India is taking all endeavorsto keep pace with global momentum to enter into new era of digital world and working hard to embrace digital contract in accordance to the Model Law on Electronic Commerce adopted by United Nation Commission on International Trade Law. E-contracts are nothing but an agreement modeled, deployed, executed, cemented, specified, ironed and entered into through an electronic form. These contracts are valid and binding as long as such contract fulfil the required pre-requisite of a contract as enumerated under the Indian Contract Act, 1872. Indian laws recognize various forms of e-contracts such as contracts entered through e-mails, Click-Wrap contracts, etc.
These are the contract in which consent of the parties is gathered from the emails exchanged between the parties. The validity of the contract entered by E-mail/WhatsApp has been discussed by the Hon’ble Supreme Courtin Trimex International FZE Limited Dubai Vs. Vedanta Aluminum Ltd, India-(2010) 3 SCC 1, wherein it has been held that unconditional acceptance of contract by e-mail is sufficient to conclude a contract. In the aforesaid case, the acceptance was conveyed over e-mail. In the aforesaid case the Hon’ble Supreme Court held as under;
“60. It is clear that in the absence of signed agreement between the parties, it would be possible to infer from various documents duly approved and signed by the parties in the form of exchange of e-mails, letter, telex, telegrams and other means of telecommunication.”
Hon’ble Delhi High Court in the case of Galaxy Infra and Engineering Pvt. Ltd. Vs. Pravin Electricals Pvt. Ltd- Arb. P.No. 674/2018 decided on12.05.2020 held that existence of the arbitration agreement can be inferred from letter, telex, or other means of communication. The Court notice that various e-mails exchanged between the parties had in fact resulted in a concluded agreement in terms of Section7 of the Arbitration and Conciliation Act,1996.
In the case of Govind Rubber Ltd.Vs. Louis Dreyfus Commodities Asia(P) Ltd- (2015)13 SCC 477 the Hon’ble Supreme Court held as under:-
“16. On reading the provisions it can safely be concluded that an arbitration agreement even though in writing need not be signed by the parties if the recordof agreement is provided by exchange of letters, telex, telegrams or other means of telecommunication. Section7(4)(c) provides that there can be an arbitration agreement in the exchange of statements of claims and defence in which the existence of the agreement is alleged by one party and not denied by the other. If it can be prima facie shown that the parties are at ad idem, then the mere fact of one party not signing the agreement cannot absolve him from the liability under the agreement. In the present day of e-commerce, in cases of internet purchases, tele purchases, ticket booking on internet and in standard forms of contract, terms and conditions are agreed upon. In such agreements, if the identity of the parties is established, and there is a record of agreement it becomes an arbitration agreement if there is an arbitration clause showing ad idem between the parties. Therefore, signature is not a formal requirement under Section 7(4)(b) or 7(4)(c) or under Section 7(5) of the Act.”
Recently the Hon’ble Supreme Courtin the case of Ambalal Sarabhai Enterprise Ltd Vs. KS Infraspace LLP Limited- (2020) SCC Online1 examined the validity of contract entered into by the parties using e-mail and WhatsApp. The Hon’ble Court held that WhatsApp messages which are virtual communication are matters of evidence with regard to their meaning and its contents to be proved during trail by evidence–in-chief and cross –examination. The e-mails and WhatsApp messages will have to be read and understood cumulatively to decipherwhether there is a concluded contract or not.
The aforesaid e-contract commonly includes Click-Wrap or Web-Wrap, Browse-Wrap and Shrink-Wrap agreement.
A Click-Wrap or Web-Wrap agreement require the person to provide his consent to the terms and conditions which are known as end user agreement and govern the licensed usage of software by clicking on an ‘I Accept’ or ‘ok’ tab. These are the most common types of contracts used on the internet, whether it is granting permission to access a site or downloading a software or selling something by way of website. The Consumer Protection (E-Commerce) Rules, 2020 bar pre-tick and automatic consent.
A Browse Wrap agreement is intended to be binding on the contacting party by mere use of the website, these includes the user policies and terms of service of websites.
