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Online Contracts: Legal Issues And Challenges Confronting The Indian Scenario

Recently E-Commerce has started growing rapidly in India as consumers have become convenient with the online business. Due to the difficulty in time management and geographical constraint consumers afford e-contracts. E-commerce provides the business with versatility in time , place , distance and payment. E-Contract is an electronic form of contract which is online based. The formulation of e-contract takes place through e-mail , e-computer application etc. Despite of having many advantage in e-contract customers also face a lot of frauds and due to this fraud customers loose a huge amount of money. But there are certain law through which legal actions are taken in such fraud cases.

Introduction
Modernization and advancement in technology has made the lives of every human being very complex which has extended to commercial transaction. A lot of changes has occurred in process of purchasing goods by the consumers. Consumers purchase goods through digital payment and in such transactions consumers are unable to suspect whether the payment was received by the original seller or the fraudster.

So it is essential that government protect its citizens through proper legislation from abusive market practices by manufacturers or retailers . E- contracts is a web based business agreement between two persons using electronic means. Due to this pandemic internet has become a boon to every person. During this COVID pandemic e-contract has played a very magnificent role in the lives of big traders , entrepreneur and business man. It was not at all possible to enter in physical contracts.

Definition of E-commerce

E-commerce is the process to conduct trade and business by using the internet as a medium.According to Hemant Goel's book on Law and Emerging Technology, Cyberlaw, E-commerce is the directing of exchanges using a proper system of computers, and telecommunication i.e. internet. He also mentioned in his book that it is a transfer of goods or services via the internet, and a monetary consideration for them.

Electronic trade is characterized as "Electronic purchasing1 and offering on the Internet and incorporates every one of the exercises that a firm performs or offering and purchasing administrations and items utilizing computers and correspondence advancements."

In lay mans language e commerce is buying and selling good , products or services through internet.

Analysis of e-contract

E-Contracts are those contracts which are formed between two or more parties through negotiations by the use of any electronic means. They are also known as cyber contracts , digital contracts and online contracts. It is similar to traditional contracts which are based on paper and exchange of goods and services takes place for a specific amount of consideration. The only exception in e-contract is the mode of contract which is digital in nature I.e internet or any e-instrument.

Essential Elements of E- Contract

  1. There must be two parties
  2. Use of electronic means
  3. E-Proposals and E-Acceptance
  4. Amount of Consideration
  5. Certainty and Possibility of Legal Performance
  6. Intention to Create Legal Relations
  7. Competency of the Parties and Free Consent

Definition of E-Contract

F-Contract is any kind of contract formed in the course of e-commerce by the interaction of two or more individual using electronic means , such as e-mail , the interaction of individual with an electronic agent such as computer program or the interaction of at least two electronic agents that are programmed to recognize the existence of a contract .

Forms of E- Contract

  1. Click Wrap or Web-wrap Agreements:
    While surfing in the internet we sometimes come across certain agreements like I AGREE or I DISAGREE to the terms and conditions mentioned . Clip agreements are those agreement where an individual goes through the terms and conditions that provided in the website and have to give assent for the same by clicking to either I AGREE or I DISAGREE. This types of contracts are mostly seen while we download something or sell or buy something in the website.
     
  2. Shrink-wrap Agreement:
    Shrink-wrap agreements consists of the software of CD Rom. The CD Rom's cover contains the terms and conditions. But there are some additional terms which sometime arrives when the CD is downloaded in the computer. If an individual is not convinced with the terms and conditions then the individual have the right to return it back. It is defined in the Section 13(2) of the IT Act, that in every communication of either offer or acceptance an individual clicks on the web as soon as the address in receipt of the electronic record is complete.
     
  3. Electronic Data Interchange (EDI):
    Electronic Data Interchange helps the in transactions of trade and commerce as it helps in transferring the inputs from one mode of computer to another mode in such manner that each and every transaction has been processed virtually with no paper work.

Elements of E- Contract

  1. Offer:
    According to section 2a of Indian Contract Act 1872 an offer is an expression of willingness of a person to enter into a legally binding contract with another party. There is a difference between offer and invitation to offer. An offer and invitation to offer are two different concepts. Any kind of offer to any person is considered to be an invitation to offer until the person's intention is conveyed.

    In Kleinwort Benson vs. Malaysia mining corporation Berhad, 1989 1 WLR 379, MMCB was asked to guarantee of the debts in a subordinate company which mentioned that it is their duty to make sure that the business of the subordinate company to pay off all liabilities every time. It was detained that it was not a proposal and the words, it is our policy, merely expressed an intention to do something but they were not made to get the offeree to assent to them. Therefore, when the subsidiary was allowed to become insolvent by Kleinwort company, MMCB could not claim for a breach of a contractual undertaking.

    The question that raised is it applicable in e-contracts also? Yes, it is applicable in electronic contracts also.
     
  2. Acceptance:
    When an offer is accepted the contract comes to an end. In postal acceptance rule the acceptance takes place at that point of time when the acceptance is send then the transmission of acceptance is done on the part of the proposer when it is send in course of communication and on the part of the accept or when it comes to the knowledge of the proposer.

