Month: May 2022

The Semi-Conductor Integrated Circuits Layout Design Act, 2000

Semiconductor Integrated Circuit Layout Design(SICLD) Act, 2000, has come into operation in India w.e.f. 4^th September 2000. As per the provisions of this Act, Registrar Semiconductor Integrated Circuits Layout-Design Registry under the Ministry of Electronics and Information Technology (MeitY) has been appointed with its head office at Electronics Niketan, 6 CGO Complex, Lodi Road New Delhi-110003.The Registry maintains the Register of Layout-Designs and records in it the registered layout-designs with the names, addresses, and descriptions of the proprietor and such other matters related to the registered layout-designs.

Definitions

“Semiconductor integrated circuit” means a product having transistors or other circuitry elements, which are inseparably formed on a semiconductor material or an insulating material or inside the semiconductor material and designed to perform an electronic circuitry function.
“Layout-design” means a layout of transistors, and other circuitry elements and includes lead wires connecting such elements and expressed in any manner in a semiconductor integrated circuit.
“Commercial exploitation” in relation to the SICLD means to sell, lease, offer or exhibit for sale or otherwise distribute such semiconductor integrated circuit for any commercial purpose.

Electronics and Information technology is one of the fastest growing sectors that has played a significant role in world economy. This is primarily due to the advancements in the field of electronics, computers and telecommunication. Microelectronics, which primarily refers to Integrated Circuits (ICs) ranging from, Small Scale Integration (SSI) to Very Large Scale Integration (VLSI) on a semiconductor chip – has rightly been recognized as a core, strategic technology world-over, especially for Information Technology (IT) based society. Design of integrated circuits requires considerable expertise and effort depending on the complexity. Therefore, protection of Intellectual Property Rights (IPR) embedded in the layout designs is of utmost importance to encourage continued investments in R & D to result in technological advancements in the field of microelectronics. The practice of providing protection through the methods of Copyright, Patents did not appropriately accommodate the requirements of Intellectual Property Rights protection for the Layout-Designs of Integrated Circuits. This was because of the fact that in the context of Layout Designs, the concept of “originality” is of utmost significance, whether it is a “novelty or not”. While the Patent Law requires that the idea should be original as well as novel, the copyright law is too general to accommodate the original ideas of scientific creation of LayoutDesigns of Integrated Circuits.

In view of the above, the necessity for providing protection for Layout-Designs of Integrated Circuits was felt to reward and encourage an adequate level of investment of human, financial and technological resources. The Majority of countries that attach significance to protection of Intellectual Property Rights in the Semiconductor Integrated Circuits provides for sui generis system of protection of Layout-Designs of Integrated Circuits, which is usually contained in a separate Act. Trade Related Intellectual Property Rights (TRIPS) Agreement under WTO contains provisions with regard to setting up of standards concerning availability, scope and use of Intellectual Property Rights, Geographical Indications, Layout-Design of Integrated Circuits etc. Therefore, the Government enacted the Semiconductor Integrated Circuit LayoutDesigns Act, 2000 providing for protection of Semiconductor Integrated Circuits Layout- Designs by process of registration, mechanism for distinguishing Layout-Designs which can be protected, rules to prohibit registration of Layout-Designs which are not original and/or which have been commercially exploited, period for protection, provisions with regard to infringement, payment of royalty for registered Layout-Design, provisions for dealing with willful infringement by way of punishment, appointing a Registrar for registering the Layout Designs and mechanism of Appellate Board. To conclude, the various modifications and amendments to earlier Intellectual Property Laws are an indication of India’s move towards new IPR regime so as to prepare ourselves for the global trade competition.

The Protection of Plant Varieties and Farmers’ Rights Act, 2001

The concept of Plant Breeders’ Rights arises from the need to provide incentives to plant breeders engaged in the creative work of research which sustains agricultural progress through returns on investments made in research and to persuade the researcher to share the benefits of his creativity with society. The issue of enacting a law relating to Plant Varieties Protection and Farmers’ Rights in India assumed importance particularly in the wake of TRIPS agreement under WTO which seeks to promote effective protection of Intellectual Property Rights in all fields of technology. Article 27 of TRIPS Agreement defines patentable subject matter and requires member countries to provide for the protection of plant varieties whether by patenting or by an effective sui generis system or by any combination thereof. With a view to provide for the establishment of an Authority to give an effective system of protection of the rights of plant breeders and farmers, and to encourage the development of new varieties of plants and to give effect to the provisions of TRIPS Agreement, the Government enacted the Protection of Plant Varieties and Farmers’ Right Act, 2001.

This Act seeks to stimulate investment for research and development both in the public and private sectors for the development of new plant varieties by ensuring appropriate returns on such investments. It also seeks to facilitate the growth of the seed industry in the country through domestic and foreign investment to ensure the availability of high quality seeds and planting material to Indian farmers. It also recognizes the role of farmers as cultivators and conservers and the contribution of traditional, rural and tribal communities to the country’s agro biodiversity by rewarding them for their contribution through benefit sharing and protecting the traditional rights of the farmers. The Act also provides for setting up of the Protection of Plant Varieties and Farmer’s Rights Authority to promote and develop new varieties of plants and promote rights of the farmers and breeders.

