By - King Stubb & Kasiva on June 16, 2023
Technology advancements around the world have led to robust development in trade and commerce. E-commerce has become one of the most lucrative industries in the world. The internet acts as an agent through no conscious of its own and initiates agreements between parties. The Information Technology Act 2000, The Indian Contract Act 1872, and The Evidence Act 1872 determine the validity and enforceability of e-contracts in the country. The pandemic has also acted as an impetus and increased the growth of the digital market. The legal sector across the world has undergone extensive digital reality adaption, whether it be the virtual mode of delivering justice by the judiciary or the conducting of business transactions of any shape and size.
E-contracts are defined as an agreement which is made electronically instead of physical meetings between the parties involved in the process of the transaction. E-contract forms a significant part of e-commerce. E-contracting is a fragmenting of e-business. The Contracts which are entered by the parties orally or digitally are subject to the same fundamental principles of Contract law. These contracts must include all these important elements in respect to get them enforceable and legally binding in India. In today’s world, they are becoming increasingly important with rapid digitalization and e-commerce to execute a significant number of business transactions in a variety of industries.
The IT Act gives legislative authority to e-contracts under Section 10 of the act. To make any contract valid signatures from both parties are needed. In e-contracts, digital signatures come into play when section 2 (p) of the IT Act defines electronic signatures used in e-contracts. These signatures are very important in several contracts like in government to government and in government to business.
There are always two parties which are involved in e-contracts, the originator and the addresses both of which are defined by the act. In the case of Trimex International FZE Ltd. Dubai vs. Vedanta Aluminium Ltd., the Supreme Court held that where the parties had communicated their offer and acceptance through email in the absence of signed documents, once a contract is concluded orally or in writing, the fact that a formal contract must be prepared and initiated by the parties would not affect the contract.
Therefore, the IT Act safeguards the interests of the parties which are maintained through its various provisions. The High Court of Madras had applied the provisions of the IT Act to an e-auction in Tamil Nadu Organic Private Ltd. Vs. State Bank of India, finding that the contractual duties which might arise through electronic methods and such contracts might be enforced under the law. Section 10A of the IT Act certifies that contracts are established with electronic means and Section 10B of the IT Act permits the use of electronic records and electronic methods for contract conclusion as long as the contract complies with the Indian Contract Act, 1872.
In the case of Ambala Sarabhai Enterprise Limited v. KS Infraspace LLP Limited, the Supreme Court examined the validity of agreements entered into by parties using a combination of communications over email and Whatsapp. The key contention was the nature and language of the correspondence, which did not directly equate to affirmation, and therefore the agreement was invalid. Further, the court has accepted and said that agreements may be executed electronically, so long as they meet all the criteria of the Contract Act and IT Act which includes agreements entered into through mail as well as Whatsapp.
It is regarded as a necessity that the court should accept the electronic mode of contracts as evidence. This statement contended in the case of Société des products Nestlé S.A v. Essar Industries &Ors, which introduces Section 65A and Section 65B in the Indian Evidence Act related to the admissibility of computer-generated devices.
Similarly, in the case of RavindraSingh@Kaku vs the State of Punjab, it was observed by the Supreme Court that a certificate under section 65B(4) of the Indian Evidence Act, 1872 is important to produce electronic evidence and that only giving of oral evidence in place of such certificate will not be sufficient. This step was taken to minimize the challenges related to e-contracts and other electronic evidence. In another case of State vs Mohd Afzal and Ors, it was held that electronic devices are acceptable in court.
Jurisdiction is the power of the court to hear a case means to take cognizance of the case and make legal decisions and judgments. It is defined as the legal authority of the court that resolves the dispute. E-contracts involve instant communication of offer and acceptance. Wherein, the contract is complete at the end of the originator where the acceptance is received. In the case of BhagwandasGoverdhandasKedia vs Girdhari Lal Parshottamdas&Co, the Supreme Court contended that the place where the acceptance is received shall have the jurisdiction of enforcement of contracts who are entered into using computer internet.
If there is any issue between the parties which belong to the same jurisdiction related to e-contract, then such dispute will be resolved similarly to the traditional contract disputes. There are some challenges that arise when the parties to E-contract belong to different countries. Section 13 of the IT Act specifically deals with the time and place of despatch and receipt of electronic records and electronic contracts.
This means that the location of computer sources through which it was dispatched and received, places no role in determining the jurisdiction of the case. However, this section limits the power by Section 20 of the Code of Civil Procedure, 1908. As Section 20 (c) explains that the suit can be instituted in the court within whose local jurisdiction the cause of action has aroused. Therefore, a question comes over the jurisdiction of the courts as the cause of action may arise in e-contract at the place where the electronic information was dispatched, irrespective of the facts of the principal place of business.
In the case of P.R. Transport Agency vs Union of India & others, the Allahabad High Court dealt with the question of jurisdiction and held that the acceptance of the contract was sent through email and received in Chanduali (U.P) and the principal place of business of the petitioner was at Varanasi (U.P) thus, the place of jurisdiction on the present case lies in U.P.
E-contracts have emerged as powerful tools that transform businesses, offering speed, efficiency, and cost-saving advantages. They enable parties from different parts of the world to form agreements simultaneously, eliminating geographical barriers. By minimizing paperwork and boosting productivity, e-commerce is poised to revolutionize the realms of business, law, and technology. However, there is a significant gap in the implementation of e-contracts due to the lack of comprehensive legislation.
The existing laws primarily cater to the needs of originators and service providers, leaving gaps in protecting the interests of all parties involved. It is crucial to enact concrete legislation that safeguards not only the originators but also the addresses in e-contract transactions. Only with proper and comprehensive legal frameworks can the full potential of e-contracts be realized.
An e-contract is simply a contract created using electronic means which has a set of terms and conditions presented by the party that drafted the contract and acceptance.
Yes, the essential of a valid contract under the Indian Contract Act 1872, when fulfilled an online contract is valid and enforceable under Indian Law.
They are easier to use for example in a traditional contract, the parties physically meet to inform each other any middlemen can hire about the contract’s terms and conditions, whereas in the case of e-contracts, they are ready to use templates for numerous types of contracts.
Trimex International FZE Ltd. Dubai vs. Vedanta Aluminium Ltd, 2010 (2) AWC 1170 (SC).
Tamil Nadu Organic Private Ltd. Vs. State Bank of India, AIR 2014 Mad 103.
Ambala Sarabhai Enterprise Limited v. KS Infraspace LLP Limited, Civil Appeal No(s). 9346 of 2019.
Société des products Nestlé S.A v. Essar industries &Ors, 2016 SCC OnLine Del 4279
RavindraSingh@Kaku vs State of Punjab, Criminal Appeal No. 1307 of 2019.
 State vs Mohd. Afzal and Ors, 107 (2003) DLT 285.
BhagwandasGoverdhandasKedia vs Girdhari Lal Parshottamdas&Co,AIR 1966 SC 543.
P.R. Transport Agency vs Union of India & others, AIR 2006 All 23.