INTRODUCTION

Contracts have become so common in daily life that most of the time we do not even
recognize that we have entered into one. Right from hiring a taxi to buying airline tickets
online, countless things in our daily lives are ruled by contracts.
The Indian Contract Act, 1872 governs the manner in which contracts are made and
performed in India. It governs the way in which the requirements in a contract are
implemented and codifies the effect of a breach of vowed provisions.
Within the outline of the Act, parties are free to contract on any terms they choose. Indian
Contract Act comprehends of limiting factors subject to which contract may be entered into,
executed and breach enforced. It only provides an outline of rules and regulations which
govern creation and performance of contract. The rights and duties of parties and terms of
agreement are definite by the contracting parties themselves. The court of law acts to enforce
agreement, in case of default.
Electronic contracts (contracts that are not paper based but rather in electronic practise) are
born out of the need for speed, suitability and efficiency. Imagine a contract that an Indian
exporter and an American importer wish to enter into. One option would be that one party
first pulls up two copies of the contract, signs them and couriers them to the other, who in
turn signs both copies and couriers one copy back. The other option is that the two parties
meet someplace and sign the contract.
In the electronic age, the whole contract can be completed in seconds, with both parties
simply attaching their digital signatures to an electronic copy of the contract. There is no need
for delayed couriers and additional travelling costs in such a situation. There was initially a
hesitation amongst the legislatures to recognize this modern technology, but now many
countries have passed laws to recognize electronic contracts.

E-CONTRACT: SCOPE & DEFINITION

E-contract is any kind of contract formed in the course of e-commerce by the interaction of
two or more individuals using electronic means, such as e-mail, the interaction of an
individual with an electronic agent, such as a computer program, or the interaction of at least
two electronic agents that are programmed to recognize the existence of a contract.
E-contract is also called as Distance contract. Distance contract has been clearly defined as
any contract concerning goods or services concluded between a supplier and a consumer
under an organized distance sales or service- provision scheme run by the supplier, who, for
the purpose of the contract, makes exclusive use of one or more means of distance
communication up to and including the moment at which the contract is concluded.
Simmons & Simmons in their book E-Commerce Law: Doing Business Online 1 further
define distance communication to mean using any means of electronic communication
without the physical presence of the supplier and the consumer to conclude a contract
between the two parties. Without the physical presence of the supplier and the consumer,
there must be a service provider, whose sole responsibility is to provide services for
commercial communications which includes buying and selling of various goods and services
and hosting of information provided by a recipient of the service among others.
The definition points out to the fact that the distance contracts/e-contracts are those contracts
in which the parties are not personally present while entering into the contract.
TYPES OF E-CONTRACTS
Generally the basic forms of "E-Contracts" are mentioned followingThe Click-wrap or Web-wrap Agreements.
The Shrink-wrap Agreements.
The Electronic Data Interchange or (EDI).

1 Simmons & Simmons, E-commerce Law: Doing Business Online, Copenhagen Business School
Press, (2001).

CLICK-WRAP OR WEB-WRAP AGREEMENTS

: These are the agreements which we generally come across while surfing internet such as I
AGREE to the terms or I DISAGREE to the above conditions. Now let us see the
peculiarities of these contracts and the specific industries that put it to use. First and foremost
are the Click-wrap agreements. Click-wrap agreements are those whereby a party after going
through the terms and conditions provided in the website or program has to typically indicate
his assent to the same, by way of clicking on an "I Agree" icon or decline the same by
clicking "I Disagree". These type of contracts are extensively used on the Internet, whether it
be granting of a permission to access a site or downloading of a software or selling something
by way of a website. The case of web-click or click-wrap contracts is different as such
contracts are formed instantaneously: The main difference between click-wrap contracts and
e-mail is that communications between web clients and servers, unlike e-mails is
instantaneous. The best way to imagine the transfer of data between computers is to treat it as
a telephone conversation, just one between computers rather than individuals. If either party
goes offline at any point, the other will be aware of the change in status. This is because all
communications between clients and servers have an inbuilt self-checking mechanism called
a check sum.

THE SHRINK-WRAP AGREEMENTS

: These are the agreements generally contains the CD Rom of software. The terms and
conditions are printed on the cover of CD Rom. Sometimes additional terms are imposed
when in such licenses appear on the screen when the CD is downloaded to the computer. The
user has right to return if the new terms and conditions are not to his liking. The validity of
the Shrink-wrap agreements first came up for consideration in the famous case of Pro Cd, Inc
v. Zeidenburg where it was held "that the very fact that purchaser after reading the terms of
the license featured outside the wrap license opens the cover coupled with the fact that he
accepts the whole terms of the license that appears on the screen by a key stroke, constitutes.