Objectives

To establish an effective system for the protection of plant varieties, the rights of farmers and plant breeders and to encourage the development of new varieties of plants.
To recognize and protect the rights of farmers in respect of their contributions made at any time in conserving, improving and making available plant genetic resources for the development of new plant varieties.
To accelerate agricultural development in the country, protect plant breeders’ rights; stimulate investment for research and development both in public & private sector for the development new of plant varieties.
Facilitate the growth of seed industry in the country which will ensure the availability of high quality seeds and planting material to the farmers.

The Geographical Indications of Goods (Registration and Protection ) Act, 1999:

Until recently, Geographical indications were not registrable in India and in the absence of statutory protection, Indian geographical indications had been misused by persons outside India to indicate goods not originating from the named locality in India. Patenting turmeric, neem and basmati are the instances which drew a lot of attention towards this aspect of the Intellectual property. Mention should be made that under the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), there is no obligation for other countries to extend reciprocal protection unless a geographical indication is protected in the country of its origin. India did not have such a specific law governing geographical indications of goods which could adequately protect the interest of producers of such goods. To cover up such situations it became necessary to have a comprehensive legislation for registration and for providing adequate protection to geographical indications and accordingly the Parliament has passed a legislation, namely, the Geographical indication of Goods (Registration and Protection) Act, 1999. The legislation is administered through the Geographical Indication Registry under the overall charge of the Controller General of Patents, Designs and TradeMarks.

A geographical indication (GI) is a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin. In order to function as a GI, a sign must identify a product as originating in a given place

The salient features of this legislation are as under:

(a) Provision of definition of several important terms like “geographical indication”, “goods”, “producers”, “packages”, “registered proprietor”, “authorized user” etc.

(b) Provision for the maintenance of a Register of Geographical Indications in two parts-Part A and Part B and use of computers etc. for maintenance of such Register. While Part A will contain all registered geographical indications, Part B will contain particulars of registered authorized users.

(d) Prohibition of registration of certain geographical indications.

(e) Provisions for framing of rules by Central Government for filing of application, its contents and matters relating to substantive examination of geographical indication applications.

(f) Compulsory advertisement of all accepted geographical indication applications and for inviting objections.

(g) Registration of authorized users of registered geographical indications and providing provisions for taking infringement action either by a registered proprietor or an authorized user.

(h) Provisions for higher level of protection for notified goods.

(i) Prohibition of assignment etc. of a geographical indication as it is public property.

(j) Prohibition of registration of geographical indication as a trademark.

(k) Appeal against Registrar’s decision would be to the Intellectual Property Board established under the Trade Mark legislation.

(l) Provision relating to offenses and penalties.

(m) Provision detailing the effects of registration and the rights conferred by registration.

(n) Provision for reciprocity powers of the registrar, maintenance of Index, protection of homonymous geographical indications etc.

The Designs Act, 2000

The Designs Act of 1911 has been replaced by the Designs Act, 2000. The Design Act in India was enacted by the Legislature on May 25, 2000 with a view to consolidate and amend the law relating to protection of designs in India. Under the TRIPS Agreement, minimum standards of protection of industrial designs have been provided for.In view of considerable progress made in the field of science and technology, a need was felt to provide a more efficient legal system for the protection of industrial designs in order to ensure effective protection to registered designs, and to encourage design activity to promote the design element in an article of production. In this backdrop, the Designs Act, 2000 has been enacted essentially to balance these interests and to ensure that the law does not unnecessarily extend protection beyond what is necessary to create the required incentive for design activity while removing impediments to the free use of available designs.

The Designs Act, 2000 (“the Act”), is a complete code in itself and protection under it is wholly statutory in nature. It protects the visual design of objects that are not purely utilitarian. Section 2(d) of the Act, defines a Design as:

“design” means only the features of shape, configuration, pattern, ornament or composition of lines or colours applied to any article whether in two dimensional or three dimensional or in both forms, by any industrial process or means, whether manual, mechanical or chemical, separate or combined, which in the finished article appeal to and are judged solely by the eye; but does not include any mode or principle of construction or anything which is in substance a mere mechanical device, and does not include any trade mark as defined in clause (v) of sub-section (1) of section 2 of the Trade and Merchandise Marks Act, 1958 (43 of 1958) or property mark as defined in section 479 of the Indian Penal Code (45 of 1860) or any artistic work as defined in clause (c) of section 2 of the Copyright Act, 1957 (14 of 1957).

The new Act complies with the requirements of TRIPS and hence is directly relevant for international trade. Industrial Design law deals with the aesthetics or the original design of an industrial product. An industrial product usually contains elements of both art and craft, that is to say artistic as well as functional elements.The design law excludes from its purview the functioning features of an article and grants protection only to those which have an aesthetic appeal. For example, the design of a teacup must have a hollow receptacle for holding tea and a handle to hold the cup. These are functional features that cannot be registered. But a fancy shape or ornamentation on it would be registrable. Similarly, a table, for example, would have a flat surface on which other objects can be placed. This is its functional element. But its shape, colour or the way it is supported by legs or otherwise, are all elements of design or artistic elements and therefore, registrable if unique and novel. Today, industrial design has become an integral part of consumer culture where rival articles compete for consumer’s attention. It has become important therefore, to grant to an original industrial design adequate protection.

