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Communication In E-Contracting

Communication is an essential element in formation of contract. Where communication of proposal is complete it forms the contract. Communication done through instances mode and post office mode. Through communication it binds duty to perform on contracting party it also decides court jurisdiction of the contract.

E-commerce is built on electronic contracts, sometimes known as digital contracts. The word's etymology implies that it refers to a specific type of contract created when two or more parties engage in online commerce. In electronic mode of communication, it includes Gmail, Social media apps such as WhatsApp, Facebook, etc. are also used for formation of contract.

The Contract Act of 1872's Section 4 addresses proposal completion, acceptance, and revocation and says the following:

The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.

The communication of an acceptance is complete:
as against the proposer, when it is put in a course of transmission to him so as to be out of the power of the acceptor; as against the acceptor, when it comes to the knowledge of the proposer.

The communication of a revocation is complete:
as against the person who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it; as against the person to whom it is made, when it comes to his knowledge.[1]

In modern time everything going through the process of modernization and Communication is also one of them. In Modernize world, Contract are forming through Email, Telegraph and also some time through Chatting Apps such as WhatsApp, Telegram, etc. So, it become very essential that mode of communication should be very clear thought-out formation of contract.

When contract formation is through instant mode of communication its sometime face problem related with its jurisdiction of the court, relevancy of the contract, when contract is formed. So, it firstly become very important to clear this problem.

There are some problems also arise when the person saw the message but it marks unseen to the other party for example in WhatsApp when someone drops the message two other party but he seen the message from notification he read the message but to the other party it shows that he not yet read in the message so it creates a great hinder in formation of the contract. Also, in Gmail when someone sent the message and his or her message mark as junk so the people also take the defiance that they not read the mail send by other party.

Legality of the E-Contracting

Modern world is changing at a fast pace and the mode of communication is also changing. All over the world recognize that change and brings or form the new laws according to the need of the hour, the Model of Ecommerce was approved in 1996 by the United Nations Commission on International Trade Law (UNCITRAL).[2]

The Model Law is accepted by the majority of the country. Model law is related to the legislation Of Ecommerce. The Modal of Ecommerce was enacted in 1996 with two main goals in mind: to make electronic commerce easier and to embrace and standardize ecommerce regulations on their legitimacy and execution across state lines.

To achieve the above objective Model law, bring certain Provisions Regarding E commerce. Such as:
  • That document should not be discriminated on the basis of the legality because it was made in the electronic form. This provision was also adopted by India in the IT Act.[3]
  • Specifies the conditions that must be met for electronic communication to be deemed equivalent to paper-based communication, particularly when it comes to writing[4], originality[5], signing[6], records[7] for the purpose of e-contracting.
In India the legitimacy of contracts created electronically is covered under the information technology act 2000. Under Section 10 of it says �

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.[8]

It therefore clearly indicates that a proposal and acceptance on online platform is valid and not made illegal or unbinding on the basis of that the contract is made through online platform.

Landmark Cases regarding legality of Ecommerce

The originator must get the acceptance in order for the contract to be established. The mail box method is used in conventional contract law to determine if acceptance has been completed. Contract law states that when an acceptance is sent in a way that the acceptor cannot control, the contract is considered completed. But, in instantaneous mode of communication it was different. In this field of instantaneous contract there are many case laws that define the part of instantaneous mode of communication but out of all Entores Ltd. Vs Miles Far East Corporation[9] is a Landmark case.

In that case, the Entores Ltd., were a company that is based in London was the complaint in that particular case.

Through an instantaneous communication method known as telex, they had made an offer to buy one hundred tons of copper cathode from the defendant Meals Far East Corporation. Their firm was situated in Amsterdam. The complainant attempted to sue the defendant for damages after the Dutch firm submitted an acceptance of this offer via telex and the complainant was not satisfied with the contract.

To determine whether the damage action should be brought under English or Dutch law The court had to determine when the contract was accepted; if it was accepted when it was sent, damages would be handled under Dutch law; if it was accepted when it was received, damages would be handled under English law.

Lordship DENNING LJ Observed,
"Take a case where two people make a contract by telephone. Suppose, for instance, that I make an offer to a man by telephone and in the middle of his reply the line goes 'dead' so that I do not hear his word of acceptance. There is no contract at that moment."

The facts of the case were as follows: a party in Holland received an offer by Telex from London, and the Telex promptly accepted it. The only question that remained was whether the contract was made in Holland or England. The Court of Appeal determined that the telex is an instantaneous means of communication medium and that the rules governing instantaneous communication between parties differ from those governing post Only once the offer has been accepted does the contract become final. And where the acceptance is received is where the contract is created.

It is one of the most known and historical case law decision related to communication of instantaneous mode of contract.

In India Bhagwandas Goverdhandas Kedia vs. M/s Girdharilal Parshottamdas and Co.[10] was a historic case regarding instantaneous mode of communication.

