E-contracts or digital contracts are contracts or agreements between parties. These must pass the basic test of the Indian Contract Act, 1872 which are competent parties to the contract, lawful consideration, consent- free consent or assent and lawful object. The Information Technology Act provides specific legal recognition to electronic records and contracts executed through electronic means in terms of which an electronic contract will be considered valid irrespective of whether it is executed in physical or electronic form, as long as it meets the basic essentials under the Contract Act. As an example, an offer made on email and acceptance is also communicated through email would be a valid legal contract even if there is no physical agreement in place. There are ample judicial precedents recognizing creation of contractual relationship via electronic communication.

Although, we do have some landing on the e-contracts which are in the nature of shrinkwrap or click-wrap or “I-agree”; in this context, it is pertinent to highlight that there is a matter pending before the SC (in the matter of Karmanya Singh Sareen and Anr v. Union of India & Ors.) where the SC, amongst other issues, is also likely to adjudicate on the enforceability of click-wrap contracts and the manner for obtaining consent from users under such contracts. In this case, the petitioners have argued that the consent obtained for such ‘I-agree’ contracts from the

Users should be ‘educated and well-informed consent’ after making full and true disclosure of the effect and consequences of the contract to which the users have provided their consent.

Other key e-contracts between two parties can be made robust through affixing of digital signatures. The can address issue of admissibility of e contracts. While there is no mandatory requirement of affixing an Electronic Signature to such contracts for their enforceability, on a joint reading of IT Act and Evidence Act, if there is no Electronic Signature on the contract, the party which wants to file a claim on the basis of such a contract will have to prove that the e-contract (as an electronic record) is authentic.

Digital signature, with which most of us are familiar since it is widely used and is mandatory for making filings with authorities such as the Registrar of Companies or the Income Tax authority, is a form of Electronic Signature. But surprising, they are not commonly used by parties for concluding contracts electronically. Considering that digital signatures are already common, it may be worthwhile considering making digital signatures mandatory for e-contracts as well.

To tackle the objection about it being tedious to do so for every contract, a minimum benchmark of value of the contract or consideration under the contract can be prescribed. As an example, a contract which has consideration of certain significant threshold may need digital signatures of both parties.

Another issue to address for proper execution of the e-contracts is payment of stamp duty on such contracts. As per the Stamp Act, stamp duty needs to be levied on every ‘instrument’ specified in Schedule I of the Stamp Act which is executed in India. The Stamp Act does not separately deal with stamping of electronic instruments or agreements and accordingly, as a matter of practice, stamp duty is usually paid only on instruments that are physically printed and signed by the parties executing the document.

It is interesting to note that even though the Stamp Act does not prescribe any method for stamping of online contracts, some of the states (like Maharashtra, Uttar Pradesh, Gujarat etc.), have included ‘electronic records’ in the definition of the term ‘instrument’ so now e-contracts are subject to stamp duty in these states. Although, the stamp duty legislation is archaic and requires some revolutionary changes like except for contracts pertaining to transfer of property or some other key commercial contracts, there should be no stamp duty on any other instrument. In any case, till any robust solution is found, it appears the risk of stamp duty will remain for the e-commerce industry as it is built on e-contracts.

While the dominance of ecommerce continue to rise in our world through various aspects, including social media, there remains need to address various challenges which this dynamic industry will pose from time to time