|
Introduction
Today with the recent advancement in the areas of computer
technology, telecommunications technology, software and
information technology have resulted in changing the standard of
living of people in an unimaginable way. The communication is no
more restricted due to the constraints of geography and time.
Information is transmitted and received widely and more rapidly
than ever before. And this is where the electronic commerce offers
the flexibility to business environment in terms of place, time,
space, distance, and payment. This e-commerce is associated with
the buying and selling of information, products and services via
computer networks. It is a means of transacting business
electronically, usually, over the Internet. It is the tool that
leads to ‘enterprise integration’. With the growth of e-commerce,
there is a rapid advancement in the use of e-contracts. But
deployment of electronic contracts poses a lot of challenges at
three levels, namely conceptual, logical and implementation. In
our article we have discussed the scope, nature and legality and
various other issues related to e-contracts.
Definition:
E-contract is a
contract modeled, specified, executed and deployed by a software
system. E-contracts are conceptually very similar to traditional
(paper based) commercial contracts. Vendors present their
products, prices and terms to prospective buyers. Buyers consider
their options, negotiate prices and terms (where possible), place
orders and make payments. Then, the vendors deliver the purchased
products. Nevertheless, because of the ways in which it differs
from traditional commerce, electronic commerce raises some new and
interesting technical and legal challenges. For recognition of
e-contracts following questions are needed to be considered:
# Whether e-contract is a
valid contract?
# Would a supplier making details of goods and services with
prices available on a website be deemed to have made an offer?
# Whether e-contracts satisfy the legal requirements of reduction
of agreements to signed documents.
# Whether e-contracts interpret, adopt and compile the other
existing legal standards in the context of electronic
transactions?
Recognition E-contracts
Offer: The law already recognizes contracts formed using
facsimile, telex and other similar technology. An agreement
between parties is legally valid if it satisfies the requirements
of the law regarding its formation, i.e. that the parties intended
to create a contract primarily. This intention is evidenced by
their compliance with 3 classical cornerstones i.e. offer,
acceptance and consideration. One of the early steps in the
formation of a contract lies in arriving at an agreement between
the contracting parties by means of an offer and acceptance.
Advertisement on website may or may not constitute an offer as
offer and invitation to treat are two distinct concepts. Being an
offer to unspecified person, it is probably an invitation to
treat, unless a contrary intention is clearly expressed. The test
is of intention whether by supplying the information, the person
intends to be legally bound or not. When consumers respond through
an e-mail or by filling in an online form, built into the web
page, they make an Offer. The seller can accept this offer either
by express confirmation or by conduct.
Acceptance: Unequivocal unconditional communication of acceptance
is required to be made in terms of the offer, to create a valid
e-contract. The critical issue is when acceptance takes effect, to
determine where and when the contract comes into existence. The
general receipt rule is that acceptance is effective when
received. For contracting no conclusive rule is settled. The
applicable rule of communication depends upon reasonable certainty
of the message being received. When parties connect directly,
without a server, they will be aware of failure or partial receipt
of a message. Such party realizing the fault must request
re-transmission, as acceptance is only effective when received.
When there is a common server, the actual point of receipt of the
acceptance is crucial in deciding the jurisdiction in which the
e-contract is concluded. If the server is trusted, the postal rule
may apply, if however, the server is not trusted or there is
uncertainty concerning the e-mail’s route, it is best not to apply
the postal rule. When arrival at the server is presumed
insufficient, the ‘receipt at the mail box’ rule is preferred.
Consideration and Performance:
Contracts result only when one promise is made in exchange for
something in return. This something in return is called
‘consideration’. The present rules of consideration apply to
e-contracts. There is concern among consumers regarding
Transitional Security over the Internet. The e-directive on
Distance Selling tries to generate confidence by minimizing abuse
by purchasers and suppliers. It specifies---
# A list of key points, must
be supplied to the consumer in ‘a clear and comprehensible
manner.’
