E-commerce and E- contract

1) Introduction
2) Legal Aspect as to Electronic Commerce in
India
3) Modes of E-Commerce
4) Case Laws Related to E-Commerce
5) Essential elements of e-contracts
6) Issues relating to e-contracts
7) E-contract and Indian law
8) Conclusion

1.Introduction
What is E-commerce? E-commerce is the buying and selling of goods or
services via the internet, and the transfer of money and data to complete
the sales. It’s also known as electronic commerce or internet commerce.
[1] It uses internet, where consumers can access different stores and
place their orders online for products and services on their own devices.
It eliminates the need to go to retail stores and provides convenience at
the fingertip to look at options and make a choice. After an order is
placed the customer’s browser communicates constantly with the server
hosting the online store website. Data is shared back and forth. Common
E-commerce marketplace platform we use regularly are Amazon, eBay,
Wayfare etc. Vendors offering E-commerce platform services for clients
hosting their own online store sites include Shopify, WooCommerce etc.
Our lives have always included contracts. Without our knowledge,
we are constantly entering into contracts, from purchasing goods to
offering services. A contract might be as simple as making an internet
purchase or as complex as signing a global peace accord.

The idea of a contract has evolved into an e-contract in modern

times as technology has grown. The offer, invitation to offer,
counteroffer, and acceptance are all done electronically in an e-contract,
and this type of communication results in an agreement.
2.Legal Aspect as to Electronic Commerce in India

Though electronic commerce has developed a vast importance in the

lives of consumers with the variety of choices being provided and the
easy access to the services as per their convenience, there does arise
some challenges as to the same which has resulted in various legal
issues arising out of the same developing a body of case laws due to
inevitable fallout in business relationships and failed transactions.
The Information Technology Act, 2000 came into effect to cater with
such issues faced by the consumers dealing with the contractual aspects
of the use of electronic records.

The main objective of the Information Technology Act,2000 is to

provide legal recognition to E-Commerce transactions. It also lays down
procedure for networking operations and for civil wrongs and offences
but with no express provision in regard to the validity of online contracts.
It establishes the legality of the e-commerce transaction if the offer and
acceptance are made through a ‘reasonable’ mode which includes:
 Acceptance by Conduct, by pressing ‘Accept’ or ‘Submit’ button to
an offer.
 By doing payment for a particular good or service being provided.
 By mailing directly to the offeror.

Example- A communication sent by an offeror to an offeree through

indirect means, such as spam mails is not regarded to be a reasonable
mode under the procedure laid down by the act.

The IT Act also governs the revocation of an e-commerce offer as

well as acceptance. An online transaction becomes complete when the
acknowledgement of the receipt of the offer is received by the offeror,
the offeror having the liberty to terminate the offer if the acceptance for
the same has not been communicated by the offeree. The act was
amended in 2008 to enhance the security of e-commerce related
transactions, providing special provisions to legally recognize the digital
signatures and electronic documents and coming up with a new Section
i.e., 43A which holds companies dealing in e-commerce accountable for
protection of personal data of customers, failing to which the law makes
the body corporate wholly liable for any wrongful loss incurred to the
online buyer and to pay the damages in form of monetary compensation.
Indian contract Act ,1872 with IT Act of 2000 governs the conditions for
the validity of contracts and agreements formed by way of electronic
medium specifying the communication and acceptance of proposals,
their revocation between consumers, sellers, and other intermediaries. It
also deals with the policies of privacy, return either dealing with refund or
replacement, terms and conditions as to the service making them legally
binding to such agreements. The laws are yet to be updated in terms of
age verification making 18 as the standard age of entering into a
contract, digital signatures, etc.
Some other regulations applicable to E-commerce are-
 Foreign Direct Investment Policy
 Foreign Exchange Management Act, 1999
 Companies Act, 2013
 Payment and Settlement Act, 2007
 RBI regulations on payment mechanisms
 Legal Metrology Act, 2009 read with Legal Metrology (Packaged
Commodity) Rules, 2011
 Sales, Shipping, Refunds and Returns
 Income Tax Act, 1961
 Good and Services Tax
 Indian Copyright Act, 1957
 The Patents Act, 1970
 Intellectual Property Issues
 Labour laws
 Information Technology Act, 2000 (IT Act) and General Data
Protection Regulations (GDPR).