In this case, through a phone conversation, the respondent M/S Girdharilal Parshottam Das and Co. received an agreement from the appellant Bhagwandas Goverdhandas Kedia Oil Mills to provide the seeds. Due to the appellant's inability to furnish the items, the respondent was sued by the complaint in Ahmedabad. The defendant in the present matter accepted an offer that the plaintiffs from Ahmedabad made to buy certain commodities from them in Khamgaon.

The matter brought up What was the contract's jurisdiction, and where was it accepted?
Most judges thought there was no justification for applying the post office rule to telephone conversations and instead favored adhering to the English rule as established in the Entores Ltd. decision.

Lordship SHAH J Observed,
According to Section 4, the contract is not implied to be formed in the capacity of the acceptor at one location and the purpose at another. He went on to add that since the Indian Contract Act's draft did not allow for the use of the telephone, the section's language should only apply to correspondence sent by mail. In other words, the contract is completed when the offer is accepted.

Lordship HIDAYATULLAH J Observed,
He stated and persuaded that the wording of Section 4 is sufficiently flexible to cover telephone conversations; the code should not entirely disregard the language of the Act when the words of acceptance are spoken into the phone and incorporated into the offer's transmission, making them beyond the acceptor's control; since the communication is immediate, the contract is created right away.

In this case, it was made abundantly evident and clear that the court's jurisdiction was established and that all modes of communication-instantaneous or post office-were legitimate. Instantaneous communication is covered by Section 4 of the Indian Contract Act, Paragraph 1, while post office communication is covered by Section 4 of the Indian Contract Act, Paragraph 2.

Objective Of E-contracting
A e-contracting does not have only the drawbacks it's also have an advantage compared to the post office communication such as �
  • It was quicker than communicating through the postal service and more practical since it could be transmitted as soon as the promisor or promisee signed, or accepted it.
  • Paper contracts are susceptible to a variety of risks, including water damage, theft, and forgeries. Top-tier electronic contract suppliers offer a range of virtual and tangible security measures to guarantee the interaction which keep contract protected against tempering and unwanted access.

Capacity of contract
For an online or offline contract to be formed and be valid, the parties' capacity at the moment of creation is crucial. The agreement of both competent parties at the moment of contract formation is required under the fundamental principle of contracts. The parties' ability is necessary in relation to the being aware of the nature and significance of the deal that was engaged upon. Section 11 Of Indian Contract Act says-

Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind and is not disqualified from contracting by any law to which he is subject.[11]

Although the aforementioned fundamental rule is constantly in jeopardy, in the event of an e-contracting where age and other verification not done properly for example contract formed in single click but when the contract is formed through email, the parties have the opportunity and time to verify each other's ability using a variety of methods, including digital signatures or e-signature technology. Because e-signature and digital signatures are governed by state laws, parties can determine each other's capability.

Lawful Object
A legitimate object is one of the necessary requirements for a contract to be deemed valid. The contract's purpose and compensation ought to be legitimate. This idea also applies to contracts made online. When a contract is formed, it is crucial that both parties affirm that the goal of a contract shouldn't be illegal. Section 10 Of Indian Contract Act says-

All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.[12]

Because of its nature, the internet allows for spontaneity, anonymity, and simple information access for everybody involved. When there are cross-border exchanges of any kind, it exposes the parties to other socioeconomic and political cultures, which gives rise to a variety of ethical and socially problematic concerns. As a result, section 10 of the Indian Contract Act must be followed in the contract. Whether it was an offline or online contract, it was required.

A contract created during electronic commerce among two or more parties via electronic form or means of communication for the transmission of electronic records is known as an e-contract. With parties entering into contracts from different countries and the ability for a cause of action to begin anywhere, jurisdiction is a key concern in e-contracts. When it comes to cross-border contracts, the issue of jurisdiction is significant.

The jurisdiction rules let parties to choose a forum by consent from both parties. When it comes to settling future legal problems between parties to a contract, choice of law is important. Determining the law that will apply in future conflicts is crucial because it offers clarity. Choice of legislation is crucial for resolving potential legal disputes between contract parties. Because it provides clarity, deciding which law will be applied in future conflicts is essential.

  • Indian Contract Act 1872, s 4
  • Founded in 1966, the United Nations Commission on International Trade Law (UNCITRAL) is an arm of the UN General Assembly tasked with advancing gradual simplification and uniformity of international trade law.
  • UNCITRAL Model Law of E-Commerce 1996, Article 5
  • UNCITRAL Model Law of E-Commerce 1996, Article 6
  • UNCITRAL Model Law of E-Commerce 1996, Article 8
  • UNCITRAL Model Law of E-Commerce 1996, Article 7
  • UNCITRAL Model Law of E-Commerce 1996, Article 10
  • Information Technology Act 2000, s 10
  • Entores v Miles Far East Corp [1955] 2 QB 327.
  • 1966 AIR 543, 1966 SCR (1) 656
  • Indian Contract Act 1872, s 11
  • Indian Contract Act 1872, s 10

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