The salient features of the Design Act, 2000 are as under:

(a) Enlarging the scope of definition of the terms “article”, “design” and introduction of definition of “original”.

(b) Amplifying the scope of “prior publication”.

(c) Introduction of provision for delegation of powers of the Controller to other officers and stipulating statutory duties of examiners.

(d) Provision of identification of non-registrable designs.

(e) Provision for substitution of applicant before registration of a design.

(f) Substitution of Indian classification by an internationally followed system of classification.

(g) Provision for inclusion of a register to be maintained on computer as a Register of Designs.

(h) Provision for restoration of lapsed designs.

(i) Provisions for appeal against orders of the Controller before the High Court instead of the Central Government.

(j) Revoking the period of secrecy of two years of a registered design.

(k) Providing for compulsory registration of any document for transfer of right in the registered design.

(l) Introduction of additional grounds in cancellation proceedings and provision for initiating the cancellation proceedings before the Controller in place of the High Court.

(m) Enhancement of quantum of penalty imposed for infringement of a registered design.

(n) Provision for grounds of cancellation to be taken as defense in the infringement proceedings to be in any court not below the Court of District Judge.

(o) Enhancing the initial period of registration from 5 to 10 years, to be followed by a further extension of five years.

(p) Provision for allowance of priority to other convention countries and countries belonging to the group of countries or inter-governmental organizations apart from United Kingdom and other Commonwealth Countries. (q) Provision for avoidance of certain restrictive conditions for the control of anti competitive practices in contractual licenses.

Strike

Strike‖ means a cessation of work by a body of persons employed in any industry acting in combination, or a concerted refusal, or a refusal under a common understanding of any number of persons who are or have been so employed to continue to work or to accept employment. [Section 2(q)]

The following points may be noted regarding the definition of strike:

Strike can take place only when there is a cessation of work or refusal to work by the workmen acting in combination or in a concerted manner.
A concerted refusal or a refusal under a common understanding of any number of persons to continue to work or to accept employment will amount to a strike.
The striking workman, must be employed in an ―industry‖ which has not been closed down.
Even when workmen cease to work, the relationship of employer and employee is deemed to continue albeit in a state of belligerent suspension.

TYPES OF STRIKE AND THEIR LEGALITY

Stay-in, sit-down, pen-down or tool-down strike

In all such cases, the workmen after taking their seats, refuse to do work. Even when asked to leave the premises, they refuse to do so.

All such acts on the part of the workmen acting in combination, amount to a strike. Since such strikes are directed against the employer, they are also called primary strikes.

(ii) Go-slow

Go-slow does not amount to strike, but it is a serious case of misconduct.

(iii) Sympathetic strike

Cessation of work in the support of the demands of workmen belonging to other employer is called a sympathetic strike.

This is an unjustifiable invasion of the right of employer who is not at all involved in the dispute. The management can take disciplinary action for the absence of workmen.

(iv) Hunger strike

Some workers may resort to fast on or near the place of work or residence of the employer. If it is peaceful and does not result in cessation of work, it will not constitute a strike.

But if due to such an act, even those present for work, could not be given work, it will amount to strike

(v) Work-to-rule

Since there is no cessation of work, it does not constitute a strike.

LEGALITY OF STRIKE

The justifiability of strike has no direct relation to the question of its legality and illegality.

The justification of strikes has to be viewed from the stand point of fairness and reasonableness of demands made by workmen and not merely from stand point of their exhausting all other legitimate means open to them for getting their demands fulfilled.

Cyber Crime

Cybercrime is a crime that involves a computer and a network. The computer may have been used to commit the crime and in many cases, it is also the target. Cybercrime may threaten a person or a nation’s security and financial health.

Definition of Cyber crime

Any offenses committed against individuals or groups of individuals to harm the reputation or cause physical or mental trauma through electronic means can be defined as Cybercrime. Electronic means can include but are not limited to, the use of modern telecommunication networks such as the Internet (networks including chat rooms, emails, notice boards and groups) and mobile phones (Bluetooth/SMS/MMS).

Why is Cybercrime considered a grave offense?

There are many privacy concerns surrounding cybercrime when sensitive information is intercepted and leaked to the public, legally or otherwise. Some of that information may include data about military deployments, internal government communications, and even private data about high-value individuals. Cybercrime is not confined to individuals alone. Internationally, both governmental and non-state actors engage in cybercrimes, including espionage, financial theft, and other cross-border crimes. Cybercrimes crossing international borders and involving the actions of at least one nation-state is sometimes referred to as cyberwarfare.

Laws against Cybercrime in India

Ever since the introduction of cyber laws in India, the Information Technology Act (IT Act) 2000 covers different types of crimes under cyber law in India. The following types of cybercrimes are covered under the IT Act 2000.