Further, communication of an offer or acceptance in the web-click mode is complete when

the addressee is in receipt of the electronic record as defined in Section 13(2) of the IT Act.

ELECTRONIC DATA INTERCHANGE OR (EDI)

: These contracts used in trade transactions which enables the transfer of data from one
computer to another in such a way that each transaction in the trading cycle (for example,
commencing from the receipt of an order from an overseas buyer, through the preparation and
lodgment of export and other official documents, leading eventually to the shipment of the
goods) can be processed with virtually no paperwork. Here unlike the other two there is
exchange of information and completion of contracts between two computers and not an
individual and a computer.
The scope of e-contracts is very wide and extensive. The popularity of e-contracts has
increased because parties entering into an e-contract can do it from anywhere in the world, at
any point of time. Simply put, e-contracts are fast, easy and also help in improving the
business prospects. The e-commerce market in India has grown tremendously. With greater
connectivity the incidence of e-contracts is increasing. The market trend in metropolitan areas
is shifting towards the online market. Articles like clothes are now being purchased online.
All of these contracts are e-contracts.
Not only commercial entities but also the Government undertakings are enjoying the perks of
this great boon of internet. Indian Railway Catering and Tourism Corporation Limited
(IRCTC) is certainly the major e-commerce site in India and in Indias private capitalist
ventures. IRCTC was set up as a subsidiary of the Indian railways for the exclusive purpose
of providing catering services and ticketing services for the Indian Railways. However, of
late, it has extended its wing and now covers sectors such as flights and hotel bookings. The
flagship was established in 2002 and has transformed the online travel booking business in
India. IRCTC functions both in the business to business and business to consumer segment.
According to the data released by IRCTC, it has more than 4-4.5 lakh reservations per day. In
2010-11, IRCTC sold tickets value more than Rs. 8000 Crore. It claims to switch more than 8
lakh equivalent transactions thereby speaking volumes about the prominence and the size of
their business.

Thus the scope of e-contracts in India is tremendous and it has now become an integral part
of the life of the people of this nation.

LEGALITY OF E-CONTRACTS
E-contract is just like any other contract and therefore, is governed by the provisions of the
Indian Contract Act (ICA), 1872. At the same time the Information Technology (Amendment)
Act, 2008 which inserted section 10A which says that
Where in a contract formation, 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.
This provision gives the same legal status to the e-contracts as other contracts have.
For a contract to be a valid one it should be in consonance with the section 10 of the ICA,
What agreements are contracts.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.
Nothing herein contained shall affect any law in force in [India], and not hereby
expressly repealed, by which any contract is required to be made in writing or in the presence
of witnesses, or any law relating to the registration of documents.
The essentials in this section are as follows:
1. Offer
2. Acceptance of the Offer
3. Lawful Object and Consideration
4. Competency of the contracting parties
5. Free Consent
6. Intention to create legal relationship

AN OFFER NEEDS TO BE MADE

In many transactions (whether online or conventional) the offer is not made directly one-onone. The consumer browses the available goods and services displayed on the merchants
website and then choose what he would like to purchase.
The offer is not made by website displaying the items for sale at a particular price. This is
actually an invitation to offer and hence is revocable at any time up to the time of acceptance.
The offer is made by the customer on placing the products in the virtual basket or shopping
cart for payment.
THE OFFER NEEDS TO BE ACCEPTED
As stated earlier, the acceptance is usually undertaken by the business after the offer has been
made by the consumer in relation with the invitation to offer. An offer is revocable at any
time until the acceptance is made.
Procedures available for forming electronic contracts include:
1. E-mail: Offers and acceptances can be exchanged entirely by e-mail, or can be combined
with paper documents, faxes, telephonic discussions etc.
2. Web Site Forms: The seller can offer goods or services (e.g. air tickets, software etc.)
through his website. The customer places an order by completing and transmitting the order
form provided on the website. The goods may be physically delivered later (e.g. in case of
clothes, music CDs etc.) or be immediately delivered electronically (e.g. e-tickets, software,
mp3 etc.).
3. Online Agreements: Users may need to accept an online agreement in order to be able to
avail of the services e.g. clicking on I accept while installing software or clicking on I
agree while signing up for an email account.
THERE HAS TO BE LAWFUL OBJECT AND CONSIDERATION
Any contract to be enforceable by law must have lawful consideration, i.e., when both parties
give and receive something in return. Therefore, if an auction site facilitates a contract

