This article is written by R.Manmitha, Keshav Memorial College of Law, 3rd Year BA LLB during the internship at LeDroit India.
KEYWORDS
- Technology
- Internet
- Electronic applications
- Agreements
- Electronic records
- Paper based records
- Laws relating to E- documents
- E- Formats
INTRODUCTION
Technology has helped the whole world connect. It also helped to evolve in the off passing time. Movie various electronic means and applications available worldwide, individuals have the ability to see, talk and connect with each other in the comfort of their own space without having to meet in person.
Another important change that technology brought to us was the shift from paper based records to electronic records. Documents, records, agreements etc could be copied, modified , searched and carried without the fear of them getting misplaced or misfiled and without the use of paper, thus taking a step towards protecting the environment. As the use of technology and the Internet has advanced, there is a need for adapting laws relating to them. There are different areas of law where provisions relating to technology and E- formats of various objects are mentioned.
E- CONTRACTS
A contract is a legally enforceable agreement defined under Section 2(h) of the Indian Contract Act, 1872. In simple words, it is an agreement that gives rise to a legal obligation to perform an act as promised by the promisor in return for consideration provided to him by the promised.
An electronic contract is commonly referred as a e- contract. It is a legally enforceable agreement formed through electronic means. It is drafted, negotiated and executed digitally and hence it is completely digital in nature. The term “E- Contract” or “Electronic Contract” has not been defined under The Indian Contract Act,1872 or The Information Technology (IT) Act , 2000. The IT Act 2000, talks about the validity of contracts formed through electronic means. It is mentioned under Section 10A of the IT Act,2000, that if Communication, acceptance or revocation of proposals is expressed in electronic form or by means of any electronic record then such a contract is deemed to be enforceable.
The main advantage of e contracts is that they are not paper based and parties of the E-contract can enter into it even if the promisor and the promisee happen to be in different places that is the in- person meeting is not required or necessary for signing the contract.
LEGAL IMPLICATIONS OF E- CONTRACTS IN INDIA
If E- contracts saves time and labour, save from the workload and many things everyone witnesses in day-to-day life then it has some limitations and drawbacks also here are few of them,
- Capacity to Contract : It is one of the most essential elements to consider to enforce an agreement to become a contract. It is mentioned in section 10,11,12 of the Indian Contract Act ,1872 Which includes soundness, major and not eliminated by law to be competent to contract. E contracts also holds with these basic requirements.
The issue in E contracts is that both parties are unaware of each other. The party providing the service or goods has no idea about the other party if he or she is legally competent to contract or not.
EXAMPLE : If a minor agrees to bind in an agreement.
- Choice of Law : It is one of the issues in E- contracts which needs special attention. This issue arises when the contracting parties are from two different nations or states. In this case, the rules and regulations of both nation differ and clashes arises and it becomes difficulty to choose which rules to apply in the contract and which regulations to be followed by the parties.
Another problem is seen when the court applies the jurisdiction where the bulk contracting transactions occurred. It is a complex issue in E- contracts for fixing a surety as to the choice of law when the dispute occurs.
EXAMPLE : One ( originator ) contracting party is from India and the other party (addressee ) is from the USA.
- Electronic authentication : Previously the contracts were based on pen and paper following the rules and regulations of Indian Contract Act, 1872, but nowadays by the innovation of electronics the contracts are done through this medium. Therefore, the need of specific guidelines was a major concern.
The Information Technology Act of 2000 was then set up to ensure the authentication of contracts by issuing the legal framework. If the guidelines are not followed by any of the parties or both then the contract will loss its legal validity. The things validated under this law are electronic signatures, electronic records and electronic documents.
- Free Consent : The free consent is the essential element for a binding contract on both parties. Free consent has been given a special recognition in the section 13 of the Indian Contract Act, 1872, but there is no provision for free consent in Information Technology Act, 2000 to form an E-Contract
In fact, the concept of consent is not even possible in E-contracts. It is only possible in physical traditional contracts. The Supreme Court of India in the case of LIC of India v. Consumer education and research Held that the user should be careful while giving the consent to avoid implications in future as the duty was of the user only to accept or reject.