Identity theft – Identity theft is defined as theft of personnel information of an individual to avail financial services or steal the financial assets themselves.
Cyberterrorism – Cyberterrorism is committed with the purpose of causing grievous harm or extortion of any kind subjected towards a person, groups of individuals, or governments.
Cyberbullying – Cyberbullying is the act of intimidating, harassment, defaming, or any other form of mental degradation through the use of electronic means or modes such as social media.
Hacking – Access of information through fraudulent or unethical means is known as hacking. This is the most common form of cybercrime know to the general public.
Defamation – While every individual has his or her right to speech on internet platforms as well, but if their statements cross a line and harm the reputation of any individual or organization, then they can be charged with the Defamation Law.
Trade Secrets – Internet organization spends a lot of their time and money in developing software, applications, and tools and rely on Cyber Laws to protect their data and trade secrets against theft; doing which is a punishable offense.
Freedom of Speech – When it comes to the internet, there is a very thin line between freedom of speech and being a cyber-offender. As freedom of speech enables individuals to speak their mind, cyber law refrains obscenity and crassness over the web.
Harassment and Stalking – Harassment and stalking are prohibited over internet platforms as well. Cyber laws protect the victims and prosecute the offender against this offense.

REMEDIES

The Information Technology Act of 2000 subsequently revised in 2008, was enacted to set limitations for these types of attackers when it came to committing Cyber-crimes. For laypeople, this is known as the Cyber-law. This Act establishes sanctions and compensation for offences involving technology. When a person is a victim of a cybercrime, he has the option of going to court to pursue legal action against the perpetrator.

The victim has the right to file an appeal in court for compensation for the wrong done to him under section 43A of the Information Technology Act of 2000, as this section covers the penalties and compensations for offences such as “damage to the computer, computer system, or computer networks, etc.”Anybody corporate that deals with sensitive data, information, or maintains it on its own or on behalf of others and negligently compromises such data or information will be liable under this section and will be required to pay compensation according to the court’s discretion.

Section 65 of the Act covers the punishment for the offences which involve “tampering with computer source documents”, where according to the section, “Whoever knowingly or intentionally conceals, destroys or alters or intentionally or knowingly causes another to conceal, destroy, or alter any computer source code used for a computer, computer program, computer system or computer network, when the computer source code is required to be kept or maintained by law for the time being in force, shall be punishable with imprisonment up to three years, or with fine which may extend up to two lakh rupees, or with both”.

There are still some gaps in the IT Act of 2008 since there are new and unknown cyber-offenses for which the law needs to stretch its arms and tighten its grip.

Here are also offences that are not covered by the IT Act because they are already covered by other laws, such as “Cyber-defamation,” which is governed by the Indian Penal Code, 1860. The term “Defamation” and its punishment are defined under this Act, so there is no need for a separate definition elsewhere because the impact of such an online offence is the same as it is offline.

VALIDITY OF ONLINE CONTRACT

E-Contract is an aid to drafting and negotiating successful contracts for consumer and business e-commerce and related services. It is designed to assist people in formulating and implementing commercial contracts policies within e-businesses. It contains model contracts for the sale of products and supply of digital products and services to both consumers and businesses. An e-contract is a contract modeled, executed and enacted by a software system. Computer programs are used to automate business processes that govern e-contracts. E-contracts can be mapped to inter-related programs, which have to be specified carefully to satisfy the contract requirements. These programs do not have the capabilities to handle complex relationships between parties to an e-contract

In a country like India, where the literacy rate is not so high, the concept of ‘Digital India’ is far reaching. People still feel insecure to do online based transactions mainly because the terms and conditions of such contracts are not transparent. Another major issue is the nature of the law governing the electronic contracts. Even if the IT Act, 2000 has legalized electronic contracts, there are no definite provisions mentioned in the Act.

Documents are mainly registered for conservation of evidence, assurance of title and to protect oneself from fraud. The evidentiary value of electronic contracts has been given recognition and can be understood in the light of various sections of Indian Evidence Act. Sec 65B of the Indian Evidence Act deals with the admissibility of electronic records. As per Sec 65B of the Indian Evidence Act any information contained in an electronic record produced by the computer in printed, stored or copied form shall deemed to be a document and it can be admissible as an evidence in any proceeding without further proof of the original subject to following conditions are satisfied such as the computer from where it was produced was in regular use by a person having lawful control over the system at the time of producing it, 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 have not affected the accuracy of the data entered.

Section 85A, 85B, 88A, 90A and 85C of the Indian Evidence Act deal with the presumptions as to electronic records. Sec 85A has been inserted later to confirm the validity of electronic contracts. It says that any electronic record in the form of electronic agreement is concluded and gets recognized the moment a digital signature is affixed to such record. The presumption of electronic record is valid only in case of five years old record and electronic messages that fall within the range of Section 85B, Section 88A and Section 90A of Indian Evidence Act.

