1

Definition of E-Commerce
Generally, E-commerce is a way to conduct business in total using the internet as a meaum
Cyberlaw, E-commerce 15
According to Hemant Goel's book on Law andEmerging Technology.
computers. and telecommunication i.e.
the directing of exchanges using a proper system of services via the internet,
goods or
internet. He also mentioned in his book that it is a transfer of
and a monetary consideration for them.

institutions.
E-commerce refers to all forms of commercial arrangement containing groups,
transmission of digitized data or
companies, or persons that are based on the working and
records, including faxes or text messages, voice or sounds, and images.
selling of goods, products, or
E-commerce or electronic commerce or EC refers to the buying or electronic
purpose or data via the
services on the internet. Also, transferring monev for some
tour such
platform, fundamentally the internet. These business exchanges mainly happen inconsumer-to
business-to-consumer that is B2C,
ways. Like business-to-business, that is B2B.
consumer that is B2C. or consumer-to-business that is C2C.

Introduction And Definition of E-Contract

calculating.
The use of the internet is not anymore limited up to communication or computing,
no differences
and analyzing data, online contracts are in trend now and as a result, there lie
contracts and all the rules
between onlineand offline contracts. Hence. online contracts are also
that are needed for the formation of a contract willanyways apply.
The online contract formation uses a communication technology which involves a lot of
mediator such as Internet Service Providers (ISPs). Imagine a contract that an Indian exporter
and an African importer wish to enter into. One option could be that any one of the parties to the
contract acquires twocopies of the contract, signs those copies, and couriers them to the other
party who is sitting in some other country or maybe the state. Now, the second party signs both
the copies and couriers one copy back to the first party. The other option is that both the parties
meet at someplace and sign the contract.

In this electronic era, the entire contract can be completed within few seconds that is by both
parties simply attaching their digital signatures to an electronic copy of the contract that they are
entering into. There is no need for sending couriers or waiting for replies through couriers and
traveling costs and energy in such circumstances. There was initiallya delay made by the
legislatures to accept this modern form of technology, but now most of the countries have passed
laws to accept electronic contracts.
 2

Then, What Is E-Contract?

electronic based) is a kind of contract

An E-contract(that are not paper-based rather they are
parties using electronic means, such
formed in the course of e-commerce by the exchange of two
happen with an electronic
as e-mail., telephones, faxes. The interaction of an individual should
discussions, or an exchange of
agent, such as a computer program,website forms like telephonic
existence of acontract.
at least two electronicagents that are organized to allow the
system.
An E-contract is a contract shaped, specific, executed, and expand by a software

The 2 main parties to an e-contract are:

The Originator and the Addressee.
An Originator, as per the IT Act, 2008, states that it is a person who sends, generates, stores, or
transmits any electronic message to be sent, generated, stored, or transmitted to some other
person, and does not, include any Intermediary.

An Addressee, as per the IT Act, 2008, states that it is a person who is intended by the originator,
to receive the electronic record, but does not, include any Intermediary.

Nature Of E-Contracts

1. The parties do not meet each other physically.

2. There are no physical boundaries set.

3. No handwritten signature is needed. It should be an electronic agent.

4. Since there is no full security, the risk factor is very high in such contracts.
5. Jurisdictional issues are a great setback on e-contracts in case of any sort of breach.

6. There is no single authority to look into the whole process exclusively in

shrink-wrap
contracts.

7. Digital Signatures and electronic records are used as evidence when

any case arises in
COurt.
 3

The subject matter includes:

is made via
A. Physical goods, where goods are ordered on an online platform and payment
the internet, and delivery is made physically. For example, Amazon or Flipcart.