between two parties where one. A valid contract presupposes a lawful object. Thus a contract
for selling narcotic drugs or pornography online is void.
THERE HAS TO BE AN INTENTION TO CREATE LEGAL RELATIONS
If there is no intention on the part of the parties to create legal relationships, then no contract
is possible between them. Usually, agreements of a domestic or social nature are not contracts
and therefore are not enforceable, e.g., a website providing general health related information
and tips.
THE PARTIES MUST BE COMPETENT TO CONTRACT
Contracts by minors, lunatics etc. are void. All the parties to the contract must be legally
competent to enter into the contract.
THERE MUST BE FREE AND GENUINE CONSENT
Consent is said to be free when there is absence of coercion, misrepresentation, undue
influence or fraud. In other words, there must not be any subversion of the will of any party
to the contract to enter such contract.
Usually, in online contracts, especially when there is no active real-time interaction between
the contracting parties, e.g., between a website and the customer who buys through such a
site, the click through procedure ensures free and genuine consent.

CASES RELATED TO E-CONTRACTS

TRIMEX INTERNATIONAL FZE LIMITED V. VEDANTA ALUMINIUM LIMITED

FACTS:
Trimex offered, via an email, the supply of bauxite to VAL which, after several exchanges of
e-mails, was subsequently accepted by latter, confirming the supply of 5 shipments of bauxite
from Australia to India. Though a draft contract had also been prepared but it yet needed to be
formalised. After VAL received first consignments of goods, it requested Trimex to hold back
next consignment of goods so as to enable them to check bauxites utility value. However, on
same day, ship owners nominated the ship for loading the cargo. Later when contract was
cancelled by Trimex, it claimed damages paid to ship owners from VAL which latter refused
by denying any contract.
ISSUES:
Whether there was any valid subsisting contract between the parties in absence of any formal
contract?
HELD:
Once the contract is concluded orally or in writing, the mere fact that a formal contract has
not been prepared by the parties does not affect either the acceptance of the contract so
entered into or implementation thereof.
A contract is said to be concluded when parties agree as to the essential terms of the contract
though minor details can be left over for them to decide later, albeit subject to satisfaction of
other requirements as provided by S.10: without such essential terms being decided, contract
cannot be enforced by law as it is deemed to be incomplete.
The SC held that all essential ingredients required for enforcing these kinds of shipment
contracts were decided by parties including price, quantity, product specifications, delivery
and payment terms, discharge port, shipment lots, demurrage rate, quality benchmark,
applicable arbitration laws, etc. Further, minute to minute correspondences exchanged b/w

the parties clearly show that both the parties were clearly aware of the various terms of the
contract and were ad idem (S.13) w.r.t. those.
Communication of acceptance, according to S.4, was complete as against VAL, as and when
confirmation of 5 shipment lots came to the knowledge of Trimex. Further, the acceptance
was unconditional and unqualified (S.7): We confirm the deal for 5 shipments.

P R TRANSPORT AGENCY V. UNION OF INDIA

The issue of Place in case of Electronic Contract was given the first judicial clarity in the case
of P R Transport Agency v. Union of India (AIR 2006 All 23). In this case one of the issue
before the Allahabad High Court was: Does the Court have jurisdiction?
In this case, P R Transport Agency (PRTA) was awarded a tender by BCCL in Jharkhand. The
acceptance of the PRTAs bid was conveyed through an e-mail. The e-mail was received at
Chamauli, Uttar Pradesh(U.P.). The respondent contended that since the tender had taken
place in Jharkhand, no cause of action arose in Uttar Pradesh. The Court relied on Sec 13(3)
of the Information Technology Act and held that when the mail was sent, it was intended for
the address from where the Company was working. Since, the office of the Company was in
Chamauli and Varanasi, both of which fell within U.P so the High Court had jurisdiction. So,
a partial cause of action arose which allows the High Court to exercise its jurisdiction.

CHALLENGES OF E-CONTRACTING
Researcher observed some issues indicate it will be challenges in forming e contracting in
cyberspace like Discoveries, Inventions and spread of new Information Technologies brought
about by computers, internet and cyberspace widen the scientific horizon but pose new
challenges and created problems for the legal world in all aspects of law. The challenges that
we facing today are not just confined to any single traditional legal system but in almost all
major categories of law such as contract law, criminal law, Law of torts etc.

