E-Commerce & E-Governance

“Electronic commerce means buying and selling of goods and services across internet”.

Categories of E-Commerce

Electronic Markets:
The purchaser can compare the prices and offerings in different market segments and make a
purchase decision

Electronic Data Interchange (EDI) It provides a standardized system of Coding trade

transactions to Communicate from one computer to another without the need for printed orders
and invoices without delays & errors in paper handling

Internet Commerce:

It is used to advertise & make sales of wide range of goods & services. This application is for
both business to business(B2B) & business to consumer (B2C)transactions.
Types of E-commerce

• Business - to - Business (B2B)

• Business - to - Consumer (B2C)
• Consumer - to - Consumer (C2C)
• Consumer - to - Business (C2B)
• Business - to - Government (B2G)
• Government - to - Business (G2B)
• Government - to - Citizen (G2C)

Business models of e-commerce:

There are mainly 4 types of business models based on transaction party.

Business-to-Consumer (B2C)
In a Business-to-Consumer E-commerce environment, companies sell their online goods to
consumers who are the end users of their products or services. Usually, B2C E-commerce web
shops have an open access for any visitor, meaning that there is no need for a person to login
in order to make any product related inquiry.

Business-to-Business (B2B)
In a Business-to-Business E-commerce environment, companies sell their online goods to other
companies without being engaged in sales to consumers. In most B2B E-commerce
environments entering the web shop will require a log in. B2B web shop usually contains
customer-specific pricing, customer-specific assortments and customer-specific discounts.

Consumer-to-Business (C2B)
In a Consumer-to-Business E-commerce environment, consumers usually post their products
or services online on which companies can post their bids. A consumer reviews the bids and
selects the company that meets his price expectations.

Consumer-to-Consumer (C2C)
In a Consumer-to-Consumer E-commerce environment consumers sell their online goods to
other consumers. A well-known example is eBay
E-Governance:

E-governance is the application of information and communication technology (ICT) for

delivering government services, exchange of information communication transactions,
integration of various stand-alone systems and services between government-to-customer
(G2C), government-to-business (G2B), government-to-government (G2G) as well as back
office processes and interactions within the entire government framework.

Business - to - Government (B2G)

B2G model is a variant of B2B model. Such websites are used by government to trade and
exchange information with various business organizations. Such websites are accredited by the
government and provide a medium to businesses to submit application forms to the
government.

Government - to - Business (G2B) Government uses B2G model website to approach business
organizations. Such websites support auctions, tenders and application submission
functionalities.

Government - to - Citizen (G2C) Government uses G2C model website to approach citizen
in general. Such websites support auctions of vehicles, machinery or any other material. Such
website also provides services like registration for birth, marriage or death certificates. Main
objectives of G2C website are to reduce average time for fulfilling people requests for various
government services.

E-Contracts

Recognition of E-contracts

Section 10 of the IT Act, 2008 gives legislative authority to E contracts. It 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.”

An electronic signature is defined by the Information Technology Act, section 2(p) as the
authentication of any electronic record by a subscriber by means of the electronic technique
specified in the second schedule and it includes a digital signature.
Further, section 5 of the Information Technology Act says that where any law requires that
information or any other matter be authenticated by affixing a signature or any document
signed by or bear the signature of any person, then such requirement shall be deemed to have
been satisfied. Electronic signature serves the same purpose as a handwritten signature.

Section 85 c of The Indian Evidence Act states that as far as a digital signature is concerned,
the courts presume that the information provided in that certificate is true and correct.

E contracts are contracts that are not paper based and are electronic in nature. These contracts
are generally made for speedy entering into a contract or for the convenience of the parties.
They are best made between parties who live in 2 different parts of the world and have to enter
into an agreement. A digital signature is all they need to enter into a contract as a party even
though both the parties to the contract are sitting miles away from each other. In this
proliferating world, it is the most convenient method to enter into a contract without being
physically exhausted. The 2 main parties to an e-contract are- The Originator and
the Addressee.

Originator according to the IT Act, 2008 is a person who sends, generates, stores or transmits
any electronic message to be sent, generated, stored or transmitted to any other person and does
not include an Intermediary.( In the present context, the person who initiates the process of
making an e-contract to send it to the other party.)

An Addressee according to the IT Act, 2008 is a person who is intended by the originator to
receive the electronic record but does not include any Intermediary.(In the present context, the
party which receives the e-contract made by the other party.)

E contracts can be broadly categorized into :

o Shrink Wrap Agreements
o Click Wrap Agreements

Shrink Wrap agreements are those which can only be read and accepted by the consumer after
the opening of a particular product. The term is described after the shrink wrap plastic wrapping
that is used to cover software or other boxes. Installing software from a CD into your PC is an
example of a shrink wrap agreement.

