Changes in the way commerce is undertaken nationally and internationally has placed greater reliance on technology and increased the use of the Internet as an interactive medium. The nature of the Internet has created issues for the formation of common contracts, given rise to complex jurisdictional problems, ignited debate on privacy and defamation issues, created new intellectual property rights which require protection and created a variety of complex consumer protection issues which may not be covered by present legislation.
The purpose of this article is to evaluate the recent legislative developments and their possible impact in facilitating electronic contracts and to consider the continued operation of common law principles in the area of contract formation. The need for the community to have a clear understanding of the differences between a paper environment and an electronic environment in everyday transactions is highlighted by the increase in Internet shopping sites. Consequently, the topic of contract formation is chosen because of its fundamental importance to commerce and the community generally. The ability for a contract to be validly formed through the Internet will be crucial to continued consumer confidence and business success in the years to come.
This topic revolves not only around Indian Contracts Act 1872 but also Information Technology Act 2000. So therefore question of validity is to be also considered in Electronic Contract as email falls under this category. Sec 10A of the Information Technology Act states the validity of electronic contracts but further research is required on its understanding. The Sec 10A of IT Act provides for the legislative authority to electronic contract. It was inserted through an amendment in 2008. It says “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.”
Forms of E-Contract – generally the basic forms of E-Contracts are mentioned following:
In recent times, the video camera, voice recorder, video conferencing is adding a new dimension to the evidentiary regime. Justice Gururajan, Karnataka High Court has held in a civil suit recognizes video conferencing as valid evidence. The evidentiary value of emails/e-contracts/epurchase orders can be well understood in the light of the following sections of Indian Evidence Act. Sections 85A, 85B, 85C, 88A and 90A deals with the presumptions as to electronic records whereas Section 65B relates to the admissibility of electronic record. All the aforesaid sections of the Evidence Act has conditions which are prerequisite for the evidence to be admissible. Through this, It can be said that electronic contracts are almost same as other hard copy contracts as far as its evidentiary value is concerned and in case of any discrepancy there are certain prerequisites that fill the lacunae. All electronic contracts are valid and enforceable contracts as they are legalized by the Information Technology Act and one could be made liable if there is any violation with the terms and conditions.
Payment of Stamp Duty on Electronic Contracts – In India, any document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or creates a is liable to Stamp duty. There is no specific provision in the Indian Stamp Act that specifically deals with electronic records and/or the stamp duty payable on execution thereof. Majority of State specific stamp duty laws also do not specifically include electronic records however the Bombay Stamp Act specifically refers to electronic records.
According to Section 13(3) of the IT Act, an electronic record is deemed to be dispatched at the place where the originator has his place of business, and is deemed to be received at the place where the addressee has his place of business except as otherwise agreed to between the originator and the addressee. For example, if Amazon‘s server is located in the US, the e-message sent by a consumer resident in Mumbai placing an order of electronic item on amazon.in, to be delivered at his residence, from a train while it was running through Chennai, the order is deemed to be dispatched at Mumbai.
As discussed above, it can be analyzed that any contract when executed electronically may attract payment of stamp duty in accordance with the applicable laws. Nonpayment of stamp duty in respect of such record/documents would attract consequences similar to those applicable to physical instruments, unless specific consequences have been prescribed for electronically executed instruments under the respective stamp duty laws. For example, in terms of the Stamp Act and most State stamp duty laws, instruments which are chargeable with stamp duty are inadmissible as evidence in case appropriate stamp duty has not been paid. Still, under the Stamp Act and most State stamp duty laws, the inappropriately stamped instruments may be admissible in evidence upon payment of applicable duty at a later stage, along with penalty of upto 10 (ten) times the duty chargeable. Further, every person executing or signing otherwise than as a witness any such instruments chargeable with stamp duty, without the same being duly stamped, would be liable for monetary fines as well. Electronic contracts may be stamped either by taking the print of the document on stamp paper or by getting the printed document franked or by procuring a stamp duty certificate by the process of e-stamping for the specific electronic contracts. However, stamping of electronic contracts, in such a conventional manner, like physical instruments, defeats the entire purpose of paperless electronic contracts which needs a change in the Stamp Duty law.
The provisions of the Indian Contract Act and the Code of Civil Procedure, 1908 lay down the rules to determine the jurisdiction and choice of law questions. Once the place of formation is ascertained the question of jurisdiction is simple to answer, however, the parties may still have the freedom to choose jurisdiction, as well the law that shall govern their contract.
With the maturation of electronic commerce, the use of e- contracts has been vastly increased globally. The two major users of electronic contract worldwide are US (United States) and EU (European Union). Both of them provide contrasting approaches to the contracts in the sphere of internet. Although the internet is more or less impacted by the US, the EU is making really good influence when it occurs to the regularization of the Internet. There are two wide classes of electronic contracts. First, those contracts that deals with physical commodities or services. Second, those contracts that deals with electronic materials (software, images, e-delivered texts, etc.). In the U.S., there are two uniform state acts designed to bring legal certainty to electronic transactions, these are: the Uniform Computer Information Transaction Act (UCITA) and the Uniform Electronic Transaction Act (UETA). UCITA deals with contracts or transactions in “computer information”. The EU has produced a consistent regulatory framework for electronic commerce. This framework includes the following Directives: E-Commerce Directive, Unfair Contract Terms Directive, ESignature Directive, Directives on Consumer Credit, Travel Packages Directive etc. The foundation behind legislations of the EU and the U.S. for electronic contracts is that the both legality of electronic contracts by making them legal validity. Nevertheless, the U.S. laws are more extensive in range. UETA covers all cases of contracts, not just electronic contracts, and UCITA cover all characters of computer information contracts. In contrast, the EU directives typically deal only with consumer contracts by exempting B2B transactions
E-contracts can be considered as basis of the e-business or e-commerce and as the technology evolves the need for protection of e-contract is also increasing. The econtracts have its own advantages and disadvantages. Though it reduces costs, time, resources and improve services through automation but on the other hand it raises queries with respect to the legal mechanism which governs the e-contracts. The world as we probably aware it, is evolving. Implementing them in the conventional sense is difficult and there is an inescapable requirement for a devoted lawful instrument to uphold e-contracts. Most created nations have understood this and have sanctioned particular laws to implement e-contracts. India too needs to understand this and step in the same bearing. All things considered, advancement is an inside and out procedure which intends to concentrate on enhancing every one of the parameters of the general public that we live in and concentrating on viable implementation of e-contracts ought to be no special case.
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