E- Tendering

Electronic Tendering is “ the electronic publishing,

communicating, accessing, receiving and submitting of all
tender related information and documentation via the
internet, thereby replacing the traditional paper‐based tender
processes, and achieving a more efficient and effective
business process for all party involved.”

Chained and time‐stamped contract terms and its negotiations,

and tendering activities will improve the system reliability,
reduce disputes, and increase individual accountability.

This can be designed to automatically generate legally

admissible time sequenced evidence for formal report writing,
and to draw up formal contract evidence. Access control and
security audit trails increase system security for
accountability. E‐tendering systems can also formalise the
tendering process to overcome staff discipline problems, and
reduce human errors.
Users in the e‐tendering system are the principal, tenderers
and trusted third parties. Electronic media are communication
media and databases.
 
The major actions involved in e‐tendering are documentation,
assessment, document handling and communications.
In the year 1996 the United Nations Commission on International Trade Law
(UNCITRAL) has adopted the Model Law on Electronic Commerce.

This Model Law provides for equal legal treatment of users of electronic
communication and paper based communication.

The Government of India taking into consideration of facilitating e­commerce,

provided for legal recognition of electronic records and digital signatures.

The Government of India enacted the Information Technology Act in the year
2000 which also has made the provision for preventing the possible misuse arising
out of transactions and other dealings concluded over the electronic medium.

Overall the Information Technology Act of 2000 provides for legal recognition for
transactions through the use of computers to create, transmit and store
information.

It provides recognition to the electronic data interchangeable and other means of

electronic communication, commonly referred as "electronic commerce" which
involve the use of alternatives of paper based methods of communication and
storage of information and facilitates electronic filing of documents.
Out of many issues, the term digital signature play an important role in e-contract.

Any subscriber may authenticate an electronic record by affixing his digital

signature.

It means "authentication of any electronic record by a subscriber by means of an

electronic method or procedure in accordance with the provisions of section 2(q) of
the Information Technology Act of 2000.

The Affixing "digital signature" with its grammatical sense and cognate meaning
refers to the adoption of any methodology and procedure by a person for the
purpose of authenticating an electronic record by means of digital signature as
provided in section 2(1)(d) of the Information Technology Act of 2000.

The section 3 and Schedule (3) has also made a provision for verification of digital
signature.

According to this provision any person by use of public key of subscriber can verify
the electronic record and according to sub-section (4) of this section the private
key and the public key are unique to the subscriber and constitutes a functioning
key pair.

This technique is similar to locker key in a bank. The customer keeps 'private key'
and bank manager keeps public key. The locker does not open unless both the keys
do not match.
The Affixing "digital signature" with its grammatical sense and cognate meaning
refers to the adoption of any methodology and procedure by a person for the
purpose of authenticating an electronic record by means of digital signature as
provided in section 2(1)(d) of the Information Technology Act of 2000.

The section 3 and Schedule (3) has also made a provision for verification of digital
signature.

According to this provision any person by use of public key of subscriber can verify
the electronic record and according to sub-section (4) of this section the private
key and the public key are unique to the subscriber and constitutes a functioning
key pair.
The sections 40, 41 and 42 of the IT Act provides for the duties of subscribers
and the public and private key system.

Section 40. Generating key pair.-Where any Digital Signature Certificate, the
public key of which corresponds to the private key of that subscriber which is to
be listed in the Digital Signature Certificate has been accepted by a subscriber,
the subscriber shall generate that key pair by applying the security procedure.

Section 41. Acceptance of digital signature certificate.-(1) A subscriber shall be

deemed to have accepted a Digital Signature Certificate if he publishes or
authorises the publication of a Digital Signature Certificate-

(a) to one or more persons;

(b) in a repository; or
otherwise demonstrates his approval of the Digital Signature Certificate in any
manner.

(2) By accepting a Digital Signature Certificate the Subscriber certifies to all who
reasonably rely on the information contained in the Digital Signature Certificate
that-

(a) the subscriber holds the private key corresponding to the public key listed in
the Digital Signature Certificate and is entitled to hold the same;
(b) all representations made by the subscriber to the Certifying Authority and all
material relevant to the information contained in the Digital Signature Certificate
are true;

(c) all information in the Digital Signature Certificate that is within the knowledge
of the subscriber is true.

Section 42. Control of private keys.-(l) Every subscriber shall exercise reasonable
care to retain control of the private key corresponding to the public key listed in
his Digital Signature Certificate and take all steps to prevent its disclosure.