Click Wrap agreements are mostly found in the software installation process. The user has to
click either ‘Accept’ or ‘Decline’ to accept or reject the agreement respectively. These
agreements lack a certain amount of bargain power. Choosing to make payments online or
choosing to reject it is an example of using a click wrap agreement.

Browse wrap agreement - there are also certain websites which show a pop up,
asking you to read the T&C. This comes merely because you’ve visited this website. Such
agreements are known as browse wrap agreements. At times, this precedes a click wrap
agreement.

Appliance Zone LLC v. Nextac Inc. (2009)

Facts - There’s this comparative shopping format wherein a merchant has sued an online shopping
platform because their T&C inlcuded jurisdiction related restrictions statign any and all disputes will
only be adjudicated in the USA. merchant contended this is unreasonable and is nto feasible.
Held - Court held the same to be valid because - i) it was prominently displayed; ii) merchant hit ‘i
agree’ and iii) general practice. Such a contract would be valid even if its b/w you and a comapny from
USA and the T&C mentioned htis and said that disputes will be taken up in Singapore. Of course such
a liberty isnt unbridled and at times courts do see that such an agreement restricitng adjudication forum
isnt too one sided.

● Hotmail Corp. v. Van $ Moneypie Corp. (1998)

Facts - the company (hotmail) which prescribed the T&C sued the customer. This was due to the latter
sending spam messages to other customers. These spam messages were desdigned to look as if they
were sent by hotmail themselves. Hotmail argued that this was a violation of the T&C that the customers
agreed to.

Court - Kuch bhi bol rahi hai, case isnt even relevant. Pagal yeh hai. The court accepted hotmail’s
contentions whic apparently as per her implies that the CWA that was entered into was held tobe valid.

● Island Systems Inc. v. Netscout Service Corp.

Here too it was noted that even if your CWA says that you can purchase our software and then resell it
further then you can only sell it basis the T&Cs you’ve agreed to. So say it says you can only sell and
not rent or say sell it only to 10 further people, then you have to abide by such restrictions and play
along with these limited permission given to you. In this case too a restriction was on renting out.

● Brower v. Gateway 2000 Inc. (1998)

Here, it was said under the T&C that disputes are to be dealt with under ICC’s arbitration mechanism
following international arbitration rules. Such a stipulation was held to be unconsciousable and
unreasonable as not all people as per the court would have the ability to pursue such an adjudication
mechanism.

● Paypal
The T&C said that whenevr Paypal ‘thinks’ that an amount is disputed then it will on its sole discretion,
freeze the customer’s A/c. even the fact that was constituted a ‘disputed amount’ was left for Paypal
and Paypal’s discretion. Court held the same to be arbitrary and unreasonable and also excessively one
sided. It was held to be a violation of PNJ. it was held to not be enfoceable to this extent.

● Facebook (2012)
T&C being hyperlinked and hosted on another website which isnt your main website. So it was held
here that as long as appropriate, prominent notice is given to the customer such an agreement is going
to be valid. This holds true for T&Cs written in small font at the bottom of the page or T&Cs mentioned
after a lot of scrolling. This is since users today are assumed to possess knowledge of this level. As
longas T&Cs are either placed on the website or customer is beign redirected to some other website
hosting it then it is enough.

Admission of e-contracts in courts

The Delhi High Court in the case of Societe Des Products Nestle S.A and Anr Vs Essar
Industries and Ors paved way for the immediate introduction of Section 65 A and 65 B in the
Indian Evidence Act, 1872 relating to the admissibility of the computer generated in a practical
way to eliminate the challenges to electronic evidence. According to section 65 A, the content
of the electronic records can be proved by parties in accordance with section 65 B of the Indian
Evidence Act, 1872. Also, Delhi High Court in the case of State of Delhi Vs Mohd. Afzal and
Others held that,” Electronic records are admissible as evidence.”

What is Digital Signature?

Digital Signature (“DS”) is an electronic signature used to secure an electronic
record or digital contracts. Like a traditional signature its purpose is to authenticate
the document, thereby authenticating the parties to an agreement.

Section 2 (1) (p) of the Information Technology Act, 2000 (“IT Act”) defines
“digital signature” as “authentication of any electronic record by a subscriber by
means of an electronic method or procedure in accordance with the provisions of
section 3”.

What is an Electronic Signature?

Electronic Signature (“ES”) is less secure compared to the DS, however it is mainly
used for the purpose of verifying and not securing unlike DS.

The term “Electronic Signature” is defined under section 2(1) (ta) of the IT Act as
“authentication of any electronic record by a subscriber by means of the electronic
technique specified in the Second Schedule and includes digital signature”. Second
Schedule lays down the ES or electronic authentication technique and procedure.

Second Schedule lays down the ES or electronic authentication technique and

procedure. It includes:

• e-authentication technique using Aadhar or other e-KYC services.

