Author: Akshita Bokde, Jagran Lakecity University, Bhopal
To the Point:
Contracts have long been foundational to trade and societal structure. In earlier times, to regulate commerce effectively, Mercantile Law was introduced. With the progression of society, this evolved into the Indian Contract Act, 1872, drafted by Sir Fitz James Stephen.
As per Section 2(h) of the Act, a contract is an agreement enforceable by law. An agreement, defined in Section 2(e), is every promise or set of promises forming consideration for each other.
Section 10 outlines the essentials of a valid contract, including:
Offer and acceptance
Free consent of all parties
Legal competence to contract
Lawful consideration
Lawful object
The agreement must not be void
Originally, contracts were made in written physical form. But with digital growth and restrictions during the COVID-19 pandemic, the shift toward electronic contracts (e-contracts) gained importance, making digital agreements a practical and necessary alternative.
Abstract:
An E-Contract or Electronic Contract refers to agreements made digitally, eliminating the need for physical paperwork. These contracts offer convenience, speed, and flexibility, allowing even parties located in different countries to engage in legally binding agreements. The inclusion of digital signatures ensures the authenticity and consent of the involved parties.
E-Contracts became especially useful during the COVID-19 pandemic when face-to-face interactions were limited, making them vital for business continuity. Their increasing use has supported India’s digital transformation and helped align it with global technological trends.
Use of legal Jargon:
There are some international Models and Agreements that mention about the E-contracts. The most prominent international frameworks are the 1996 UNICTRAL Model Law on Electronic Commerce and the 2005 Electronic Communications Convention, both aimed at unifying E-contract laws across jurisdictions.
In India, there are two most important legislations that talk about E-Contracts. One is the Indian Contract Act, 1872 and the other is the Information Technology Act, 2000. Apart from this other legislations also mention about the E-Contracts. Under Section 10A of the Information Technology Act, 2000, contracts formed, communicated, accepted, or revoked electronically are valid and enforceable, regardless of their electronic origin.
Section 2(r) defines ‘electronic form’ to include information that is generated, sent, received, or stored in various digital, optical, magnetic, or microfilm formats.
Section 5 of the IT Act mandates that contract contents must be authenticated with a valid digital signature, ensuring legal recognition equivalent to handwritten signatures. It shall be signed by such person and it shall bear the signature of such person, the requirement shall be deemed to have been fulfilled if a digital signature has been affixed.
According to the Bharatiya Sakshya Adhiniyam, 2023, a document bearing a digital signature is presumed authentic, and its contents are deemed accurate by the court.
Section 10 of the Indian Contract Act lays down the essentials for the formation of a valid contract which have been discussed above.
With regards to the admissibility of the E- Contracts as evidence in the Indian Courts, Section 63 of the Bharatiya Sakshya Adhiniyam permits electronic record to be presented as evidence in court of law. It provides the same treatment to the electronic evidence same as traditional evidence.
Section 63(2) of Bharatiya Sakshya Adhiniyam lays down certain conditions. They are:
The electronic record produced must be generated by a computer or a communication device
The information must be uploaded in the device as a part of routine.
The operating device shall not have any problem, it must work properly.
Section 63 (3) provides that there should be a single unit which shall consists of interconnected devices in order to ensure admissibility.
Section 63 (4) provides that to ensure the authenticity of the electronic evidence, a certificate needs to be submitted. The certificate must:
The certificate must identify the electronic record and describe its manner of production.
It must mention the details of the devices which are used in generating the record.
It should mention that there is compliance with the statutory requirements.
The certificate shall be certified by the person who is in charge of the device according to his best of his knowledge and belief.
The proof:
E-contracts can be of different types. Some of them are as follows:
Click wrap Agreements:
A click-wrap agreement appears when, say, you download an app and are required to select “I Accept” after reviewing the terms. Clicking to agree forms a binding electronic contract.
Browsewrap Agreements:
A browse-wrap agreement is one where the user passively accepts the terms—typically by continuing to use a website or clicking a link—without an explicit sign-off.
Scrollwrap Agreements:
A scroll-wrap agreement requires users to scroll through the terms before clicking “I Accept,” encouraging at least some level of engagement with the content.
Shrinkwrap Agreements:
Shrink-wrap agreements are commonly found in boxed software, where opening the package implies acceptance of the included terms.
Sign-in-wrap Agreements:
A sign-in-wrap agreement binds users to terms displayed during the sign-in process; by logging in, users are deemed to have accepted those conditions.
Case Laws:
In the case of Tamil Nadu organic Pvt. Ltd vs State Bank of India
In Tamil Nadu Organic Pvt. Ltd. v. SBI, the court affirmed that electronic contracts are recognized under the Indian Contract Act and enforceable in a court of law.
Trimex International FZE ltd, Dubai vs Vendanta Aluminium ltd.
In Trimex International FZE Ltd. v. Vedanta Aluminium Ltd. (Dubai), the court emphasized that electronic communications can form valid contracts, so long as they meet the Act’s standard validity criteria.
Arjun Panditara Khotkar vs Kailash Kushanrao Gorantyal and Other, 2020
In Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal (2020), the Supreme Court underscored the role of Section 65 of the Indian Evidence Act in verifying electronic contract validity.
Sudharshan Cargo Pvt Ltd vs. M/s. Techvac Engineering Pvt.Ltd,2013
In Sudharshan Cargo Pvt. Ltd. v. Techvac Engineering Pvt. Ltd. (2013), the court recognized emails as admissible electronic records under Section 2(b) of the IT Act, treating them as reliable evidence.
Ruder vs. Microsoft Corporation,1999
The court in this case mentioned about click-wrap agreements and it said that they were enforceable. The court highlighted that scrolling across pages of E-contract is same as turning pages of a physical contract. So Digital contracts are same as Physical Contracts.
Conclusion
With the rapid advancement of technology, e-contracts have paved the way for the evolution of contract law. These digital agreements are now recognized under various Indian legislations, including the Bharatiya Nagarik Suraksha Sanhita and the Bharatiya Sakshya Adhiniyam. Through statutory provisions and judicial decisions, e-contracts have gained legal admissibility in India. While they reflect global technological progress, there remains significant scope to enhance their security and evidentiary reliability.
FAQS
Are E-contracts are valid in India or not?
E-contracts are been recognised as a valid contract and they are enforceable in the Courts of law. Several provisions of various legislations mention about the admissibility and enforceability of e-contracts in India.
How to ensure the authenticity of the E-contract?
The authenticity of the E-contract can be ensured by affixing Digital Signature in accordance with the Information Technology Ac, 2000.
What are the various ways in which consent can be given to an E-contract?
There are some ways which are as follows:
When a user clicks on ‘I Agree’ on the Terms and Conditions
When the user affixes his Digital Signature.
When a user Sign-In into some websites the user is said to have consented.
If a contract is formed on email and WhatsApp, is it valid?
Yes, the contracts formed over email and WhatsApp are valid if they meet the basic essentials of the contract that is, it involves offer, acceptance of the same offer, communication of acceptance, a valid consideration and it should fulfil the requirements of Section 10 in order to turn into a contract.
What can be some challenges in enforcement of the E-contracts?
With the advent of technology, there are scams happening right left and center which poses a significant threat to the authenticity of E-contracts. Also, sometimes it happens that the firms used already set terms and conditions which the user doesn’t read and pass it on. Another challenges is that India has a considerable amount of illiterate people then, how the free consent of these people can be ensured.