B. Digital products like software can be ordered.

C. Services like electronic banking, financial advice, etc are also subject matters.

Elements of E Contract

1. Offer

Offer is defined under Section 2(a), ofthe Indian Contract Act, 1872. It states that an ofer is an
expression of the willingness of a perSon to enter into a legally binding contract with another
party.Advertisement on websites is considered to be an invitation to offer until and unless it is
specified clearly. Because offer and invitation to offer are two different concepts. An offer to any
person, is an invitation to it, until intention, is clearly conveyed. Whena person responds via an
e-mailor fills in any forms available on the internet, they make an offer for a particular thing.
Now it's in the hand of the seller whether to accept it or reject it either by an express
confirmation or maybe by any conduct.As a result of which, we can say that an invitation to offer
is incapable of turning into a binding contract by accepting its terms and conditions until it is
accepted.n Kleinwort Benson vs. Malaysia mining corporation Berhad, 1989 1 WLR 379, when
asked by MMCB to guarantee the debts of a subsidiary company stated that it is their policy to
ensure that their business of the subsidiary company is at all times in a position to meet its
liabilities. It was held that this was not a proposal and the words, it isour 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 arises is, is it applicable in electronic contracts also? Yes, it is applicable in
electronic contracts also.

2. Acceptance
Once an offer is accepted, a contract comes to an end, except the postal
The postal acceptance rule is an exception to the normal rule that acceptance rule applies.
be communicated tothe offeror before a contract comes into
acceptarnce of a contract must
existence.
Under this rule, acceptance of a contract is said to occur at the timne when the
posted. Hence, the communication of acceptance is complete, on part of the acceptance
is
proposer when it is
 4

the
when it comes to
transmission to him and as on part of the acceptor
putinthe course of designated computer
acceptance enters into the
when the
knowledge of the proposer that is
resource.

in this regad as seen in Lalman Shukla

between Indian and Common law defendant's nephew was
There is no disparity is a munib. The
A11 LJ 489. Here the plaintiff boy. In this case,
v.Gauri Dutt,(1913) 11 volunteered his services to search for the missing
abscondedand the plaintiff promised to pay Rs. 501 to
had
of the fact that he found the boy whose uncle seeing that he came to
know
wherein spite denied the reward
nephew. But the munib was
anyone who finds his acceptance can be mainly done via email, website
boy.Both offer and
only after finding the
forms, and online agreements.
Revocation Of Ofer And ACceptance Indian
2000 is not a complete one and as a result, the
Act of
The Information Technology electronic contracts as well. However, both
acts still
used for
Contract Act of 1872 is still revocation will not be relevant as there is
no
which speaks of
complete each other. Section 5 and receipt of mail happen within few
minutes
contracts. The dispatch
much time in electronic Northern Bank.(1900)1 Ch 220, case we see that an
offer
Re London And
and simultaneously.In on 26th October and it reached the
acceptor
was withdrawn by a letter posted
topurchase shares acceptor actuallyposted the letter of acceptance of
(addressee)on the next day at 8:30 a.m. The revoked.
The offer was held validly
the offer after 8:30 a.m.

3. Lawful Consideration

a valid contract, there must be a lawful

The Indian Contract Act of1872 says that for
present days, once an item has been
consideration. The same applies to e-contracts too.In the
payment is successfully done, the consideration is executed and the needs are
supplied and the
consideration is mere executory
satisfied. The main problem arises at that time when the
once.Like in the case of online shopping sites which promise to supply any product.Another
sometimes when an
e-contracts
problem arises that Contract law can't be applied fully in
autonomous computer is used.

4. Lawful Object
The object which is used for entering into the contract should be a lawful one.Contracts that are
illegal or which violate public policy will not be enforceable by courts. Such types of contracts
are considered to be void.An agreement that calls for, the causing of a crime is illegal and
therefore void.
 5

5. Competent Parties To Contract

entering into
accepted, that natural persons and legal persons both are capable of
Itis generally Neither English nor American contract
contracts.Computers don't come under natural persons, considered to be
at present,consider them to be legal persons and therefore are not persons,
law,
contracts.As a result, it is the buyer and the seller who are natural
competentparties to be a
contract.The autonomous computer,clearly cannot
and, are capable of being parties to the
contractual party to the contract.

6. Free Consent

mistake, etc.
The consent should be free from fraud, misrepresentation,
because the margin that is used to
However, it becomes a bit difficult sometimes to determine
determine the strict rule of free consent gets narrower.