REMEDIES FOR BREACH OF ONLINE CONTRACT

There is no specific rule in case of breach of online contract but the rules regarding remedies for breach of contract can be followed as provided in The Indian Contract Act. A valid contract gives rise to co- relative rights and obligations and they are enforceable in the court of law when infringed on breach of contract. The Contract Act mainly talks about two remedies for the breach of contract such as Damages and Quantum Meruit. But few other remedies are also available as provided in the Specific Relief Act such as specific performance of contract and injunction restraining the other party from making a breach of contract. Sec 73 and Sec 74 of the Indian Contract Act, The person whose rights are infringed by the breach of contract may bring an action for damages or compensation in terms of monetary value for the loss suffered by the party. Sec 73 to 75 provides rules regarding the assessment of damages based on the famous case Hadley vs. Baxendale. According to the rules laid down in this case, there can be damages which naturally arose on the usual course of things from such breach of contract and can be called ordinary damages and secondly, damages for loss arose from special circumstances i.e. special damages. Contract Act, 1872 deals with the rules regarding the remedy of damages on breach of contract.

The person whose rights are infringed by the breach of contract may bring an action for damages or compensation in terms of monetary value for the loss suffered by the party. Sec 73 to 75 provides rules regarding the assessment of damages based on the famous case Hadley vs. Baxendale. According to the rules laid down in this case, there can be damages which naturally arose on the usual course of things from such breach of contract and can be called ordinary damages and secondly, damages for loss arose from special circumstances i.e. special damages.

REMEDY CLAUSE These clauses state what rights the non-breaching party has if the other party breaches the contract. In contracts for the sale of goods, remedy clauses are usually designed to limit the seller’s liability for damages.

Arbitration Clauses: An arbitration clause states that disputes arising under the contract must be settled through arbitration rather than through court litigation. Such clauses generally include the name of the organization that will conduct the arbitration, the city in which the arbitration will be held, and the method for selecting arbitrators.

Merger Clauses: Merger clauses state that the written document contains the entire understanding of the parties. The purpose of merger clauses is to ensure that evidence outside the written document will not be admissible in court to contradict or supplement the terms of the written agreement.

Breach of Contract: The parties to a contract must either perform or offer to perform their respective promises, unless such performance is dispensed with or excused under the provisions of the Act, or any other law. Promises bind the representatives of the promisor in the case of death of such promisor before performance, unless a contrary intention appears from a contract. In a contract the agreement being enforceable by law, each party to the contract is legally bound to perform his part of the obligation. Non-performance of the duty undertaken by a party in a contract amounts to breach of contract, for which he can be made liable.

Remedies for breach of contract

The legal remedies for breach of contract are: (a) damages; (b) specific performance of the contract; and (c) injunction.

Damages: In practice damages constitute the main remedy. When a contract has been breached, the party who suffers by such breach is entitled to receive, from the party who has breached the contract, compensation for any loss or damage caused to him thereby, being loss or damages which naturally arose in the usual course of things from such breach or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss of damage sustained by reason of the breach.

A person who rightfully rescinds a contract is entitled to compensation for any damage, which he has sustained through non-fulfillment of the contract.

Liquidated damages and penal stipulations If a sum is named in the contract as the amount to be paid in case of breach of contract, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage of loss is proved to have been caused thereby, to receive, from the party who has broken the contract, reasonable compensation, not exceeding the amount so named or the penalty stipulated for.

A stipulation for increased interest from the date of default may be regarded as a stipulation by “way of penalty”. The court is empowered to reduce it to an amount which is reasonable in the circumstances.

Specific performance In certain special cases (dealt with in the Specific Relief Act, 1963), the court may direct against the party in default “specific performance” of the contract, that is to say, the party may be directed to perform the very obligation which he has undertaken, by the contract. This remedy is discretionary and granted in exceptional cases. Specific performance means actual execution of the contract as agreed between the parties.

Specific Performance of any contract may, in the discretion of the court be enforced in the following situations
When there exists no standard for ascertaining the actual damage caused by the nonperformance of the act agreed to be done; or
When the act agreed to be done is such that monetary compensation for its nonperformance would not afford adequate relief.

Instances where compensation would be deemed adequate relief are:

Agreement as a consequence of a breach by a landlord for repair of the rented premises; Contract for the sale of any goods, for instance machinery or goods.

Exceptions A contract which runs into such minute or numerous details or which is so dependent on the personal qualifications or volition of the parties, or otherwise from its nature is such, that the court cannot enforce specific performance of its material terms, cannot be specifically enforced.

Another situation when a contract cannot be specifically enforced is where “the contract is in its nature determinable”. A contract is said to be determinable, when a party to the contract can put it to an end. A contract the performance of which involves the performance of a continuous duty, which the Court cannot supervise, cannot be specifically enforced.

Persons who cannot obtain specific performance

The specific performance of a contract cannot be obtained in favor of a person who could not be entitled to recover compensation for the breach of contract. Specific performance of a contract cannot be enforced in favor of a person who has become incapable of performing the contract that on his part remains to be performed, or who violates any essential term of the contract that on his part remains to be performed, or who acts fraudulently despite the contract, or who willfully acts at variance with, or in subversion, of the relation intended to be established by the contract.