2) If the private key corresponding to the public key listed in the Digital Signature
Certificate has been compromised, then, the subscriber shall communicate the
same without any delay to the Certificate Authority in such manner as may be
specified, by the regulations.
Section 3. Authentication of electronic records.- (1)Subject to the provisions of
this section, any subscriber may authenticate an electronic record by affixing his
digital signature.

(2) The authentication of the electronic record shall be effected by the use of
asymmetric crypto system and hash function which envelop and transform the
initial electronic record into another electronic record.

Explanation.-For the purposes of this sub-section, "hash function", means an

algorithm mapping or translation of one sequence of bits into another, generally
smaller, set known as "hash result" such that an electronic record yields the same
hash result every time the algorithm is executed with the same electronic record
as its input making it compositionally infeasible-

(a) to derive or reconstruct the original electronic record from the hash result
using the result produced by the algorithm;
(b) that two electronic records can produce the same hash result using the
algorithm.
(3) Any person by the use of a public key of the subscriber can verify the
electronic record.
(4) The private key and the public key are unique to the subscriber and constitute a
functioning key pair.
Section 4. Legal recognition of electronic records.-

Where any law provides that information or any other matter shall be in writing or
in the typewritten or printed form, then, notwithstanding anything contained in
such law, such , requirement shall be deemed to have been satisfied if such
information or matter is-

(a) rendered or made available in an electronic form; and

(b) accessible so as to be usable for a subsequent reference.

Section 5. Legal recognition of digital signatures.-

Where any law provides that information or any other matter shall be
authenticated by affixing the signature or any document shall be signed or bear
the signature of any person, then,

notwithstanding anything contained in such law, such requirement shall be deemed

to have been satisfied, if such information or matter is authenticated by means of
digital signature affixed in such manner as may be prescribed by the Central
Government.
Section 7. Retention of electronic records.-(1)

Where any law provides that documents, records or information shall be retained
for any specific period, then, that requirement shall be deemed to have been
satisfied if such documents, records or information are retained in the electronic
from, if---

(a) the information contained therein remains accessible so as to be usable for a

subsequent reference;

(b)the electronic record is retained in the format in which it was originally

generated, sent or received or in format which can be demonstrated to represent
accurately the information originally generated, sent or received;

(c) the details which will facilitate the identification of the origin, destination date
and time of despatch or receipt of such electronic record are available in the
electronic record.
Accordingly unless there is a contrary or specific provision in law electronic record
is acceptable.

If it is found in the contract or agreement and the law compels that the
information shall be authenticated by affixing the signature, then such
requirement should have to be made available.

The legal position in the Information Technology Act vide sections 11, 12, 13, 14 and
15 makes it clear.

It is also clear fact that if the contracting parties agree each other that the
digital signature can be verified at the time of its affixing and it is followed then
such digital signature shall be deemed to be a secure digital signature.

Such digital signature can be held to be a digital signature.

Section 11. Attribution of electronic records.-An electronic record shall be
attributed to the originator,-

(a) if it was sent by the originator himself;

(b) by a person who has the authority to act on behalf of the originator in
respect of that electronic record; or

(c)by an information system programmed by or on behalf of the originator to

operate automatically.
Section 12. Acknowledgement of receipt.-

(1)Where the originator has not agreed with the addressee that the
acknowledgements of receipt of electronic record be given in a particular form or
by a particular method, an acknowledgement may be given by-

(a) any communication by the addressee, automated or otherwise; or

(b) any conduct of the addressee, sufficient to indicate to the originator that the
electronic record has been received.

(2)Where the originator has stipulated that the electronic record shall be binding
only on receipt of an acknowledgement of such electronic record by him, then,
unless acknowledgement has been so received, the electronic record shall be
deemed to have been never sent by the originator.
(3) Where the originator has not stipulated that the electronic record shall be
binding only on receipt of such acknowledgements,

and the acknowledgement has not been received by the originator within the time
specified or agreed or, if no time has been received by him and specifying a
reasonable time,

then the originator may give notice to the addressee stating that no
acknowledgement has been received by him and specifying a reasonable time by
which the acknowledgement must be received, by him

and if no acknowledgement is received within the aforesaid time limit he may after
giving notice to the addressee, treat the electronic record as though it has never
been sent.
Section 14. Secure electronic record.-Where any security procedure has been
applied to an electronic record at a specific point of time, then such record shall be
deemed to be a secure electronic record from such point of time to the time of
verification.

Section 15. Secure digital signature.-If, by application of a security procedure

agreed to by the parties concerned, it can be verified that a digital signature, at
the time it was affixed, was-

(a) unique to the subscriber affixing it;

(b) capable of identifying such subscriber;
(c) created in a manner or using a means under the exclusive control of the
subscriber and is linked to the electronic record to which it relates in such a
manner that if the electronic record was altered the digital signature would be
invalidated.

then such digital signature shall be deemed to be a secure digital signature.