# Written confirmation, or confirmation in another durable medium
available and accessible to the consumer, of the principle points.
# The right of withdrawal enabling consumers to avoid deals
entered into inadvertently or without sufficient knowledge,
providing for seven-day cooling-off period free from penalty or
reason to return the goods or reimburse the cost of services.
# Performance should be delivered within thirty days of order
unless otherwise expressly agreed.
# Reimbursement of sums lost to fraudulent use of credit cards. It
places the risk of fraud on the credit card Company, requiring
them to take steps to protect their position.
# On the other hand, there is also need to protect sellers from
rogue purchasers. For this, the provision of ‘charge-back clauses’
and encouragement of pre-payment by buyers is recommended.
# Thus, this Directive adequately protects rights of consumers
against unknown sellers and sellers against unknown buyers.
Liability And Damages: A party that commits breach of an agreement
may face various types of liability under contract law. Due to the
nature of the systems and the networks that business employ to
conduct e-commerce, parties may find themselves liable for
contracts which technically originated with them but, due to
programming error, employee mistake or deliberate misconduct were
executed, released without the actual intent or authority of the
party. Sound policies dictate that parties receiving messages be
able to rely on the legal expressions of the authority from the
sender’s computer and this legally be able to attribute these
messages to the sender. In addition to employing information
security mechanisms and other controls, techniques for limiting
exposure to liability include: -
1. Trading partner and legal
technical arguments
2. Compliance with recognized procedures, guidelines and practices
3. Audit and control programmers and reviews
4. Technical competence and accreditation
5. Proper human resource management
6. Insurance
7. Enhance notice and disclosure mechanisms and
8. Legislation and regulation addressing relevant secure
electronic commerce issuing.
Digital Signatures:
Section 2(p) of The Information Technology Act, 2000 defines
digital
signatures as authentication of any electronic record by a
subscriber by means of an electronic method or procedure. A
digital signature functions for electronic documents like a
handwritten signature does for printed documents. The signature is
an unforgeable piece of data that asserts that a named person
wrote or otherwise agreed to the document to which the signature
is attached. A digital signature actually provides a greater
degree of security than a handwritten signature. The recipient of
a digitally signed message can verify both that the message
originated from the person whose signature is attached and that
the message has not been altered either intentionally or
accidentally since it was signed. Furthermore, secure digital
signatures cannot be repudiated; the signer of a document cannot
later disown it by claiming the signature was forged. In other
words, digital signatures enable "authentication" of digital
messages, assuring the recipient of a digital message of both the
identity of the sender and the integrity of the message. The
fundamental drawback of online contracts is that if there is no
alternate means of identifying a person on the other side than
digital signatures or a public key, it is possible to misrepresent
one’s identity and try to pass of as somebody else.
Conclusion:
E-contracts are well suited to facilitate the re-engineering of
business processes occurring at many firms involving a composite
of technologies, processes, and business strategies that aids the
instant exchange of information. The e-contracts have their own
merits and demerits. On the one hand they reduce costs, saves
time, fasten customer response and improve service quality by
reducing paper work, thus increasing automation. With this,
E-commerce is expected to improve the productivity and
competitiveness of participating businesses by providing
unprecedented access to an on-line global market place with
millions of customers and thousands of products and services. On
the other hand, since in electronic contract, the proposal focuses
not on humans who make decisions on specific transactions, but on
how risk should be structured in an automated environment.
Therefore the object is to create default rules for attributing a
message to a party so as to avoid any fraud and discrepancy in the
contract.
Reference:
1. Bakshi P.M & Suri R.K, Cyber and E-commerce Laws, Bharat
Publishing House, edn 1, 2002.
2. Ryder D.Rodney, Guide to Cyber Laws, Wadhwa & Co. Publishers,
edn.1, 2001.
3.
www.legalserviceindia.com
4.
www.asianlaws.org
|
E-Contracts
& Its Legality
More
Articles:
The
author can be reached at: vasudhatamrakar@legalserviceindia.com /