ONLINE CONTRACT

Contract:

The Indian Contract Act, 1872 defines a contract as an agreement between two or more parties for the buying/selling of goods or services for a valid consideration. The essentials to a valid contract are also some of the essentials to an e-contract which are:

An offer and acceptance have to be made.
There should be a lawful consideration.
There should be free consent between the parties to a contract.
The object of the agreement should be lawful.
Parties must be competent enough to contract.
The contract must be enforceable by law.

The Indian Contract Act, 1872 provides a basic contractual rule that a contract is valid if it is made by competent parties out of their free consent for a lawful object and consideration. There is no specific way of communicating offer and acceptance; it can be done verbally, in writing, or even by conduct. Thus, oral contracts are as valid as written contracts; the only condition is they should possess all the essentials of a valid contract.

It was held in the case of Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas, “that ordinarily, it is the acceptance of offer and intimation of that acceptance which results in a contract. This intimation must be by some external manifestation that the law regards as sufficient. Hence, even in the absence of any specific legislation validating e-contracts cannot be challenged because they are as valid as a traditional contract is.”

E-Contract

The Information Technology Act, of 2000 provides various procedural, and administrative guidelines and regulates the provisions relating to all kinds of electronic transactions. These include computer data protection and authentication of documents by way of digital or electronic signature. Though electronic contracts have been given recognition by the IT Act, 2000, the majority feel it less secure to get into any kind of online contract as there are no concrete judicial precedents for the validity and enforceability of online contracts in India. The 2008 amendment to the IT Section 10 gives legislative authority to E contracts. It says 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.”

E contracts are contracts that are not paper-based and are electronic in nature. These contracts are generally made for speedy entering into a contract or for the convenience of the parties. They are best made between parties who live in 2 different parts of the world and have to enter into an agreement. A digital signature is all they need to enter into a contract as a party even though both the parties to the contract are sitting miles away from each other. In this proliferating world, it is the most convenient method to enter into a contract without being physically exhausted. The 2 main parties to an e-contract are- The Originator and the Addressee.

Originator according to the IT Amendment Act, 2008 is a person who sends, generates, stores, or transmits any electronic message to be sent, generated, stored, or transmitted to any other person and does not include an Intermediary. ( In the present context, the person who initiates the process of making an e-contract sends it to the other party.)

An Addressee according to the IT Amendment Act, 2008 is a person who is intended by the originator to receive the electronic record but does not include any Intermediary. (In the present context, the party which receives the e-contract made by the other party.)

E contracts can be broadly categorized into :

Shrink Wrap Agreements
Click Wrap Agreements

Click Wrap agreements are mostly found in the software installation process. The user has to click either ‘Accept’ or ‘Decline’ to accept or reject the agreement respectively. These agreements lack a certain amount of bargain power. Choosing to make payments online or choosing to reject them is an example of using a click wrap agreement.

Shrink Wrap agreements are those which can only be read and accepted by the consumer after the opening of a particular product. The term is described after the shrink wrap plastic wrapping that is used to cover software or other boxes. Installing software from a CD into your PC is an example of a shrink-wrap agreement.

In the case of browse-wrap contracts, we usually accept the terms and conditions of the contract by clicking the button that indicates ‘I Agree’, and in the case of shrink wrap contract or purchase of a software product, assent is given by the consumer or the purchaser with tearing of the wrapper and using it. Many have the tendency of not reading the terms and conditions carefully before agreeing to such. But these actions should be taken consciously and carefully only after reading the terms of the contract properly as it leads to a valid contract and the terms can be strictly enforced against them.

However, courts in other countries such as the US, have dealt with the validity and enforceability of contracts such as shrink wrap and click wrap contracts. It was held in the famous case of ProCD. Inc. vs. Zeidenberg ``that the very fact that purchaser after reading the terms of the license featured outside the wrap license opens the cover coupled with the fact that he accepts the whole terms of the license that appears on the screen by a keystroke constitutes an acceptance of the terms by conduct.” Thus, it is confirmed that shrink-wrap agreements are valid contracts and are enforceable against the purchaser of the software. But the enforceability of the shrink-wrap agreement is extended as far as the general principles of the contract are not violated. The validity of the click wrap agreement was first considered when the Court for the northern district of California upheld in the famous case of Hotmail Corporation that “the defendant is bound by the terms of the license as he clicked on the box containing

An online contract is simply a communication between two parties in regard to the transfer of goods/services. And as per the Indian Evidence Act, any e-mail communication and other communication made electronically is recognized as valid evidence in a Court of law. By considering the points, it can be concluded that the contract that follows the communication is valid too and Indian law thus recognizes the validity of online contracts.

