By: SEJAL KAUL AND SOURASISH DE
INTRODUCTION :
Today, with recent progress in the fields of computer technology, telecommunications, software and information technology, people's living standards have changed unimaginably. Because of the constraints of geography and time, communication is no longer restricted. Information is broadly and more rapidly transmitted and received than ever before. And this is where electronic commerce gives the business environment flexibility in terms of location, time, space, distance, and payment. The purchase and sale of information, products and services via computer networks are associated with this e-commerce. It is usually a way of electronically transferring business over the Internet. It is the device that contributes to 'business integration'. As the e-commerce sector grows, the use of e-contracts is rapidly progressing. The implementation of electronic contracts, however, presents many challenges at three levels: conception, logic and execution. The extent, nature, legality and various other e-contract issues were discussed in our article
CONTRACT :
The term "contract" is defined as an enforceable arrangement by statute under Section 2(h) of the Contract Act, 1872. While electronic contracts (e-contracts) are not expressly protected by the Contract Statute, they are not banned per se. For all other contracts, e-contracts are also regulated mainly by Article 10 of the Contract Act. To verify e-contracts laid down under contract law, the basic elements are as follows:
Valid and reasonable bid
Object lawful
Legal care
Consent free of charge
Contracting Parties qualified
The parties plan to develop legal relations
The test as a legal and binding contract is not explicitly considered void
An e-contract cannot then be practised validly unless, as provided for by the Contract Act, it meets all the basic features of a transparent contract. Dubai v Vendita Aluminum Ltd, in Trimex International FZE Ltd, the Supreme Court (SC) held that an unqualified contract was concluded between the parties through e-mails
E-contract is a software system contract, which is designed, specified, executed and used. Conceptually, e-contracts are very similar to conventional business (paper-based). Sellers send to prospective customers their items, costs and terms. Purchasers weigh their options, negotiate rates and terms, position orders and make deposits, as far as possible. The retailers then supply the goods they buy. However, owing to the variations between the electronic trade and conventional trade, new and interested technological and legal problems have arisen.
RECOGNITION OF E-CONTRACT :
Contracts established for faxes, telex and other related technologies are now recognised by regulation. An arrangement is legally binding because it meets the conditions of the law concerning its creation, that is, that the parties primarily plan to establish a contract. Their compliance with three classical cornerstones - the bid, approval and consideration - shows that this is their purpose. One of the early stages in the formation of a contract is that contracts are negotiated through an offer and approval by the negotiating parties. Web-based ads mayor cannot be a bid and two separate terms are invitations for service. It is probably an invitation to treat as a bid to an unspecified person unless a conflicting purpose is apparent. The test seeks to decide whether or not the individual is lawfully bound by presenting the details. If you reply via e-mail or complete an online form on the website, you are making a deal. You will be contacted by us. By an express confirmation or actions, the seller may approve this bid.
The following are some of the important facets of e-contracts:
Recognition of Electronic Contracts under the IT Act: Section 10A of the IT Act 2000 (IT Act) discusses the legality of contracts signed through e-mails, and stipulates that, in the case of contract forming, correspondence and termination of proposals/acceptances by electronic means, they will not be regarded as unenforceable on grounds of electronic records alone. To be binding in any contract, contracting parties' signatures shall indicate their approval of contractual terms and conditions, an electronic signature will be played in case of an e-contract. Besides, section 4 of the IT Act gives legislative recognition to electronic documents and specifies that if any statute requiring information or matter to be published or reproduced, this provision shall be assumed to have been met if the information or subject matter is accessible and available in electronic format. In compliance with the second schedule of the IT Act, it is impossible to enact the following documents remotely or digitally and must be physically enforced such that they become valid and enforceable at the court of law:
Negotiable methods as specified by the Act of 1881 (other than cheques).
Power of lawyers as specified by the Act of 1882 on lawyers
Indian Trusts Act, 1882 Trusts
Dispositions as described in the Indian Succession Act, 1925;
Any sale/delivery deal or any stake in the immovable property
Evidence Act Acceptance of e-contracts: e-contracts have the same legal effect as a paper-based arrangement under the Evidences Act (1872 Evidence Act). It is notable that the word "evidence" is descriptive of all the papers, including electronic reports created to audit the Case, which is deemed to be photographic evidence in Section 3 of the Evidence Act. The proof of electronic subscription signature must be shown in compliance with Section 67A of the Evidence Act, which can be rendered by the subscriber himself testimony, about the loan and funding records. Aside from the secure electronic signature. Delhi Supreme Court v. Mohd in Delhi Case State. 'Electronic documents are allowable as facts, according to Afzal and Ors. If anyone questions the authenticity of computer data or electronic reports due to system violation or operating malfunction or interpolation, the challenger must be irrational in that regard." Singh and Ors at Harpal. v. Punjab State, SC has reiterated that, without meeting the criteria of Section 65B, all electrical records in the form of secondary proof cannot be accepted in fact.