    Iin Lalman Shukla v. Gauri Dutt, (1913) 11 A11 LJ 489. Here the plaintiff is a merchant. The defendant's nephew escaped and the plaintiff came forward to search the missing boy. In this case,the fact was that the boy was founded. The boy's uncle had promised to pay Rs. 501 to whoever finds his nephew. But the munib was not given the money as he got the news after finding the boy.

E-contract acts in India

  • Indian Contract Act:
    The ICA consists of all the rules which are applicable to contract. The essentials which are needed to form a contract should be covered by this law.A contract which is paper less and in electronic form and covers all the specification of ICA is an e-contract. An e-contract is as valid as a paper contract.
     
  • Indian Evidence Act 1872:
    It should be noted that courts accepts contracts which are electronic mode . The case of Société des products Nestlé S.A v. Essar industries & Ors. Sec. 65A and Sec. 65B in the Indian Evidence Act was introduced that permitted evidence which are computer generated. This was held t challenges related to e-contracts and other electronic evidences can be disqualified. In the case of State vs Mohd. Afzal and Ors7 . It was held that, electronic records are acceptable in court.
     
  • Information and Technology Act:
    The Information and Technology Act was established in 2000 for the regulatory basis of e-commerce. India is the 12th nation which has an extensive e-commerce. Section 10A of Information and Technology Act

Which deals with the validity of e-contracts and its formation, revocation and communication of proposal and acceptance which are expressed in electronic form and will not be considered unenforceable on the base that electronic form of contract was used for the specific purpose. A contract to be valid in natures and acceptance of parties to a contract are required. An electronic signature is required in an electronic contract.

Issues and challenges faced in e-contract

  • E-contract:
    The Indian Contract Act and the IT Act are legally valid e-contracts. E-contracts are ruled by certain rules that mandates that contracts can be undertaken through free consent and lawful consideration between the two individual. There is a huge possibility that in e-contract minors also enter into contracts. So in order to stop minors entering into contract the forms on the websites should mention that whoever the individual undertakes the contract should be above 18years.
     
  • Data Protection:
    Protecting the facts in online is the major worry of every individual. The Information Technology 2011 and the Section 43A of the IT Act both highlights the recommendations of how to protect the data in India.Every Company should take care in order to protect from corruption , damage , loss or destruction of any kind of private information or data also in the communication of the contract between parties.
     
  • Intellectual Property Rights:
    Sometimes it is seen that e-commerce website are operated by some other parties who are specialized in the same stream . The information is protected by the third party. If the agreement do not provide IP rights between parties then there is a possibility of infringement on trademark , copyright or patent at online platform.
     
  • Product returns and refunds:
    In e-contract the consumer has the right to cancel the product after it was ordered. If the customer is not satisfied with product returns the product to the seller. Many times we have seen that consumers get attracted with the products on the screen as it looks eye catching and orders it but when the product reaches in hand they become unsatisfied and returns the product. Many times consumers also face fraudulence. It should be further observed that if goods are canceled the refunds should be receive by the consumers within few days but traders usually block the consumers money by not refunding. Hence refund time should be mentioned in advance by the law which if exceeded by the trader will lead to fine.
     
  • Delivery of faulty goods:
    In electronic contracts we have faced issues like ordering goods but receiving false goods. We have many time seen such cases in our real life as well as read in newspapers like a person ordered a laptop but received a brick , a vim bar instead of Samsung Galaxy Core 2 , pieces of stones was received once instead of iPhone 4S. The legislation orders the seller to provide equal amount of compensation to the suffered consumers to curb the issues. But still there are sellers who does acts in order to harass the consumer. In order to stop this issue strict rules and laws should be imposed.

Comparative study between traditional contracts and e-contracts

  1. Traditional contracts are time consuming but E-Contracts are not:
    In every contract negotiation is the most important step which requires countless modification. Face to face meeting is a time consuming process for both parties in traditional contracts where as in e-contract there is no scope of face to face meeting as the electronic documents are handled digitally.Contract can be signed and reviewed by the parties wherever they stay.
     
  2. Electronic contract have fewer errors compared to traditional contract:
    Traditional contracts creates a lot of discrepancies with the parities as it consists of errors , chances and manipulation and this creates legal disputes. But e-contract are always automated so there are no typographical errors and if there are any manipulations then it can easily be tracked
     
  3. E-Contracts saves all the unnecessary operational expenses:
    In traditional contract we have to expenses on printing papers and sending them by post which also includes transportation expense. But this cost gets subtracted in e-contract.
     
  4. E-Contracts are legal binding:
    E-Contracts are generally binding in nature between the two contracting parties within the common law. The contracting parties are allowed to sign the contract without compromising their privacy.

Conclusion
E-Contract have certain pros and cons. Depending upon such pros and cons many young consumer prefer e-contract as its is not time consuming . In a busy day we prefer to not to waste our time in every thing that is why many of them prefer e-contract. Consumers while travelling can also perform e-contract. But we should be aware that we don't get trap to any kind of fraudsters. Then we will face a lot of trouble. So we need to be careful before performing e-contract.
List of abbreviation:
EDI , CD

Table of cases:
  • Lalman Shukla v. Gauri Dutt
  • Kleinwort Benson vs. Malaysia mining corporation Berhad
  • Nestlé S.A v. Essar industries & Ors.
List of statutes referred:
  • Indian Contract Act
  • Information and Technology Act
  • Indian Evidence Act.

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