Difference between contract and E-Contract

Contracts	E-Contracts
It requires the traditional signatures of the party	It needs the digital signatures
The contracts are drafted on the paper	These are drafted digitally
Parties are physically present at the time of the contract	There is no need to present physically while making the contract
They took heavy transaction cost	Low transaction cost
More time consuming	These are time-saving contract
The risk factor is very low, almost secure	There is a high risk involved in the E-contracts

Conclusion

The citizens of India are encouraging the concept of Digital India, but there is no definite legislation relating to the transactions done over computerized communication networks. Several laws such as The Indian Contract Act, 1872, Information Technology Act, 2000, Indian Copyright Act, 1957, and the Consumer Protection Act, 2019 to some extent are working and acting on resolving issues that arise relating to the formation and validation of online contracts. The Information Technology Act, 2000 is the Act that governs the transactions conducted over the internet and explains the considerable mode of acceptance of the offer and provides the rules for revocation of offer and acceptance in a vague or indefinite manner.

ELECTRONIC SIGNATURE

Electronic or Digital Signatures consist of cryptographic techniques which ensure privacy and verify the origin and integrity of the message; the techniques commonly used are a mix of algorithms, keys and codes. Symmetric cryptography uses just a single key to encrypt and decrypt the messages, on the other hand asymmetric technique uses two keys one of which is public (because it is known by the parties) and one, which is private (just one of the parties knows it).

Most modern signatures are based on asymmetric methods, described as a special door that can only be opened with four key locks, two on either side. Once both parties have locked the keys into the door, it is possible to open the door and for the parties to be sure that they can negotiate through that open door safely. Signatures serve the purposes of evidence, approval, and efficiency and logistics. To achieve these basic purposes a digital signature must be capable of Signer and Document authentication, these methods are tools used to exclude impersonators and forgers and are essential ingredients of what is often called non-repudiation service. This prevents a person from unilaterally terminating or making modifications to legal obligations arising out of a computer-based transaction.

Authentication of electronic records is dealt with under Section 3 of IT Act, by way of affixing an electronic signature. It is stipulated that such authentication shall be achieved by using the asymmetric cryptosystem and hash function61 whereby the initial electronic record is transformed into another electronic record.

Thus, digital requirements should possess, as minimum requirements, the following characteristics:

A crypto system which is asymmetric. The initial electronic record transforms into another electronic record Hash function and hash result The hash function ‘s stability The hash function ‘s safety Public Key and Private Key.

A signature is not part of the substance of a transaction, but rather of its representation or form. Signing documents serve the following purposes:

• Evidence: A signature authenticates writing by identifying the signer with the signed document. When the signers make a mark in a distinctive manner, the writing becomes attributable to the signer.

• Ceremony: The act of signing a document calls to the signer’s attention the legal significance of the signer’s act hereby helps prevent “inconsiderate engagements”

• Approval: In certain contexts, defined by law or custom, a signature expresses the signer’s approval or authorization of the writing or the signer ‘s intention that it has a legal effect.

Through the Information Technology Act, 2000 (IT Act), Indian was able to recognize the use of electronic signatures. With the aim of improving the ease of doing business; rationalizing the way documents are stored, and improving the safety, and cost-effectiveness of records, the Indian Government has greatly advocated for the use of digital technologies by its citizens and corporations.

Presently, it is safe to state; there has been a significant increase in adoption of electronic signatures all over India. This can be partly attributed to the government’s emphasis on facilitating electronic transactions using Aadhaar (a distinctive identification number provided by the government to all Indians nationals). With that said, in India, electronic signatures must satisfy a few conditions before they can be relied upon.

Requirements for validity

The Information Technology Act, 2000 provides for the adoption of e signatures and acknowledges two forms of e-signs as having similar legal acceptance as pen-and-paper signatures. These forms specifically acknowledged under the IT Act include:

• E signatures which incorporate an Aadhaar ID with an electronic Know-YourCustomer (eKYC) method.

• Digital signatures which are created by an “asymmetric crypto-system and hash function”. For such signatures, the signer is usually issued a long-term certificate-based digital identity number, stored on a USB token, which is used to place a sign on a document.

For the above forms of electronic signatures to be legitimate, they must satisfy these further conditions.

• The signatory of the e signature must be unique

• At the point of signing, the signatory should be in control of the data employed to generate the e-sign.

• Any tamper with the signature, or the form to which the signature is placed, must be easily detectable.

• There must be an audit trail of procedures followed during the signing process.

• Signer certificates should only be granted by the Certifying Authority. If all these conditions are followed, then there is an obvious legal belief in favor of the legality of any document signed using e-signatures. Documents that Indian law prohibits to be signed electronically

The government of India has held that e signatures cannot be adopted on all types of documents. The following documents cannot be signed online and should be executed with the typical pen-and-paper signature to be considered legally acceptable.

• Any document listed by the government of India on the official gazette

• Power of attorney

• Trust deeds

• A will and other forms of testamentary disposition

• Negotiable documents such as bills of exchange, drafts, promissory notes and more

• Documents involving any sale of immovable property such as real estate.

What are E-Contracts?