The Information Technology Act of 2000,provides that such digital signature shall
have to be certified by the Certifying Authority who can work under the
Controllers of Certifying Authority

The sections 17 and 18 of this Act have made the provision as follows.

Section 17. Appointment of Controller and other officers.-

(1) The Central Government may, by notification in the Official Gazette, appoint a
Controller of Certifying Authorities for the purposes of this Act and may also by
the same or subsequent notification, appoint such number of Deputy Controllers
and Assistant Controllers as it deems fit.

(2) The Controller shall discharge his functions under this Act subject to the
general control and directions of the Central Government.

(3) The Deputy Controllers and Assistant Controllers shall perform the functions
assigned to them by the Controller under the general superintendence and control
of the Controller.

(4) The qualifications, experience and terms and conditions of service of

Controller, Deputy Controllers and Assistant Controlers shall be such-as may be
prescribed by the Central Government.
(5) The Head Office and Branch Office of the office of the Controller shall be at
such places as the Central Government may specify, and these may be established
at such places as the Central Government may think fit.

(6) There shall be a seal of the Office of the Controller.

Section 18. Functions of Controller.- The Controller may perform all or any of
the following functions, namely:-

(a)exercising supervision over the activities of the Certifying Authorities.

(b)certifying public keys of the Certifying Authorities.

(c)specifying the contents of written, printed or visual materials and

advertisements that may be distributed or used in respect of a Digital Signature
Certificate and the public key.

(d) specifying the form and content of a Digital Signature Certificate and the key;

(e) facilitating establishment of any electronic system by a Certifying Authority

either solely or jointly without other Certifying Authority under regulation of such
system.

(f) specifying the manner in which the Certifying Authorities shall conduct their
dealings with subscribers.

(g)resolving any conflict of "interests“ between‘ certifying authority and

subscribers.
1. Formation and Validity of E-contract

The United Nations General Assembly Resolution No. A/RES/51/162, dated 30th
January 1997, Chapter III and specifically Article 11 sets about the formations
and validity of E-contract. These Articles of the resolution reads as follows: -

COMMUNICATION OF DATA MESSAGES

 
Formation and validity of Contracts

2. Article 11-In the context of contract formations, unless otherwise agreed by

the parties, an offer and the acceptance of an offer may be expressed by
means of data messages.

Where a data message is used in the formation of a contract, that contract

shall not be denied validity or enforceability on the sole ground that a data
message was used for that purpose.

2. The provisions of this article do not apply to the following: [ ... ].

Article 12-1.

As between the originator and the addressee of a data message, a declaration of

will or other statement shall not be denied legal effect, validity or enforceability
solely on the grounds that it is in the form of a data message.

2. The provisions of this article do not apply to the following:

[ ... ].

According to the UNCITRAL Model Law Article 11 is not intended to interfere with
the law on formation of contracts but rather to promote international trade by
providing increased legal certainty as to the conclusion of contracts by electronic
means.
2. Data Message and Electronic Data Interchange (EDI) "Data message"

According the United Nations Model Law Data Message on EDI are as follows:

30. The notice of "data message" is not limited to communication but is also
intended to encompass computer-generated records that are not intended for
communication.

Thus, the notice of "message" includes the notion of "record". However, a

definition of "record" in line with the characteristic elements of "writing" in article
6 may be added in jurisdictions where that would appear to be necessary.

31. The reference to "similar means" is intended to reflect the fact that the Model
Law was not intended only for application in the context of existing communication
techniques but also to accommodate foreseeable technical developments.

The aim of the definition of "data message" is to encompass all types of messages
that are generated, stored, or communicated in essentially paperless form.
For that purpose, all means of communication and storage of information that might
be used to perform functions parallel to the functions performed by the means
listed in the definition are intended to be covered by the reference to "similar
means",

although, for example, "electronic" and "optical" means of communication might not
be, strictly speaking, similar.

For the purposes of the Model Law, the word "similar" connotes "functionally
equivalent”.
The definition of "data message" is also intended to cover the case of revocation or
amendment. A data message is presumed to have fixed information content but it
may be revoked or amended by another data message.

"Electronic Data Interchange (ED])"

The definition of EDI is drawn from the definition adopted by the Working Party
on Facilitation of International Trade Procedures (WP.4) of the Economic
Commission for Europe, which is the United Nations body responsible for the
development of UN/EDIFACT technical standards.

