it is in electronic form.
 The principle of technological neutrality mandates the
adoption of provisions that are neutral with respect to
technology used.
UNCITRAL BACKGROUND
 The purpose of Model law was to offer National legislators a
set of internationally accepted rules as to
 How a number of such legal obstacles may be removed, and
 How a more secure legal environment may be created for
what has become known as electronic commerce

Objectives of the Model Law:

 To facilitate rather than regulate electronic

commerce
 To adapt existing legal requirements
 To provide basic legal validity and raise
legal certainty
Feature of the Model
 This Law applies to any kind of information in the form of a data
message used in the context of commercial activities;
 Establishes rules and norms that validate and
recognize contracts formed through electronic means;
 sets rules for forming contracts and governing electronic contract
performance;
 puts electronic communications on par with traditional paper-
based modes of communication in order to fostering efficiency in
international trade;
 defines the characteristics of valid electronic writings and of an
original document;
 provides for the acceptability of electronic signatures for legal
and commercial purposes; and
 supports the admission of computer evidence in courts
and arbitration proceedings.
Sailent Features
 Between and among the parties involved in generating, sending,
receiving, storing or otherwise processing data messages, and except as
otherwise provided, the provisions of chapter III i.e. regarding the
communication of data messages may be varied by agreement.
 However, such variation does not affect any right that may exist to modify
by agreement any rule of law regarding the application of legal
requirements to data messages. (Article 4)
 Information shall not be denied legal effect, validity or enforceability
solely on the grounds that it is referred to in that data message. (Article 5)
 Where the law requires information to be in writing, that requirement is
met by a data message if the information contained therein is accessible
so as to be usable for subsequent reference. (Article 6)
•Article 7 :- Where the law requires a signature of a person, that requirement is
met in relation to a data message if:
(a) A method is used to identify that person and to indicate that person’s
approval of the information contained in the data message; and
(b) that method is as reliable (discussed in Art. 8.1a and 3a) as was appropriate
for the purpose for which the data message was generated or communicated,
in the light of all the circumstances, including any relevant agreement.
•Article 8 Where the law requires information to be presented or retained in its
original form, that requirement is met by a data message if:
(a) there exists a reliable assurance as to the integrity of the information from the
time when it was first generated in its final form, as a data message or
otherwise; and
(b) where it is required that information be presented, that information is capable
of being displayed to the person to whom it is to be presented.
Cont....
 Under Article 9(1), In any legal proceedings, there should not be any denial
regarding the admissibility of a data message in evidence:
(a) on the sole ground that it is a data message; or,
(b) if it is the best evidence that the person adducing it could reasonably be
expected to obtain, on the grounds that it is not in its original form.
 Under Art. 9(2) Information in the form of a data message shall be given
due evidential weight.
 In assessing the evidential weight of a data message, regard shall be had to
the reliability of the manner in which the data message was generated,
stored or communicated, to the reliability of the manner in which the
integrity of the information was maintained, to the manner in which its
originator was identified, and to any other relevant factor.
Other Provisions of the Model Law

 Article 11 (Use of data messages in contract formation)

 Article 12 (Non-repudiation)
 Article 13 (Attribution of data messages)
 Article 14 (Acknowledgement of receipt)
 Article 15 (Time and place of dispatch and receipt)
 Articles 16 and 17 (Electronic commerce and carriage of
goods)
 International Trade Law (UNCITRAL) Model Law on
Electronic Commerce:

 The MLEC establishes rules for the

 formation and validity of contracts concluded by electronic means,

 attribution of data messages,

 acknowledgement of receipt and

 determination of the time and place of dispatch and receipt of data

messages.
 Moreover, part II of the MLEC, dealing with electronic commerce in
connection with carriage of goods, has been complemented by other
legislative texts, including the United Nations Convention on Contracts
for the International Carriage of Goods Wholly or Partly by Sea (the
"Rotterdam Rules")
Important Provisions under the 2005 Convention:

The Convention features the followings-

 The Convention applies to all electronic communications exchanged between parties
whose places of business are in different States when at least one party has its place of
business in a Contracting State. (Art 1)
 Contracts concluded for personal, family or household purposes, such as those relating to
family law and the law of succession, as well as certain financial transactions, negotiable
instruments, and documents of title, are excluded from the Convention's scope of
application (Art2)
 The Convention sets out criteria for establishing the functional equivalence between
electronic communications and paper documents, as well as between electronic
authentication methods and handwritten signatures (Art. 9).
 The Convention defines the time and place of dispatch and receipt of electronic
communications. (Art. 10).
Cont.....
 Communications are not to be denied legal validity solely on the
grounds that they were made in electronic form (Art. 8).
 The enforceability of contracts entered into by such systems, including
when no natural person reviewed the individual actions carried out by
them (Art. 12).
 A proposal to conclude a contract made through electronic means and
not addressed to specific parties amounts to an invitation to deal, rather
than an offer whose acceptance binds the offering party, in line with the
corresponding provision of the CISG (Art. 11).
 Provides remedies in case of input errors by natural persons entering
information into automated message systems (Art. 14).
Overview of the Indian law
and it’s
Deviation from UNCITRAL Model