An electronic or digital contract is an agreement “drafted” and “signed” in an electronic form. An electronic agreement can be drafted in the similar manner in which a normal hard copy agreement is drafted. For example, an agreement is drafted on our computer and was sent to a business associate via e-mail. The business associate, in turn, e-mails it back to us with an electronic signature indicating acceptance. An e-contract can also be in the form of a “Click to Agree” contract, commonly used with downloaded software: The user clicks an “I Agree” button on a page containing the terms of the software license before the transaction can be completed. Since a traditional ink signature isn’t possible on an electronic contract, people use several different ways to indicate their electronic signatures, like typing the signer’s name into the signature area, pasting in a scanned version of the signer’s signature or clicking an “I Accept” button and many more.

ESSENTIAL ELEMENTS OF ONLINE CONTRACT

1) Offer –There must be a lawful proposal or offer made by one party known as the proposer and it is the starting point of a contract. By browsing and choosing the goods and services available on the website of the seller, the consumer makes an offer to purchase such in relation with the invitation to offer made by the seller.

2) Acceptance – When a proposal or offer is accepted by the person to whom the offer is made, it becomes a promise. The acceptance of the proposal must be unconditional and absolute and must be communicated to the proposer or the offeror. In case of an online contract, offer and acceptance can be made through e-mails or by filing requisite forms provided in the website. They may also need to take an online agreement by clicking on ‘I Agree’ or ‘I Accept’ for availing the services offered.

3) Intention to create legal relationship – If there is no intention of creating legal relationship on the part of the parties to contract, there is no contract between them.

4) There must be a lawful object – Parties to the agreement must contract for a legal object. A contract is only enforceable by law only when it is made for a lawful purpose. It must not defeat any provision of law and must not be fraudulent in nature. Thus, a contract on a website designed for the purpose of selling illegal substances online is a void contract.

5) There must be a legal or lawful consideration – Consideration is one of the most important elements of a contract. The basic rule is that when a party to a contract promises to perform his promise he must get something in return for the performance of his promise. Consideration is something of some value in the eyes of law. It may be of some benefit, right, interest or profit given to the party as inducement of promise. An act constituting consideration must be moved at the desire of the promisor and must be legal, real and not imaginary. Promises that are physically impossible to perform cannot have real consideration. For eg. an online site that offers purchase of land on the moon.

6) Capacity of parties – Parties to a contract must be capable of entering into a contract. He must attain the age of majority and must be of sound mind. He must not be disqualified from contracting by any law for the time being in force. In our country an agreement where either party is a minor has no significance. It is considered as void ab-initio.

7) There must be free and unaffected consent – Consent which is defined under Section 13 of the Indian Contract Act, 1872 is an essential requirement of a contract. It is basically the meeting of minds of the parties. When both agree upon the same thing in the same manner, they are said to consent. In case consent is caused by coercion, it is voidable at the option of the party whose consent was so caused.

8) Possibility of performance – The terms and conditions of agreement must be certain and not vague and must also be such as are capable of performance. An agreement to do an act impossible in itself cannot be enforced as per section 29 of the Indian Contract Act, 1872.

Law governing e-contract

1.) Validity of Contracts Formed Through Electronic Means. – 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.

2.) Section (11) of Information Technology Act, 2000: An electronic record shall be attributed to the originator— (a) if it was sent by the originator himself; (b) by a person who had 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.

Illustration 1: Pooja logs in to her web-based gmail.com email account. She composes an email and presses the ―Send‖ button, thereby sending the email to Sameer. The electronic record (email in this case) will be attributed to Pooja (the originator in this case) as Pooja herself has sent it.

Illustration 2: Pooja instructs her assistant Siddharth to send the above-mentioned email. In this case also, the email will be attributed to Pooja (and not her assistant Siddharth). The email has been sent by a person (Siddharth) who had the authority to act on behalf of the originator (Pooja) of the electronic record (email).

TYPES OF ONLINE CONTRACT

Online contracts can be of three types mainly i.e. shrink-wrap agreements, click or web-wrap agreements and browse-wrap agreements. In our everyday life, we usually witness these types of online contracts. Other types of online contracts include employment contract, contractor agreement, consultant agreement, Sale resale and distributor agreements, non-disclosure agreements, software development and licensing agreements, source code escrow agreements.

a) Shrink-wrap agreements are usually the licensed agreement applicable in case of software products buying. In case of shrink-wrap agreements, with opening of the packaging of the software product, the terms and conditions to access such software product are enforced upon the person who buys it. Shrink-wrap agreements are simply those which are accepted by the user at the time of installation of software from a CD ROM, for example, Nokia pc-suite.

b) Click- wrap agreements are web-based agreements which require the assent or consent of the user by way of clicking “I Agree’ or “I Accept” or “Ok” button on the dialog box. In click –wrap agreements, the user basically have to agree to the terms and conditions for usage of the

particular software. Users who disagree to the terms and conditions will not be able to use or buy the product upon cancellation or rejection. A person witnesses web-wrap agreement almost regularly. The terms and conditions for usage are exposed to the users prior to acceptance. For agreement of an online shopping site etc.

c) An agreement made intended to be binding on two or more parties by the use of a website can be called a browse wrap agreement. In case of browse wrap agreement, a regular user of a particular website is deemed to accept the terms of use and other policies of the website for continuous use.

Month: May 2022

The Semi-Conductor Integrated Circuits Layout Design Act, 2000

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