A Shrink-Wrap agreement is one which terms and condition of the contract are usually present on plastic or in manuals attached with the software merchandise purchased by the customers. There are the contract which are generally contained in CD Rom of software. Section 13(2) of the IT Act communication of an offer or acceptance in the in the Web-Click mode is complete when the addressee is in receipt of the electronic record.
E-contracts are as valid as written contract, the condition is that they should possess all ingredient of valid contracts. Section 2(h) of IC Act defined contract as an agreement enforceable under the law. In terms of Section10 of the IC Act contract is valid if itis made by competent parties out of their free causes for lawful object and consideration. Section 4 and 7 of the IC Act also provides that a valid and legally binding contract must have an offer, acceptance of offer, for legal consideration and be made in free will.
Section 2(1) (t) of the IT Act defines electronic record as data, record or data generated, image or
sound stored, received or sent in an electronic form or computer – generated micro fiche. Section 3 of
the IT Act provides for the verification of electronic record by affixing digital signature. Section – 5 of
the IT Act provides for legal recognition of electronic signature.
Section 10A of IT Act provide legal recognition to e – contract and states that where in a contract formation, the communication of proposals and acceptances 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. An e – contract subsequent to its execution is stored in electronic form and is considered as an electronic record under the IT Act. Section 79A of the IT Act empowers the central Government to notify electronic evidence.
However, nothing in the IT Act shall apply to the documents or transaction specified in the First Schedule of the IT Act such as Negotiable Instrument ( other than a cheque ) as provided under Section 13 of the Negotiable Instrument Act, 1881, Power of Attorney as defined under Section 1A of the Powers of Attorney Act, 1882, trust as defined under Section 3 of the Indian Trust Act, 1882, a will as defined under Section 2(h) of the Indian Succession Act, 1925 including any other testamentary disposition and any contract for sale or conveyance of immovable property or any interest in such property.
Section 92 of the IT Act clearly indicate that the provisions of the Indian Evidence Act, 1872 (IE Act) are applicable for e-contract as well. Section 65A of IE Act recognize electronic documents/e-contracts as valid evidence and provides that electronics records can be proved at the court of law by way of following certain procedure prescribed in Section 65B IE Act. Section 65B of IE Act further provides that any information which is recorded through an electronic medium and is available as on printed paper, stored or copied in optical or magnetic media produced by a computer shall be admissible as evidence, if it satisfies the conditions provided therein. It is required that the document or e-mail sought to be produced from a computer, was in a regular use by a person having lawful control over the system at the time of producing it; the document or the e-mail was stored or received during the ordinary course of activities; the information was fed into the system on a regular basis the output computer was in proper operating condition and has not affected the accuracy of the data entered. The Hon’ble Supreme Court in the case of Arjun Panditrao Khotkar Vs. Kailash Kushanrao Gorantyal – 2020 SCC Online SC 571 has held that the certificate required under Section 65B in condition precedent to the admissibility of evidence by way electronic record. Section 73A of the IE Act provides for the production of digital signature certificate in front of court in case of any doubt raised about the genuineness of the same. Section 85A of IE Act further says that the Courts shall presume that every available electronic record which has an electronic signature affixed to it shall be considered to have a valid evidentiary value. As per Section 85B of IE Act the Courts shall presume that the e-contract which is being presented have not been tempered with and once a digital signature is affixed to an agreement available online, such shall be presumed by the Courts to be an acceptance of such agreement. Section 85C of IE Act further provides that if a digital signature is affixed to a particular document then the Court shall presume that such document is true and correct. Section 88A of IE Act also says that the court shall presume the addressee to be a person to whom the electronic communication purports to be addressed by the originator. Section 90 A of IE Act further helps court while dealing with record which is more than 5 years old, if such record is in proper custody then the court shall presume that the digital signature has been affixed with such document to authenticate its validity.
Despite several steps being taken by the legislature there are certain issues relating to e-contract such as jurisdiction, capacity to contract, free consent, loss of data, consensus-ad-idem, notarization and stamping of contract which require to be addressed in order to catch the pace and fully adopt the UNCITRAL model of e-business.
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