- Theft of identity : Theft of identity is as the name only suggests, when the identity of the original user is driven by any other person either knowingly or unknowingly. The theft of identity is the wrongdoing for a purpose like money. It is normally done by hacking the device. Section 66 with Section 43 which expresses that if any individual, dishonestly or falsely, does any demonstration that makes harm to the computer or framework of the computer without the proprietor’s consent at the point that person is liable with either imprisonment for the period of 3 years or fine of INR 5 lakhs or both.
In the case of Societe Des Products Nestle S.A. v. Essar Industries and Ors. Paved way by the Delhi High Court of the introduction of section 65A and 65B in the Indian Evidence Act which makes the electronic based Evidence admissible in courts. In the case of State of Delhi v. Mohd. Afzal And Ors. Held that “electronic records are admissible as evidences.
Here are some of the other challenges and concerns relating to E- contracts:
Technical Challenges
- Security Risks: E-contracts are vulnerable to cyber-attacks, data breaches, and unauthorized access.
- Authentication Issues: Verifying the identity of parties involved in e-contracts can be difficult.
- System Failures: Technical glitches can disrupt e-contract formation and performance.
- Data Storage: Ensuring the integrity and availability of electronic records.
Legal Concerns
- Jurisdictional Issues: Conflicts arise when parties are located in different jurisdictions.
- Contract Validity: Ensuring e-contracts meet essential requirements.
- Electronic Signature: Authenticating electronic signatures.
- Dispute Resolution: Resolving disputes arising from e-contracts.
Operational Challenges
- Communication Breakdown: Misunderstandings due to lack of face-to-face interaction.
- Language Barriers: Difficulty in understanding contract terms.
- Cultural Differences: Differences in business practices and norms.
- Time Zone Differences: Coordinating across different time zones.
Regulatory Concerns
- Compliance: Adhering to varying regulatory requirements.
- Data Protection: Ensuring compliance with data protection laws.
- Consumer Protection: Safeguarding consumer rights.
- Taxation: Addressing tax implications.
Best practices to Address Such Challenges :
- Implement robust security measures
- Use secure electronic signature methods
- Establish clear dispute resolution processes
- Conduct thorough risk assessments
- Develop comprehensive contract terms
- Ensure transparency and communication
CONCLUSION
E- Contracts is one of the global concern and need. The development of many sectors have taken place after the introduction of concept of E- Contract. Like GPay, Phonepay, Paytm, Bharathpay, and UPI etc.., E-Contract is growing further especially in India. The pattern progress in digital banking along with debit cards with increase in professional users and web developers will uphold this process of development. Right now, the most important part is the law that envelopes all the parts of E – Agreements expanding from downloading a small app to making and launching one, everything can be done through the digital medium. E- Contracts have emerged as a vital aspect of conducting business. A person must understand the legal implications of E- Contract and the best practices to navigate the challenges posed by the digital age effectively. The growing importance of E- Contract necessitates continuous learning and adaptation to ensure that legal professionals remain at the forefront of this rapid evolving field.
In India, though there are laws Which govern contract between two individuals through Indian contract act, 1872 but these laws are not made by keeping the thought of E contracts in mind. The various sections which talk about consideration, competence to contract, place of Contract, etc. Don’t fit completely with the situation of e-contract as in an e- contract a lunatic, a minor can also just click the tab and form the east contract. In E contracts, the situation for negotiation is also negligible which makes them more inconvenient.
References
LIC of India v. Consumer Education and Research Centre, 1995 3 SCC 42.
Societe Des Products Nestle S.A v. Essar Industries And Ors., 2006 (33) PTC 469 Delhi (India).
State of Delhi v. Mohd. Afzal And Ors..
The Indian Contract Act, 1872
The Information Technology Act, 2000
The Indian Evidence Act, 1872
