Electronic contracts or e-contracts are contracts formed with the means of the internet. It has become part of our digital world. With us progressing into a more techno-savvy environment, all of us have to go through several contracts without even consciously knowing that we have entered into an e-contract with that company and we have agreed to legal consequences arising out of that contract. Even we do not bother to read the whole document and try to do away with it by just clicking “I agree”. Right from installation, of an application in our Smart phones, to giving access to our photos, media files, and location etc., to that application. We can say that e-contacts contribute majorly to smooth functioning of our lives.
The traditional form of contracts is contract undergone by two or more parties agreeing upon something legally binding. If we get into this traditional form of contracts they are way more complicated due to the time and money taken and requiring the physical presence of parties to the contract.
Here, we are into a mindset of getting into a contract and read the document thoroughly before signing it. It takes a long time to draft then getting into the process.
For instance, there lies a contract between A and B to sell A’s watch to B at 5000 consideration, if A breaches the contract he will be liable to face consequences as per the Indian contract act. In India, we have legislation like the Indian Contract Act, 1875, Sale of goods act that needs to be taken into account while drafting and enforcing.
Traditional contracts are agreements enforceable by law. Any Contract should be in accordance with section 10 of the Indian Contract Act, 1872 i.e. agreements that are valid contracts before the bar. Section 10 includes Contracts that are made by free consent by competent parties with a lawful consideration and a lawful object. Additionally, there are exceptions where the contracts could be valid without consideration under section 25 of the act.
On the other hand electronic contracts mean the same as traditional contracts only the difference which lies here is that they are done through an online platform through the mode of emails etc. where subject matter could be goods, services through online mode or physical goods.
The only essential requirement to validate an E-Contract is compliance with the necessary pre- requisites provided under the Indian Contract Act, 1872. The validity of electronic contracts is governed by the Information Technology Act, 2008. Section 10A which states that e-contracts are valid and enforceable.
“Section 10-A: 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.”
E-contract gives an edge against traditional contracts as there are pre-drafted contracts that can be modified according to the situation and sent within seconds with the security of electronic signature. Electronic contracts contains two parties namely originator and Addressee.
Elements of Valid Contact
Offer or Proposal
It is defined under section 2(a) of the Indian Contract act, 1872 as “when a person signifies to another his willingness to do or abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal.”
It should be noted that there should be intention to create legal relationship; offer must be communicated expressed or implied. Communication of offer is communicated when the person has been brought into the knowledge of the person to whom it is made.
According to section 2(b) when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal when accepted becomes promise.
The person making the proposal does not become bound until it is accepted. The acceptance can be either expressed or implied.
Revocation of offer
It can only be said before the offer is accepted. According to section 5, a proposal may be revoked at any time, before the communication of its acceptance is complete as against proposer, but not afterwards. Revocation can be made by sending revocation notice, by lapse of time, by failure of acceptor to fulfill a precedent condition to acceptance, by death or insanity of the proposer.
In State of Delhi vs Mohd Afzal & Others, 2003(3) 11 JCC 1669 it was held that E-contracts are admissible as evidence in the court of law under the Indian Evidence Act Sections 85A, 85B, 88A, 90A, and 85C deals with the presumptions as to electronic records whereas Section 65B relates to the admissibility of electronic record.
In Ashok smokeless coal India (P) Ltd and others v. Union of India and others The validity of a scheme framed by coal India limited for sale of coal by electronic means was questioned. It was held that appeal is allowed and scheme framed by coal India ltd were valid and the judgment of Calcutta high court was upheld, setting aside the judgment of Madhya Pradesh High court.
In case of SBI Cards and Payments Services Pvt Ltd v. Rohitdas Jadhav, it was held that messages or legal notice sent through WhatsApp chat are valid legal evidence under court of law and blue tick over the app is a valid proof of acceptance.
It is well and accepted that e-contracts are the same as traditional contracts in numerous ways and they are admissible in the court of law as well. There lies a thin line of difference between the two. Our realm is in flux, things, technology is changing, within a snap of a finger, on the other hand, India still relies on a 148-year-old statute which recognizes contract by the means of posts, letters but there are no separate provisions for e-contracts.
- Indian Contract Act, 1872
- Information Technology Act, 2008