E – Contracts and its Legality in India, Erwin Thomas Wilson@LexCliq

With recent advancements in computing technology, telecommunications technology, electronics, and information technology, people’s standards of life have been transformed in unprecedented ways. Due to geographical and time limitations, connectivity is no longer restricted. More information is exchanged and received than ever before, and at a faster rate. And it is here that electronic commerce provides the market world with versatility in terms of place, time, space, distance, and payment.


A contract that is modeled, defined, performed, and deployed by a digital framework is known as an e-contract. Traditional (paper-based) commercial contracts are conceptually equivalent to e-contracts. Prospective buyers are presented with vendors’ goods, costs, and names. Buyers weigh their options, discuss rates and conditions (if at all possible), position orders, and pay for them. The vendors then supply the ordered products. Electronic trade, however, presents some fresh and interesting technological and legal problems because of the ways it differs from conventional commerce.

Recognition of E – contracts

  • Offer: Contracts created via facsimile, telex, or other related technologies are already recognized by the rule. An arrangement between parties is legally binding if it complies with the law’s conditions for its existence, namely that the parties agreed to form a contract. This is shown by their adherence to three traditional cornerstones: bid, approval, and consideration. The use of a bid and approval to reach an understanding between the contracting parties is one of the first steps in the formulation of a contract. Since offer and invitation to receive are two different terms, an advertisement on a website may or may not constitute an offer. Until a contrary reason is explicitly articulated, it is most likely an invitation to treat since it is made to an unidentified person. The intent test determines whether or not the individual wishes to be lawfully bound by providing the material. Consumers make an Offer when they answer by e-mail or by filling out an online form embedded in a web page. The seller has two options for accepting this offer: express clarification or act.
  • Acceptance: To establish a legal e-contract, unequivocal unconditional correspondence of acceptance is expected in terms of the bid. The key question is when approval takes place since this determines when and where the contract is formed. Acceptance is successful until it is obtained, according to the general reception law. There is no definitive guideline for contracting. The applicable correspondence law is based on the message’s fair assurance of receipt. When parties communicate directly, without using a server, they will be notified if a message is not sent or is only partially received. Since approval is only successful when obtained, the party who discovers the error must order re-transmission. When there is a shared registry, the stage at which the approval is received is critical in determining the jurisdiction in which the e-contract is completed. The postal rule can be applied if the server is trusted; but, if the server is not trusted or there is confusion about the e-path, mail’s it is safest not to apply the postal rule. The ‘receipt at the mail box’ rule is favored where delivery at the server is assumed to be inadequate.
  • Consideration and Execution: Contracts are formed when one commitment is made in exchange for something else. The term for this something in exchange is ‘consideration.’ E-contracts are subject to the current rules of consideration. Transitional Security over the Internet is causing fear among users. The e-directive on Distance Selling aims to build trust by limiting purchaser and supplier violence. It specifies:
  1. The buyer must be given a list of key points in a “simple and comprehensible way.”
  2. The principal points must be confirmed in writing, or in another durable medium that is usable and affordable to the user.
  3. The withdrawal right allows customers to prevent contracts entered into accidentally or without proper understanding by offering a seven-day cooling-off period after which they can surrender products or receive a refund without penalty or excuse.
  4. Unless otherwise specified, performances should be delivered within thirty days of the order date.
  5. Reimbursement of funds incurred as a result of illegal credit card use. It puts the credit card company at risk of theft, forcing them to take precautions to secure their position.
  6. On the other side, vendors must be protected from unscrupulous buyers. It is advised that ‘charge-back guarantees’ be used in contracts and that consumers be encouraged to pay in advance.
  7. As a result, this Directive adequately defends shoppers’ rights against unknown vendors, as well as sellers’ rights against unknown buyers.
  • Liability And Damages: In contract law, a person who breaches an arrangement can be held liable for a variety of damages. Owing to the design of the platforms and networks that businesses use to perform e-commerce, parties may find themselves responsible for contracts that theoretically originated with them but were executed, released, or released without the express intent or authorization of the party due to programming negligence, employee mistake, or intentional wrongdoing. Parties receiving messages must be able to rely on legal statements of authority from the sender’s machine to legitimately attribute these messages to the sender, according to sound policies. In addition to employing information security mechanisms and other controls, techniques for limiting exposure to liability include:
  1. Arguments on trading partners and legal technicalities
  2. Observance of defined protocols, rules, and standards
  3. Programmers and reviews are audited and regulated.
  4. Technical expertise and certification
  5. Human resource management that is successful
  6. Insurance is a form of protection.
  7. Improve the processes for notification and transparency.
  8. Legislation and regulations governing the issuance of protected electronic commerce certificates.

Digital Signatures

Digital signatures are described in Section 2(p) of the Information Technology Act of 2000 as the authentication of any electronic document by a subscriber using an electronic system or process. A digital signature has the same purpose as a handwritten signature for electronic records. The signature is an unforgeable piece of information that certifies that a certain individual wrote or agreed to the document to which it is attached. A digital signature is actually more secure than a handwritten signature in terms of confidentiality.


E-contracts are well-tailored to help the re-engineering of business structures that is happening at many companies, requiring a composite of technology, processes, and business techniques that aid the instant sharing of knowledge. E-contracts have their own set of advantages and disadvantages. On the one side, by reducing paperwork and increasing automation, they minimize prices, save time, speed up customer response, and increase service quality. By having unparalleled access to an online marketplace with millions of users and thousands of goods and services, E-commerce is intended to increase the growth and competitiveness of participating firms. On the other hand, with an electronic contract, the proposal depends on how risk can be structured in an artificial setting, rather than on people who make decisions on individual transactions. As a result, the aim is to establish default guidelines for attributing a message to a party to prevent contract fraud and discrepancies.

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