 The objectives of the Information Technology Act, as outlined in

the preamble, are to
 provide legal recognition for E-commerce transactions, facilitate
Electronic Governance and
 amend the Indian Penal Code, Indian Evidence Act 1872, the
Bankers’ Book Evidence Act 1891 and the Reserve Bank of India
Act 1934.
 The Act also establishes a regulatory framework for cyber laws and
lays down punishment regimes for different cyber crimes and
offences.
Overview of the Indian law
 Legal recognition for digital signatures.
 Electronic governance.
 Regulatory framework.
 Offences and penalties.
Deviations
 Deviation in Article 7 of the model
 The Information Technology Act mandates certain technical
standards—
 that is, an asymmetric cryptosystem commonly known as ‘public
key encryption’ and ‘hash function’. [Section 3 of the Act]
 Article 11 of the Unciteral Model 1996
 the Indian Information Technology Act does not have any express
provision regarding the validity or formation of online contracts.
 The Indian Contract Act 1872 deals with the validity of contracts.
 It does not prescribe any particular method for the communication
of offer and acceptance.
 Thus, there is no requirement of writing for the validity of
contracts, except in such cases where the requirement of writing is
specifically mandated by law
 Evidentiary Value of e-Contracts under Indian Evidence
Act, 1872
 The shift in the paradigm owes to the efforts of the UNCITRAL
Model Law, 1996 on electronic commerce and assigning of the
legal recognition to e-record or data message.
 The evidentiary value of e-Contracts can be explained in the light
of the following sections of Indian Evidence Act, 1872.
 it is observed that electronic contracts are almost same as other
hard copy contracts as far as its evidentiary value is concerned and
in case of any discrepancy there are certain prerequisites that fill
the lacunae
 All electronic contracts are valid contracts as they are legalized by
the Information Technology Act, 2000 and one could be made
liable if there is any infringement with the terms and conditions.
Subsequently many amendments have been made in order to attain
conceptual clarity
 Sections 85 A, 85 B, 88 A, 90 A and 85 C deals with the
presumptions as to electronic records whereas Section 65 B relates
to the admissibility of electronic record .
 Cont.....
 It says that any information contained in an electronic record which is
printed on a paper or stored/recorded/copied on optical/magnetic media
produced by a computer shall be deemed to be a document and is
admissible as evidence in any proceeding without further proof of the
original,
 In case the following conditions are satisfied: The computer output was
produced during the period over which the computer was used regularly to
store or process information by a person having lawful control over the use
of the computer.
 In case a combination of computers, different computers or different
combinations of computers are used over that period, all the computers
used are deemed to be one single computer.
 The information contained should have been regularly fed into the
computer, during that period, in the ordinary course of activities. The
computer was operating properly during that period and if not, it would not
have affected the accuracy of data entered.
 The Indian Evidence Act, 1872 has provided judicial recognition to
‘Electronic Documents’. Consequent to passing of the Information
Technology Act, 2000, electronic documents have come to be recognized at
par with the written documents for the purpose of evidence in law
Case Law
1. In the case of Public Citizen vs. John Carlin :- the Court has
expressed its displeasure at the Government policy of destroying
electronic documents/records after taking-out its print-outs and
termed it to be ‘arbitrary and capricious’.
 It was held that electronic documents are ‘unique and distinct from
printed versions of the same’ and had far more utility than their
paper print-outs. As such, they must be well preserved as evidence.
2. In the case of Armstrong v. Executive Office of the U.S. President
:- the Federal Court has expressed a view that government e-mail
record is a record as defined by the Federal Records Act and
therefore, it is not only sufficient for the Government to preserve
the paper print-outs of such messages but also its data on computer
tape should also be preserved.
 Cont .......
3. Highlighting the importance and need for the preservation of evidence in
electronic form, in the U.S. Court in National Union Electric Corporation
vs. Matsushita Electronic Industries Co. :- the court held that with the
advanced computer technology, all data will be stored in some form of the
computer memory. Therefore, all data has to be stored in computer disks are
admissible in the form of evidence as and when required.
4. As regards judicial trend as to the admissibility and evidentiary value of
electronic record in the Indian evidence law, the High Court of Allahabad in
State Bank of India vs. Rizvi Exports Ltd :- the court has observed that
Section 65B of the Indian Evidence Act relates to admissibility of electronic
records as evidence in a court of law.
The computer holding the original evidence is not required to be produced
before the court of evidence. A print-out of the record or a copy of a CD-
ROM, hard disk floppy etc., can be produced in court in the form of
evidence. However, an authenticated certificate has to be attached to the
printouts as required by Section 65B of the I.T. Act, 2000.
Cont....
 In the instant case, the State Bank of India has filed a debt
recovery suit to recover money from some persons who had
taken loan from it.
 As a part of the evidence, the State Bank of India submitted
print-outs of statement of accounts maintained in its computer
system.
 Since the bank had not attached the relevant authenticated
certificates as mandated by the Bankers Books of the Evidence
Act (as amended by Section 65B of the IT Act, 2000) with the
print-outs, the Court held that these documents were not
admissible in evidence.