An electronic contract is essentially a digital counterpart of a traditional contract. An electronic contract must, however, be more than just a contract; it must also be a lawful contract under the law’s interpretation.

The Indian Contract Act of 1872 prescribes the conditions, fulfilling which an
agreement is deemed a valid contract. These include –

1. Offer and acceptance
2. Free consent
3. Capacity
4. Lawful consideration

These conditions are meant to ensure that the two parties entering into a contract
with each other possess the capacity to do so, are doing so freely and lawfully,
and are of the appropriate age. Additionally, the contract must entail an offer and
a verifiable means of accepting this offer.

Electronic contracts that meet these criteria are valid and can be upheld in a court
of law

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: 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.

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 contracts, contractor
agreements, consultant agreements, Sale resale, and distributor agreements, non-disclosure
agreements, software development, licensing agreements, and source code escrow agreements.
a) Shrink-wrap agreements are usually the licensed agreement applicable in the case of software
product buying. In the case of shrink-wrap agreements, with the 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 that require the assent or consent of
the user by way of clicking the “I Agree’ or “I Accept” or “Ok” button on the dialog box. In click
–wrap agreements, the user basically has to agree to the terms and conditions for usage of the
particular software. Users who disagree with the terms and conditions will not be able to use or
buy the product upon cancellation or rejection. A person witnesses web-wrap agreements almost
regularly. The terms and conditions for usage are exposed to the users prior to acceptance. For
the 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 the case of a 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.

d) Emails: Emails are not something you’d expect to see in a list of electronic contracts,
but they have been ruled in several cases, to constitute a legally binding contract. For example, in the case of Trimex International FZE vs. Vedanta Aluminium Limited, India 2010, the Supreme Court upheld the validity of an unregistered
and unsigned contract discussed via email; thus, confirming the enforceability of the contract through email.
Emails can also be signed electronically, which is an important criterion for deciding when an agreement becomes a contract.

E) Electronic signatures: Electronic signatures refer to the digital and verifiable counterparts of regular wet
signatures. Electronic signatures are used to sign documents online, which can
typically be done in two ways –
▪ Aadhaar-based signatures using an OTP
▪ Digital signatures that use an asymmetric public key system and hash algorithms, and allow users to sign documents with a password Intellectual Property laws are a branch of law that deals with the protection and enforcement of legal rights in respect of the original creations, inventions, designs, piece of music and artistic work of the creator or inventor. The purpose
of these laws is to encourage people to develop creative works that helps and benefit society by ensuring that the person developing an art, design, idea or technology can develop the same without fear. To protect intellectual property
rights, there are various types of contracts executed by the owner of the Intellectual Property.
G)Intellectual property Assignment Agreement
The agreement to assign the Intellectual property right transfers the intellectual property right completely or partially from the original creator to another person or organization for consideration. By this kind of an agreement, the original
owner transfers his right to develop or sell the said intellectual property to another person or legal entity. Assignments can be assignments of Patents governed by the Patents Act, 1970, Assignment of Trademarks governed by Trademark Act, 1999, and Indian Copyright Act, 1957. Following are the types of Assignments:

Assignment of Patents

Assignment of Trademarks

Assignment of Designs

Assignment of Copyrights

Assignment of confidential know-how

Assignment of Geographical Indications
Non-Disclosure Agreements
In order to protect the information falling under the branch of intellectual property, which is also dynamic for the functioning of the company, like trade secrets, business plans or business structures, technologies, or codes, you may
need to enter into NDAs while contemplating business relationships. NDA is usually entered between parties contemplating a deeper business relationship (such as two parties discussing a major licensing deal) to protect any disclosure
of confidential information in the future, even if the larger transaction is not successful. In that case, the non-disclosure obligations of the NDA continue to apply. Clauses that are included in NDAs are also common in other documents such as employment or consultancy agreements.
Technology Licensing or Technology Transfer Agreements
By this agreement the owner of the intellectual property authorizes another person or company to use such rights of the technology developed by the owner, for a considerable amount as agreed between the parties. This is a way to transfer
knowledge of technology. This helps small companies grow as they acquire such technology licenses from the bigger companies for the production and promotion of a product. Many joint venture agreements in the automobile sector in India have involved such arrangements, where the Indian company gets access to the foreign partner’s technological expertise and combines it with local distribution expertise in the Indian market. For example, Hero Honda (now terminated), Maruti Suzuki,
Mahindra – Renault, etc. are some examples.
Trademark Licensing and Franchising Agreement
Trademarks distinguish or help identify the goods and services of one’s company or entity, by a licensing or franchising agreement. The goodwill gained by such a mark is shared by another entity that will help promote the business or carry on
a business with the same mark and by maintaining the same standard of the business and its goods and service. Popular restaurants such as Mcdonald’s, Subway, Dominos, KFC, Pizza Hut, and coffee shops such as Starbucks follow a
franchising model.
Copyright Licensing Agreement
By this agreement, the owner of the copyrights can grant other people or companies the ‘license’ to monetarily exploit the copyright, such as by creating a reprint, or reproducing or distributing the original works on the terms and
conditions of the owner. A license can be very limited in scope, time, or territory, for example, it may only be for the creation of a translation (or a movie) and nothing else, restricted to a period of two years and the right to sell may be limited to a
particular state or country.
In exchange for such a right, the owner is paid a royalty or an amount of consideration as agreed upon by the parties. This does not permanently transfer the right of copyright to another person; it is licensed for some duration.
Inventions Assignment Agreement
This contract gives the employer the rights over the creation of his employee during the period of his employment. Usually, the employment agreement contains a clause whereby all the creations of an employee are the product of the
employer’s business. Further, these kinds of agreements and clauses also protect the confidential information of the company. Intellectual property right in an employer-employee relationship is by default assigned to the employer by virtue of
the Copyright Act but the same is not the case in respect of trademarks and patents. Hence, executing a separate inventions assignment agreement is necessary for this purpose.
Music License Agreement
A music license agreement is a contract between the creator of the music and a third party to exchange his composition for consideration, whereby giving a right to the third party to publish or distribute the music in various forms.
Research and Development Agreement
Such agreements are entered between a company with any individual or an organization for conducting research and development of an idea, goods, or services. They are generally entered in respect of:
• research in connection with manufacturing/ hardware products, or
• with professors who pursue research at universities, or
• with scientists working at companies.
The company or the university includes assignment clauses to assign any intellectual property developed to itself.
Work For Hire Agreements
These agreements are executed or entered between companies to hire an artist to
perform a certain piece of work or to create work that the company intends to
have copyright over, e.g. designs, logos, corporate videos, etc. It is important to
identify the work in which intellectual property is assigned.