• E-authentication technique or procedure for creating and accessing
subscriber’s signature key facilitated by a trusted third party. Here, the
Certifying Authorities (“CA”) has to ensure the subscriber identity
verification, secure storage of the key by the trusted third party and
subscribers’ sole authentication control to the signature key.
•
A subscriber may authenticate by any such electronic authentication technique
which is considered reliable and may be specified in the Second Schedule of the IT
Act or Section 3A of the IT Act.[1] The ES or electronic authentication technique
will be reliable if:
• The data of signature creation or authentication are linked to the signatory
or the authenticator and to no other person;
• Such data were under the control of the signatory / authenticator at the
time of signing;
• Alteration made to the ES after affixing such ES is detectable;
• Alteration made to the information post its authentication by ES is
detectable; and
• Any other prescribed conditions.

Difference between Digital Signature and E-Signature

ELECTRONIC SIGNATURE (“ES”) DIGITAL SIGNATURE (“DS”)

DS is a secured signature which

ES is a digital form of a “wet link signature”
works with ES and rely on public
which is legally binding and secure.
key infrastructure.

It can be a symbol, image, process attached to

It can be visualized as an
the message or document to recognize the
electronic fingerprint which
identity and to give consent on it. Main types
encrypts and identifies a person’s
of ES include verbal, electronic ticks, or
identity. Other common types
scanned signatures. (Any such signature
include digital signatures based on
mentioned under Second Schedule of the IT
Adobe and Microsoft.
Act)

It is used for verifying a document. It is used for securing a document.

The validation of ES is not performed by any The validation of DS is performed

trusted certificate authorities or trust service by trusted CA or trust service
providers. providers.

It is vulnerable to tampering. It is highly secure.

ES is not usually authorized. DS is not usually authorized.

DS can be verified (by using

ES cannot be verified.
public key).

DS comprises of more security

Less security features are involved in ES.
features.

DS comes with encryption

It does not incorporate any coding or standards.
standards.
Validity of DSC: The DSCs are typically issued with one year validity and two-year validity.
These are renewable on expiry of the period of initial issue.
Classes of DSC: There are mainly three classes of Digital Signature Certificate

i. Class 1 Certificate: issued to individuals/private subscribers. These

certificates confirm that user's name (or alias) and E-mail address form an
unambiguous subject within the Certifying Authorities database.

ii. Class 2 Certificate: issued for both business personnel and private
individuals use. These certificates confirm that the information in the
application provided by the subscriber does not conflict with the information
in well-recognized consumer databases.

iii. Class 3 Certificate: issued to individuals as well as organizations. As these

are high assurance certificates, primarily intended for e-commerce
applications, they shall be issued to individuals only on their personal
(physical) appearance before the Certifying Authorities.

Types of DSC
i. Individual Digital Signature Certificates (Signing Certificates): Individual
Certificates identify a person. These certificates can be used for signing electronic
documents and emails and implementing enhanced access control mechanisms for
sensitive or valuable information.
ii. Server Certificates: Server Certificates identify a server. certificates are used for
1 way or 2-way SSL to ensure secure communication of data over the network.
iii. Encryption Certificates: Encryption Certificates are used to encrypt the message.
The Encryption Certificates use the Public Key of the recipient to encrypt the data
so as to ensure data confidentiality during transmission of the message. Separate
certificates for signatures and for encryption are available from different CAs.

Documents On Which eSign Is Invalid

According to Section 1(4) of the IT Act, 2000 shall not apply to documents or transactions
specified in the First Schedule. Thus, digital signature does not apply to the documents
contained in the first schedule. The documents covered under the First Schedule are as follows:

1. A negotiable instrument (other than a cheque) as defined in section 13 of the Negotiable

Instrument Act, 1881 (26 of 1881).

2. A power-of-attorney as defined in section 1A of the Powers-of-Attorney Act, 1882 (7 of

1882).

3. A trust as defined in section 3 of the Indian Trust Act, 1882 (2 of 1882).

4. A will as define in clause (h) of section 2 of the Indian Succession Act, 1925 (39 of 1925),
including any other testamentary disposition by whatever name called.

5. Any contract for the sale or conveyance of immovable property or any interest in such
property

Legal Framework

• Model Law on Electronic Commerce (‘MLEC’) adopted by the United Nations

Commission on International Trade Law (‘UNICITRAL’) to ensure uniformity in
law applicable to ‘alternative to paper based’ methods of communication and
storage of information.
• UNICITRAL Model Law on Electronic Signatures, 2001 (‘MLES’) based on
Article 7 of the UNICITRAL MLEC, it has largely adopted the provisions therein
for e-signature related provisions.
• In effect, as per Section 5 of the IT Act, it considers e-signatures meeting the
prescribed standards such as Public Key Cryptography, Digital Signature
Standards, Directory Services, etc., (‘Prescribed Standards’) as comparable to
physical signatures.

