ELECTRONIC CONTRACTS AND ISSUES

ELECTRONIC CONTRACTS AND ISSUES.

By- Vaishnavi Venkatesan

In today’s fast paced era with globalisation in its frontier, electronic commerce has seen a significant upsurge. Establishment of organizations which provide products and services in one click, easy access to the internet and availability of smart phones coupled with other technology has led to a wide acceptance of electronic contracts as a legitimate way of regulating business.
The Indian Contract Act, 1872 (Hereinafter, ICA) defines a contract as “Agreement enforceable by law.” In consonance with this traditional definition but also having a wider connotation, an E-Contract can be understood as “any binding agreement between parties having lawful object and consideration with their interaction over electronic means like email, MP3 audio file, multimedia-message, etc.‘ This definition satisfies all the ‘essentials’ of a valid contract.

Some common types of e-contracts include Click- Wrap contract which is one of the most widely used and controversial forms of e-contract. It involves one party agreeing to the ‘terms and conditions’ imposed by the other party by a simple click and gives no choice to them. The next type of contract is Browse- Wrap Contract which is similar to the concept of click wrap but instead involves a hyperlink at the bottom of the page, connecting users to the page with terms and conditions on clicking it. The act of browsing the website after the opening of a hyperlink is inferred as their consent to contract. Another important type of Contract is E-mail Contracts, which provides the parties with an option and is negotiable. These types of contracts are entered into through electronic communication. It is governed under Information Technology Act of 2000.

The importance of e-contracts in today’s world is undisputed. Electronic contracts simplify daily transactions for an e-consumer to a large extent however they also give rise to multifarious issues which cannot be overlooked.

Some of these issues which need to be addressed are:

Freedom to Contract: In most E-Contracts including some mentioned above a buyer is never given an option to put forth their conditions in a contract, they have no option but to accept the terms and conditions put forth by the other party. Freedom to contract is limited to a large extent since the buyer can only decide two things: place of delivery of goods and mode of payment. However, breach of an online contract equally affects the consumers, for example when there is a defect in a product.

Jurisdictional Issues: The Code of Civil Procedure, 1908 (Hereinafter, CPC) along with the ICA govern the subject of jurisdiction. E-contracts are paperless and borderless; therefore, it gets difficult to ascertain the jurisdiction i.e. the extent of the limit of the court ‘s authority over any suit or appeal at the time of breach of e- contracts. In such e-contract, the location of computer sources through which it was dispatched and received, plays no role in determining the jurisdiction of the case which juxtaposes section 20 of the CPC, which states that the suit can be instituted in the court within whose local jurisdiction the cause of action has aroused. Therefore, it brings forth the fallacy that cause of action in a e-contract can arise where electronic information was transmitted, irrespective of the place of business which generally determines jurisdiction in traditional agreements. This is a grey area which is prevalent in the current legislature and should be addressed.

Competency of Parties to Contract: When two parties enter into an e-contract they are strangers and there is no full proof manner to ascertain the legitimacy of a person. This paves way for minors or persons of unsound mind to enter into a contract through clickwrap or browse wrap methods in a website in contravention to section 11 of the ICA. This raise numerous questions due to lack of stringent legislation to deal with such issue in depth.

LOSS DUE TO TECHNICAL ERROR: E-contracts are entered into by the parties through electronic transmissions and are stored in the virtual world. But, like paper transactions there is no safety in the information stored in the world. Though, it is believed that anything which enters the digital world always exists and is never lost yet there are no administrative, legal or judicial guidelines over the scenario where the whole information or part of information is lost due the failure of the technology.

Therefore, even though the present scenario E-Contracts have become an indispensable mode of business, there are loopholes which have to be addressed. One such remedy which can be adopted is instead of shifting the entire onus on the buyer or customer by enforcing the legal maxim “Caveat Emptor” or buyer beware the current legislation should be made stringent while also accounting for areas which have been missed out. There is, furthermore, a need for a separate legislation which governs e-contracts in India.