The Model Law does not settle the question whether the definition of EDI
necessarily implies that EDI messages are communicated electronically from
computer to computer, or whether that definition, while primarily covering
situations where data' messages' are communicated through a telecommunications
system, would also cover exceptional or incidental types of situation where data
structured in the communicated by means· that do not involve telecommunications
systems,

for example, the case where magnetic disks containing EDI messages would be
delivered to the addressee by courier. However, irrespective of whether digital
data transferred manually is covered by the definition of "EOI", it should be
regarded as. covered by the definition of "data message" under the Model Law.
"
"Information system"
The definition of "information system" is intended to cover the entire range of
technical means used for transmitting, receiving and storing information.

For example, depending on the factual situation, the notion of "information

system" could be indicating a communications network, and in other instances could
include an electronic mailbox or even a telecopier.

The Model Law does not address the question of whether the information system
is located on the premises of the addressee or on other premises, since location of
information system is not an operative criterion under the Model Law.

Section 13 of Information Technology Act

Section 13. Time and place of despatch and receipt of electronic record.-

(1)Save as otherwise agreed to between the originator and the addressee, the
despatch of an electronic record occurs when ,it enters a computer resource
outside the control of the originator.
2) Save as otherwise agreed between the originator and the addressee, the time of
receipt of an electronic records shall be determined as follows, namely:

(a) if the addressee has designated a computer resource for the purpose of
receiving electronic records,~
(i) receipt occurs at the time when the electronic record enters the designated
computer resource; or
(ii) if the electronic record is sent to a computer resource of the addressee that is
not the designated computer resource, receipt occurs at the time when the
electronic record is retrieved by the addressee;

(b) if the addressee has not designated a computer resource alongwith specified
timings, if any, receipt occurs when the electronic record enters the computer
resource of the addressee.

3) Save as otherwise agreed to between the originator and the addressee, an

electronic record is deemed to be despatched at the place where the originator has
his place of business, and is deemed to be received at the place where the
addressee has his place of business.
(4) The provisions of sub-section (2) shall apply notwithstanding that the place
where the computer resource is located may be different from the place where the
electronic record is deemed to have been received under sub-section (3).

(5) For the purposes of this section-

(a) if the originator or the addressee has;more than one place of business, the
principal place of business, shall be the place of business;
(b) if the originator or the addressee does not have a place of business, his usual
place of residence shall be deemed to be place of business;
(c) "usual place of residence", in relation to a body corporate, means the ,place
where it is registered
3. Time and Place of Dispatch and Receipt of Data Messages

Article 15 of the UNICTRAL Model Law provides that:

(1) Unless otherwise agreed between the originator and the addressee, the
dispatch of a data message occurs when it enters an information system outside
the control of the originator or of the person who sent the data message on
behalf, of the originator.

(2) Unless otherwise agreed between the originator and the addressee, the time of
receipt of a data message is determined as follows:

(a) if the addressee has designated an information system for the purpose of
receiving data messages, receipts occurs:
(i) at the time when the data massage enters the designated information system;
or
(ii) if the data message is sent to an information system of the addressee that is
not the designated information system, at the time when the data message is
retrieved by the addressee;
(iii) if the addressee has not designated an information system, receipt occurs
when the data message enters an information system of the addressee.
 (3) Paragraph (2) applies notwithstanding that. the place where the information
system is located may be different from the place where the data message is
deemed to be received under paragraph (4).

(4) Unless otherwise agreed between the; originator and the addressee, a data
message is deemed to be dispatched at the place where the originator has its place
of. business, and is deemed to be received at the place where the addressee has its
place of business. For the purposes of this paragraph:

(a) if the originator agreed between the orginator and the addressee, a data
message is deemed to be received under paragraph (4).
(b) if the originator or the addressee does not have a place of business, reference
is to be made to its habitual residence.
4. Supreme Court on Contract over Telephone

5. Contractual Obligation in Cyberspace

In India there is the Contract Act of the year 1872 for the rules regulating the
general contract in the visible world.

On the contrary in the age of super computer and the internet there is no
specified e-contract or electronics contract in the world of electronics.

If such a law is provided then the formation of the electronic contracts viz.,
digital signature system can have a complete legal space in space where the
contracts or agreements are made and concluded in computer base or
electronically.

On the other hand it can be remembered that when a sender transmits the
message through e-mail or other mode of electronic messaging it is held that the
message has been transmitted, sent or received.

But such message enters a system where the sender or transmiter loses his power
to take return.
And same message is held to be received when it enters into the system or mailbox.

If the computer problem comes between two then these become a problem for
either or both the parties.

The important point is to be remembered about the authentication of the

electronic contract through the Information Technology Law and rules made there
under though there is no special provision for e-contract or click-wrap agreements.