In India, The information Technology Act, 2000 (ITA) and amendment in several existing
laws through ITA does enforce and control a level of cyber related problems. However, it has
shown inadequacy of law while dealing with information technology itself. The ITA in many
ways falls short of International standards. Therefore, in the era of information technology
such loopholes in legal framework cannot be ignored and can lead to some impairment for
individual as well as nation. New provisions added through Information Technology
(Amendment) Act, 2008 could be a way out from all these challenges but several changes are
still needed for the act to ensure both functional equivalence and technological neutrality.
Hence, there is an urgent need to redefine the cyber laws in India as per International
standards. There are few major areas in cyberspace in which many challenges have been
cropped up on legal front. These areas are inherent challenges, Legal Challenges,
technological challenges, Political and social challenges, practical challenges etc.

Inherent Challenges: In many countries the laws related to cyberspace have already been
developed. U.S. and the West drafted their own legislations by either adapting their existing
laws in the context of cyberspace or creating new laws in respect thereof. Determining
jurisdiction and formation of e-contracts are two key issues on which traditional legal
principles have been largely applied by Courts India enacted its first law on IT through the IT
Act, 2000 based on the principles Elicit dated in the UNCITRAL Model law of e-commerce.
It extends to whole of India and also applies to any offence or contravention there under
committed outside India by any person.

JURISDICTIONAL CHALLENGES
Jurisdiction is the authority of a court to hear a case and resolve a dispute. The issue of
Jurisdiction is highly conflicting and debatable in cyber law as to the maintainability of any
suit which has been filed. It becomes more complicated largely on account of the fact that the
internet is borderless. The notion of jurisdiction is rooted in territoriality from the point of
view of both the court which can properly assert jurisdiction and from the point of view of
the law that should be applied while deciding the dispute. In domestic transactions, a court
will always have the jurisdiction to enforce their respective laws within their physical,
geographical and political boundaries but the enforcement issues throws up several
challenges when it comes to international transactions due to constant change in technology
in borderless cyberspace. There have been various principles and test that lay down by the
court in U.S. and U.K. which elaborated the scope of jurisdiction and the same is being
followed by the Indian Court. However, the act still does not deal with some major legal
issues such as Jurisdiction, protection of domain name, infringement of copyright law etc.
This led the formation of various challenges before Indian Legal system.
Electronic contracts are governed by the basic principles elucidated in the Indian Contract
Act, 1872,which mandates that a valid contract should have been entered with a free consent
and for a lawful consideration between two adults. It also finds recognition under section 10A
of the Information Technology Act, 2000 that provides validity to e-contracts. Accordingly,
both Indian Contract Act, 1872and Information Technology Act,2000 needs to be read in
conjunction to understand and provide legal validity to e-contracts. Further, provisions of the
Evidence Act, 1872 also provides that the evidence maybe in electronic form. The Supreme
Court in Trimex International FZE Ltd. Dubai v. Vedanta E-Commerce recognizing the
validity of e-transaction has held that e-mails exchanges between parties regarding mutual
obligations constitute a contract. The ICA, 1872 provides that where a person who is in a
position to dominate the will of another, enters into a contract with him, and the transaction
appears, on the face of it or on evidence adduced, to be[unconscionable, the burden of
proving that such contract was not induced by undue influence shall lie upon the person in a
position to dominate the will of the other. Consequently, in cases of dispute over e contracts
the entity carrying out the e-commerce will have the onus to establish that there was no undue
influence. Further, the Act also provides that the consideration or object of any agreement is
unlawful when it is forbidden by law, or is of such a nature that if permitted, it would defeat
the provisions of any law; or is fraudulent, or involves or implies injury to the person or

property of another, or the Court regards it as immoral or opposed to public policy. Thus, the
entity is also required to keep these prerequisites in mind while entering into an Etransaction.
Example: A consumer visits a bookstore and inquires about the availability of an out-of-stock
book. Bookstore employee downloads a digital copy of the book and prints it along with
cover. It is not an ecommerce retail transaction since agreement to purchase did not occur
over an electronic network. However, the right to access the digital archived copy is an ecommerce service transaction.
JURISDICTIONAL BARRIERS
Researcher critically pointed out the some barriers across at the time of jurisdiction of issues
related to above they are as followingIn the cyberspace, there is no geographical boundary. It establishes immediate long-distance
communications with anyone who can have access to any website.
No judicial body exists to deal with legal commercial problems arising between citizens of
different countries. The court while considering the scope of jurisdiction in International
transaction,
India, all cyber law is governed by the IT Act. However, IT Act does not deal with some
major legal issues including the issue of jurisdiction. It is well-established law in India that
where more than one court has jurisdiction in a certain matter, an agreement between the
parties to confer jurisdiction only on one to the exclusion of the other(s) is valid. In case there
is no agreement, the respective court considers the balance of convenience and interests of
justice while deciding for the forum.