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 

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.