Electronic Stamp Law (ISA) 1899 acknowledges e-contracts, which does not explicitly mention e-commerce documents and/or stamp duties payable following their execution. 'Instructors' shall be defined as 'includes any document which creates, moving, limiting, extending, dismantling, or documenting any rights or responsibilities.' In Stamp Act. 'Instruments' Though electronic documents are not included in the majority of State laws on stamping duties, Maharashtra, Rajasthan & Gujrat (governed by State-specific stamp laws) the term 'instrument' has been changed to include electronic recording as specified under Article 2(1)(t) of the IT Act, and the words 'signed' and 'signature.' This covers the signing and execution, as defined in paragraph 11 of the IT Act, of an electronic record. The Indian Stamps Act does not allow for the stamping of electronic records or electronic contracts in States that do not have any national stamp legislation. The State statute allows for the levying of the differential stamp duty in case of intergovernmental purchases if the document is first performed in an additional state with lower stamping duty and is imposed in the former country. Moreover, some State regulation often allows for unequal stamping duties to be attracted even photocopies and electronic records that are brought to the state. It is also recommended that the parties compute the stamp duties due in the States involved and therefore place the highest stamping duties on the electronic contract.
Electronic contract execution: there are many electronic contract execution options for Parties, several of which are listed below:
Digital signatures: Parties can receive protected digital signatures from the licensing authority with a digital signature certificate. Such a digital signature is treated in compliance with the Act concerning IT and proof as a protected electronic archive.
Sharing scanned copies of contracts signed with wet ink: Parties can propose carrying out a circulation contract. In this case, the prosecutor plans the contract implementation versions to be negotiated by the parties. Each contracting party is obliged to check, by e-mail, that the contract is satisfactory to it. After that, each party will print the contract signature page, affix it to the signature, scan it and then return it to the lawyer for compilation and verification.
Email conveying contract approval: the parties can also intend, by email exchange adding unsigned contracts, to exchange contract confirmations of acceptance. While such a contract is enforceable, it should be remembered that the challenge lies in establishing the correct output if the other party challenges it. Parties must then ensure approval of the vocabulary of the email. Using safe, tamper-resistant encrypted email delivery and storage mechanisms can also reduce the chance of a party rejecting the attachment to the email confirmation (i.e. the contract).
Because of the design of the platforms and of the networks used for e-commerce by the corporations the parties may be responsible for contracts that have arisen theoretically but have been implemented or disclosed, without any real intent or jurisdiction, owing to programming mistakes or intentional wrongdoing.
LEGAL VALIDITY AND JURISDICTION :
VALIDITY OF E-CONTRACTS :
With electronic contracts being performed via electronic means, the increasing pattern of business transactions is now very prevalent via the Internet.
An electronic contract (or an e-contract) as is a commonplace document, is often regulated mainly, as is the case with contracts generally, by the codified provisions of the 1872 Indian Contract Act (ICA). The e-Contract shall therefore not, however, be executed validly until all the fundamental concepts of a valid contract such as (a) "Offer" and "Acceptance" have been met; (b) Lawful consideration; (c) Lawful object; (f) The parties' plans to establish legal relations; (g) assurance and success possibilities; (h) that they are not decelerated null and void; (j) that the arrangement is regulated by multiple laws and formalities. All other laws regulating the electronic contract shall be read, and shall not be replaced, by the ICA. Hence, when an electronic contract was established in connection with a variety of electronic communications in which fundamental contract elements are (such as offer, acceptance, consideration etc.) are captured separately, then proper maintenance of all the record of the contractual arrangement between the parties such electronic records and emails becomes essential to prove.
Besides, electronic contracts and registers became recognised statutorily in compliance with the IT Act 2000. ("IT Act"). It says, for example, that a contract is not regarded as inexhaustible on the sole basis that electronic form/means have been used to convey proposals, approve proposals, cancel proposals or accept them as necessary. The IT Act also recognizes 'digital signatures' or ' electronic signatures' and validates electronic record authentication through the use of such digital/electronic signatures. Following Indian provisions, the contents of electronic records can also be proven by the parties following the provisions of the Indian Evidence Act, 1872.