7. Certainty Of Terms
leads to difficulty if
Keeping a record of the contract as agreed is important and vital too. This
part of the terms
there are several email exchanges, each attaching documents intended to form
of the contract including counter-offers and negotiations amongst the contracting parties. As
the offeror and who has
mentioned above, it leads to difficulty in such a case to determine who
accepted the offer, which may determine the party's terms and conditions apply.

Kinds of E-Contract

E-Contracts Can Mainly Be of Three Types:

1. Shrink-Wrap Agreements
Shrinkwrap contracts are mainly a licensing agreement used for software purchases. In this case,
the terms and conditions used to access such software products shall be enforced by the person
who is buying it, with the initiation, of the packaging up of the software product.

2. Click-Wrap Agreements
It comes into existence when an online buyer or user clicks on theI AGREE button on a
webpage to purchase or download a particular program. It is derived from the fact that such
agreements most of the time require clicking on an on-screen icon to signal
acceptance.

3. Browse-Wrap Agreement
 6

binding on two or
browsing wrap agreement may also be called an agreement which is to be browsing, an
A
through the use of that website. In case of such an agreement that is on
more parties use and other website
user of a given website is to accept the terms and conditions for
ordinary include contracts Tor
use.Other types of online agreements
policies for making a continuous developer
employees, contractors, sales and resale agreements, distributors, software escrow.
Consultants, and contracts for source-code
and licensing agreements,

Validity Of E-Contract
Technology Act, 2000, (IT Act, 2000) mainly Section
Under the provisions, of the Information valid and enforceable.
that an electronic contract is
10-A, it says
electronic contract is a conformity, with the pre
The only essential thing to make it validate, an
Act, 1872. Also, the courts in India will
requisites which are provided under the Indian Contract
the Indian Evidence Act, 1872. The
regard electronic contracts under the provisions of
Evidence Act, by which the term
recognition of a contract is bestowed under the Indian
is printed on a
document includes any information containing in an electronic record, which Such
paper, stored, recorded, or copied in optical or magnetic media produced by a computer.
admissible in
shall be
information conforms with the conditions of Section 65B of the Act which
document before the
any proceedings, without any further proof or production of the original fact
concerned authority and shall be regarded as evidence of any content of the original or any
stated therein of which direct evidence would be admissible.

The provisions in the Information Technology Act, 2000, gives legal recognition to an
electronic contract, particularly section 10-A of the IT Act which says that:

Section 10-A states about the validity of contracts formed by any electronic means:
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
through electronic records, such contract shallnot be deemed to be unenforceable solely on the
ground that such electronic form or means was used for that purpose.
The above provision was initiated by the Information Technology Act, 2000 after recognizing
the increasing over-reliance on various electronic means to reach commercial agreements.It
applies where contract formation, communication, and acceptance of the proposal are carried out
through any electronic means.

E-Contracts as well as E-Signatures i.e., electronic signatures are recognized under Indian law
and are govemed by the Information Technology Act, 2000 I.e., IT Act. Section 4 of the IT Act
says that the requirement for any information or matter to be in writing or typewritten or printed
form under any law shall be deemed to have been satisfied, if such information or matter, is in an
 7

reference.
electronic form and is accessible to be usable for a subsequent further

Section 4 of the IT Act says as under:

recognition of electronic records Where any law provides that

"Section 4 Legal printed form, then,
information or any other matter shall be in writing or the typewritten or
requirement shall be deemed to have been
notwithstanding anything contained in such law, such matter is:
satisfied if such information or

a. rendered or made available in an electronic form: and

b. accessible to be usable for a subsequent reference.

As as far as, the signing of such contracts is concerned, electronic signatures are treated as
equivalent to traditional by-hand signatures and are also considered legal under Section 5 of the
IT Act. Section 5 of the IT Act, says as under:

Section 5 Legal recognition of electronic signatures:

Where any law provides that information or any other matter shall be authenticated by affixing
the signature or any document shall be signed or bear the signature of any person, then,
notwithstanding anything contained in such law, such requirement shall be deemed to have been
satisfied, if such information or matter is authenticated through an electronic signature affixed in
such manner as may be prescribed by the Central Government.