3.Modes of E-Commerce
The Electronic commerce can be operated in four major segments of
marketing:
 Business to Business (B-B)
 Business to Consumer (B-C)
 Consumer to Consumer (C-C)
 Consumer to Business (C-B)

4.Case Laws Related to E-Commerce

 Avnish Bajaj vs State, famously known as Bazee.com case

(2005)
In this case, theCEO of E-Commerce Portal was arrested and given bail
later under Section 67 of IT Act on account of an obscene video
uploaded on Bazee.com for sale. He proved Due Diligence but in
2005, Information Technology Act did not have any provisions related to
‘Intermediary’.

 Sharat Babu Digumarti vs State, Govt. of NCT of Delhi

Petitioner was working as Senior Manager, Trust and Safety, BIPL on
the day when DPS MMS was put up for sale on Bazee.com. i.e., the
office responsible for the safety of the Portal, taking action on suspect
lists when reported by the users, and block the user or close items listed
accordingly.
It was held that there is prima-facie sufficient material showing
petitioner’s involvement to proceed against him for the commission of
offence punishable under Section 292 IPC. Though he was already
discharged of offences only under Section 67 read with Section 85 of IT
Act and Section 294 IPC.

 Kent Ro Systems Ltd & Anr Versus Amit Kotak & Ors (Ebay –
January 2017)
Kent RO had lodged Complaint with eBay as to IPR violation of its rights
by a seller on latter’s platform and wanted Ebay to verify the products
before it is uploaded on the platform.
. Court said the IT Intermediary Rules only require the intermediary to
publish the Rules and Regulations and Privacy Policy and to inform the
users of its computer resources not to host, display, uphold or publish
any information that infringes any Intellectual Proprietary Rights.
 Google India Pvt Ltd VS. Visaka Industries Limited (2009)
In this case, Google was held liable as Intermediary on guilt being
proved as criminal complaint instituted before the Information technology
(Amendment) Act 2008 came into force.
 Vyakti Vikas Kendra & other vs Jitender Bagga & Google
(2012)
 In this case, the Art of Living Foundation filed for interim relief
against a blogger and the intermediary Google owned Blogger.com
for cyber defamation where the latter was ordered to remove all
the defamatory content within 36 hours.
5.Essential elements of e-contracts
To validate an E-Contract under Indian Contract Act, of 1872 there are
some essential elements. These are-
 Lawful offer
 Lawful acceptance
 Lawful object
 Competent parties to contract
 Certainty of terms

6.Issues relating to e-contracts

If E-contract saves time and labour, save from the workload and many
things everyone witnesses in day-to-day life then it has some limitations
and drawbacks also. Here we go with them one by one-

a)Capacity to contract-
It is one of the most essential elements to consider to enforce an
agreement to become a contract. It is mentioned in sections 10, 11,
and 12 of the Indian Contract Act, 1872 which includes soundness,
major and not disqualified by law to be competent to contract. E-
contracts also holds with these basic requirements.
. The issue in E-contract is that both parties are unaware of each
other. The party providing the service or goods has no idea about the
other party if he/she is legally competent to contract or not. Ex- if a minor
of 16 years orders something through any shopping site.

b).Choice of law-
It is one of the issues in E-contracts which needs special attention. This
issue arises when the contracting parties are from two different nations
or states. In this case, the rules and regulations of both nations clash
and become difficulty to choose which rules should be followed.
Another problem is seen when the court applies the jurisdiction
where the bulk contracting transactions occurred. It is a complex issue in
E-contracts for fixing a surety as to the choice of law when the dispute
occurs. Ex- one (Originator) contracting party is from India and the other
(addressee) from the USA.
c)Choice of the forum-
This problem is similar to the problem discussed above in choice of law.
In any dispute the parties residing in different nations make their local
forums as the governing forums.
 Parties to the contract may have different preferences, like if one
chooses arbitration and the other commercial suit to settle the dispute.
This is one of the never-ending dispute when the parties choose to E-
contract.