Indian courts have also rarely acknowledged the conclusion of contracts by electronic means, such as email correspondence (or electronic contracts). For eg, the Hon'ble Supreme Court of India found that the e-mail contract between the parties has been recognition without reservation and is a legal contract that complies with the provisions of the ICA in respect of the Trimex International FZE Limited, Dubai vs. Vendita Aluminum Ltd.[1] case.
JURISDICTION OF COURTS UNDER E-CONTRACTS :
One question sometimes arises, considering the existence of e-contracts, which court is liable to try conflicts arising from e-contracts?
Following two basic principles, the Code of Civil Practice of 1908 ('CPC') provides for the creation of the jurisdiction of civil courts in India:
the defendant's place of residence;
the site of the cause of action.
Contracts typically have a special clause about their place of performance, and the courts of that place will if in compliance with the CPC as aforesaid, have local authority to entertain and continue on disputes arising under the said contracts.
We may refer to the case of the PR Transport Agency vs. Union of India [2], in which the high court in Allahabad may determine the matter of competence in which the respondent has submitted the letter of approval by email to the address of the petitioner. The abovementioned concepts may be applicable in more depth in this sense. Subsequently, for whatever technological and inevitable reasons, the respondent submitted another e-mail with the cancellation of the e-auction to the petitioner." As the complainant questioned such correspondence in the High Court of Allahabad, he raised an appeal concerning the court's "territorial jurisdiction" on the basis that there was no cause for action within Uttar Pradesh (UP), which implies that the High Court (UP) of Allahabad did not have the competence to proceed. In this situation, the petitioner's main position of business was in Chandauli district (UP), and Varanasi, which is also in the country of UP, was the other place where he carried on the business. Accordingly, the Court held in compliance with section 13(3) of the IT Act that the tender's approval by email was regarded as received at Varanasi/Chandauli by the petitioner, which is the only place of business for the petitioner. The Court took competence to prosecute the conflict when all these locations fell beyond the geographical competence of the High Court Allahabad.
LIABILITY AND DAMAGES :
A party who violates the contract can face different forms of liability in compliance with contract law. Given the design of programs and the networks used by businesses for e-commerce, parties might be responsible for contracts originated in technical terms but which were performed and published without the party's express purpose or authority owing to programming mistakes, employee errors or intentional wrongdoing. Sound policies ensure that the group receiving the messages may legitimately attribute these communications to the sender using the legal expressions of authority from the sender's device.
Techniques for reducing liability exposures include, as well as utilizing information management systems and other checks;
1. Commercial and legal technical claims
2. Compliance with policies, directives and standards acknowledged
3. Programmers and reviews for audit and monitoring
4. Professional knowledge and accreditation
5. Proper control of human capital
6. Insurance
7. Improving processes for notification and transparency
8. Rules and regulations dealing with the problem of safe electronic trading.
Digital Signature: Section 2(p) of the Information Technology Act 2000 describes digital signatures as an automated system or mechanism for authenticating any electronic document by a subscriber. For electronic records, a digital signature works such as a hand-written signature for paper documents. The signature is unforgeable evidence which claims that the document to which the signature has been added was written by or agreed by a specified individual. A digital signature offers more protection than a handwritten signature. The receiver will check both that the letter originated with the person signed with it and that the message has not been updated either deliberately or by mistake after it was signed. The message is digitally signed. Moreover, protected digital signatures cannot be rejected; the document signer cannot eventually deny them by arguing that the signature has been forged. The basic downside of internet contracts is that if there is no way to distinguish a person on the other hand, except for digital signatures or a public key, then the identification may be misrepresented and tried like everyone else.
CONCLUSION :
E-contracts promote the reengineering of corporate systems that take place in multiple businesses requiring a composite of technology, processes and business methods that enable instant knowledge sharing. The e-contracts with their own merits. They minimize costs, save time, enhance customer service response and increase the quality of service by reducing the amount of paperwork, thus improving automation. This is planned by offering unparalleled access to a national, online marketplace with millions of consumers, thousands of goods and services, to maximize the profitable and competitive role of participating firms. In the other hand, as the plan relies on electronic contracts on humans that vote on individual transactions, it focuses on how risk in an automated setting can be organized. The goal is therefore to create default rules to assign a message to a party to ensure that deception and discrepancy in the contract are prevented.
FOOTNOTES :
[1] (2010) 3 SCC 1
[2] AIR 2006 All 23: 2006 (1) AWC 504
1. Bakshi P.M & Suri R.K, Cyber and E-commerce Laws, Bharat Publishing House, edn 1, 2002.
2. Ryder D.Rodney, Guide to Cyber Laws, Wadhwa & Co. Publishers, edn.1, 2001.
3. Contract and Specific Relief b Avatar Singh
4. Indian Bar Association
5. Indian Contract Act,1872