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:

1. An offer and acceptance have to be made.
2. There should be a lawful consideration.
3. There should be free consent between the parties to a contract.
4. The object of the agreement should be lawful.
5. Parties must be competent enough to contract.
6. 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

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.