d).Electronic authentication-
Previously the contracts were based on pen and paper following the
rules and regulations of Indian Contract Act, 1872, but nowadays by the
innovation of electronics the contracts are done through this medium.
Therefore, the need of specific guidelines was a major concern.
The Information Technology Act of 2000 was then set up to
ensure the authentication of contracts by issuing the legal framework. If
the guidelines are not followed by any of the parties or both then the
contract will loss its legal validity. The things validated under this law are
electronic signatures, electronic records and electronic documents.

e).Free consent-
The free consent is the essential element for a binding contract on both
parties. Free consent has been given a special recognition in the section
13 of the Indian Contract Act, 1872, but there is no provision for free
consent in Information Technology Act, 2000 to form an E-Contract.
In fact, the concept of consent is not even possible in E-contracts. It
is only possible in physical traditional contracts. The Supreme Court of
India in the case of LIC of India v. Consumer education and
research Held that the user should be careful while giving the consent to
avoid implications in future as the duty was of the user only to accept or
reject.

f).Theft of identity-
Theft of identity is as the name only suggests, when the identity of the
original user is driven by any other person either knowingly or
unknowingly. The theft of identity is the wrongdoing for a purpose like
money.
It is normally done by hacking the device. Section 66 with Section 43
expresses that if this happens then the doer will be awarded either
imprisonment for 3 years or a fine of 5 lakhs or with both.
.

7.E-contract and Indian law

There is no such act or law which specifically talks about e-contracts.
Many provisions of different acts combines to enforce E-contracts
properly.

A).The Indian Contract Act, 1872

The Indian Contract Act of 1872 lays down all the essentials for a
contract to be legal and enforceable. It also lays down the provisions for
if the breach of contracts takes place. Either its E-contract or traditional
contract, must fulfill the legal framework mentioned in the Act.

The essential requirements of a contract to be lawful are lawful offer,

lawful acceptance, lawful object, lawful consideration, capacity of parties,
free consent and the agreement must not be declared as void or
unlawful as per the law

.
B).The Information Technology Act, 2000

Though the Indian Contract Act talks about the contracts, it did not
mentioned the validity of E-contract. The validity or legality of an E-
Contract is recognized by the Information Technology Act, 2000. Section
3 of this act talks about the verification of the E-contract by fixing the
electronic signatures by both the parties. In this way E-contracts are now
recognized as valid and not void.

Section 11 talks about the attribution, Section 12 talks about the

acknowledgement and section 13 deals with the time and place of
dispatch. Section 10A of the Information Technology (Amendment) Act,
2000 talks about the validation of agreements through electronic
medium. IT act also mentions the cybercrime punishments.

C).Indian Evidence Act, 1872

In this electronic era keeping evidences is quite normal and the

evidences on electronic medium are admissible also. Evidences through
video conferencing, audio notes, advanced camcorders and
computerized cameras can be presented in courts. Many sections are
there in the Indian Evidence Act relating to electronic pieces of evidence
like 65B, 85A, 85B, 88A, 90A and 85C.
 In the case of Societe Des Products Nestle S.A. v. Essar
Industries and Ors. paved way by the Delhi High Court of the
introduction of section 65A and 65B in the Indian Evidence Act which
makes the electronic based Evidence admissible in courts. In the case
of State of Delhi v. Mohd. Afzal And Ors. held that “electronic records
are admissible as evidences.

8.Conclusion

Everything however, small or big can be done through internet, like

education, shopping, banking, etc. Day by day the digitalization is
reaching the heights in fulfilling the demands of the society in the best
possible manner. One of the most important part related to internet is E-
commerce, which cannot be accessed without the internet. Growing of
internet has also led to the growth of E-commerce and is developing
rapidly. Every other business, just name it and the same can be
conducted via e-commerce.
E-contract is one of the global concern and need. The development of
many sectors have taken place after the introduction of concept of E-
contract. Like Google pay, paytm, UPI, etc.. Everything Nowadays is
possible through digital medium like selling goods, booking tickets,
buying goods, online registration forms and the list goes on.

The increase in the use of digital medium also increases some

responsibilities. Constant surveillance should be there and monitored on
timely basis to reduce crime and fraud either online or offline like
CCTVs.

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