Explanation:
For this section, "signed", with its grammatical variations and cognate expressions, shall, with
reference to aperson, mean afixing of his handwritten signature or any mark on any document
and the expression "signature'" shall be construed accordingly."

Exceptions of Applicability of Information Technology Act, 2000

Under the IT Act for the documents that can be executed in an electronic format and by the use
of an electronic signature, there are certain exceptions to that. The First
Schedule of the IT Act
especially prohibits the following mentioned documents from being implemented in an
electronic format and being electronically signed:
 8

i. Negotiable instruments (other than a cheque)

ii. Power of attorney

iii. Trust deeds

iv. Wills(including any other testamentary disposition) and

property or any interest thereoi.
Contracts for the sale or conveyance of immovable
V.

of any form, except the specific exclusions

Therefore, according to the IT Act,contracts that too E-Signature. Kindly keep
attaching an
mentioned above, maybe implemented electronically by
inmind that an E-Signature under the IT Act includes:

and used along with a personal pin,

i. digital signatures, which are stored in a USB token,
and
authentication technique using any
ii an electronic signature i.e., E-signature or electronic Act).
the IT
e-KYC authentication (as provided in Second Schedule of

Case Study
others
Case Name: P.R. Transport Agency vs. Union of India &
Decided on: 24TH September
Court: Allahabad High Court - Bench: S Harkauli., UPandey-
2005 - Citation: AIR 2006 AIl23

Facts:
Coal, (here it is referred to as BCC for the
In this case, an e-auction was held by Bharat Coking
PRTA) for
allocation of coal. BCCaccepted the bid of P.R. Transport Agency) (referred to as the
Colliery. On 19th July
4000metric tons of coal at Rs. 1,625/- per metric tons from Dobari
e-mail address.A sum
acceptance letter of the bid was sent via e-mailto PRTransport Agency's
BCCin terms of
of Rs. 81.12 Lakhs was deposited by PRTA to the cheque drawn in favor of
coal.An e
Terms of Allocation'. PRTAanyways accepted the cheque but failed to deliver the
technical issues
mail was sent by BCC for canceling the cheque deposited by PRTA because, of
some
and unavoidable reasons. However, the actual reason was something different. It was that
consideration
other person's bid was higher than that of PRTA. The higher bid was not taken into
due to a flaw in the software. PRTA went to the Hon'ble High Court of Allahabad, aggrieved by
this letter.

Issues Raised:

1. Whether this court has territorial jurisdiction to listen and hear this writpetition?
 9

agreement has the effect of excluding the writ

2. Whether the clause (No. 10.5) of the tender
jurisdiction of this particular Court?

Laws Applied:
Code of Civil Procedure, 1908 (CPC): Section 20
Constitution of India: Article 226

Indian Contract Act, 1872:Section 28

Information Technology Act, 2000: Section 13(3)

Judgement Given By The Court:

Information Technology Act and held that the mail sent
The Court count on Section 13(3) of the
working condition i.e. Chamauli and
was to be for the address where the Company was in
Court had jurisdiction, as the
Varanasi. Since both of the places were from within U.P., the High
exercise its jurisdiction.
partial cause of action arose from within the High Court to
out only for civil courts and not
The Court also held that the territorial jurisdiction can be a force
on account, of part of
that of a High Court. Provided that the power is vested in the High Court
the cause of action that has arisen within its territorial jurisdiction.
meaning of Article 12of
Further, it was also held that the Respondents (i.e. BCC) fall within the
stage without hearing the
the Constitution of Indian and mail for cancellation of the bid at a later
Petitioner was held to be violative, to the reasons of natural justice. The Respondents were
bid.
instructed by the court to handover the coal to the Petitioner following the
Vedanta Aluminium Ltd., whereof
In the case of Trimex International FZE Ltd. Dubai vs.
of signed
the offer and acceptance had been conveyed by the parties via an email in the absence
documents. The Hon'ble Supreme Court of India had observed that once a contract is concluded
orally or in written form, the mere fact that a formal contract has to be prepared and witnessed by
the parties would anyway not affect either the acceptance or implementation of such a contract.