Legal Recognition under the IT Act:

o Electronic records are functionally equivalent to records available in writing or in
typewritten or printed form, provided such electronic records are accessible for
subsequent reference - Section 4 of the IT Act.
o Electronic signatures, including digital signatures, are functionally equivalent to
physical signatures - Section 5 of the IT Act.
o Electronic records and electronic signatures used by the Government in its regular
transactions are functionally equivalent to records and signatures available in
physical form - Section 6 of the IT Act.
There are multiple models for affixing an e-signature in India, including:
• Digital signatures
These are a type of e-signature that use a pair of public and private keys to encrypt a hash
generated by a hash function. They are considered highly secure and are often used for
important transactions.
• Electronic signatures
These include a variety of authentication methods, such as scanned signatures, PINs, and
checkboxes. They are flexible and can be used for different cases, including day-to-day
transactions.
• Aadhaar-based eSign
This system uses the Aadhaar identification platform to simplify the e-signing process for
Aadhaar holders.
• Licensed CAs
These are private sector companies, government departments, public sector companies, or non-
government organizations (NGOs) that are licensed by the Root CA. The certificates issued by
licensed CAs are legally valid in India.
Other models for affixing an e-signature include: Simple electronic signatures (SES),
Advanced electronic signatures (AES), Qualified electronic signatures (QES), Simple digital
signatures, and Basic digital signatures.

Digital Economy & Issues of Governance

Don Tatscott- wrote a book and coined the term digital economy.

Components of digital economy: internet, e-businesses, e-commerce, digital media (includes any all
kind of information sharing).
Three sub parts within digital media : 1. direct sale of digital media, 2. Free digital media access, 3. Big
data- your own raw data+analysis of its then the value of it.
The shift from third to fourth industrial revolution brought digital revolution.

eCurrency
It can be classified into - electronic currency and virtual currency and also digital currency. Largely,
most electronic fund transfers (RTGS, NEFT, UPI) where your fiat currency is getting used at any
medium is referred to as electronic transfer. Withdrawal isnt as such a criteria to classify money intor
any of these 3 categories.

SWIFT Banking Sytem - this is something that we currently have in place for cross national
transactions. It is not a transactional model but a message-delivering model. All G10 countries control
this system.

Advantages of eMoney -

● Physical wear and tear is minimised

 ● Lesser risk of fraud. This is easy to say but how does a website where you enter

sensitive card details, protects your card and prevents cloning? Ans. - encryption, the entire
cartography system (pata nahi kaunsa) protects your details on their way to the recipient /
bank. In 1995, Netscape came up with SSL (Secured ___ lane). This basically encrypts the
entire route of a transaction being motion until completion. Nowadays, websites get SSL
certifcates. A parallel system is followed in india - web trust seal, issued by some govt.
Dept. that she doesnt know of. It certifies that the website is end-to-end encrypted. There
are certain other security models too. Netscape’s innovation led to the change from http to
https.

Now when Netscpae’s model was taken over by Internet Engineering Taskforce, we

switched to TLS (Transport Layering ____) since 1999.

● The processing system is quick, so saves time

● Cross border transactions with speed, ease

● Transaparency is enhanced. You can check if money was actually received or not.

Proper trail is maintained.

Ponzi Scheme
● Victims are lured with promises of high monetary returns for little risk. Ex- Money
Trade Coin scame (MTC scam). It is a fraudulent investment scam. MTC is a
cryptocurrency scam which is in valued at 300 crores- 500 crores.
● Cryptocurrency is not properly regulated now- many nations have started regulating
Bitcoins and other cryptocurrencies as legal currency.
● RBI not recognize it as legal currency

1. Then in 2020, before SC when the case came up (Internet mobile assn. case) where SC said that
there cannot be a blanket ban in view of Art. 19(1)(g). The case was - IAMAI v. RBI (2020).
In 2021, when the Cryptocurrency Bill came, the larger viewwas to denounce such currencies.
It was named Crypotcurrency and Regulation of Official Digital Currency Bil, 2021l. The
intention was to ban private cryptocurrencies and bring out their own CBDC
2. In EU, they have a regulation - MICA (Markets in Crypto Assets) Regulation, Reg. No.
2023/1114/EU. Through this regulation, they’re putting an obligation on crypto asset holders
and dealers so as to ensure that ultimately there’s a sort of transaparency that can be brought
about in cryptocurrency dealings. They’re also tryign to bring technical standards in respect of
this. The attempt is to make a more transparent ecosystem.
ISSUES WITH CRYPTOCURRENCIES

Traceability

- South Korea - they’ve come up with crypto exchanges. They have recognised 33 traders and only
they can deal with cryptocurrencies

- Australia - they have crypto kiosks/ATMs. They allow for crypto to be bought and be used for
certain limited functions.

Volatility