UNIVERSITY INSTITUTE OF LEGAL

STUDIES, PANJAB UNIVERSITY

(CHANDIGARH)

INFORMATION TECHNOLOGY
LAWS

PROJECT ON

ELECTRONIC CONTRACTS

Submitted by:- Submitted to:-

Srishti Sharma Dr. Amita Verma

B.A. LL.B.(Hons.) Section-C
Roll No. 168/19
Semester-X

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 ACKNOWLEDGEMENT

First and foremost, I want to thank my research supervisor, Dr. Amita Verma, who
selflessly helped me in completing this project. Her teaching style and methodology
have always inspired me to achieve my targets. She raised many precious points in our
discussion and I hope that I have managed to address several of them here.

Getting through my dissertation required more than academic support, and I have many,
many people to thank for listening to and, at times, taking a stand for me. I cannot begin
to express my gratitude and appreciation for their friendship.

With Regards,

Srishti Sharma

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 INTRODUCTION

What is an E-Contract?

An e-contract is the most recent electronic mechanism to facilitate trading

relationship between business parties, and is modeled, executed, controlled and
monitored by an electronic system. Theoretically, an e-contract is very similar to
traditional (paper based) contracts. In simple words, an e-contract means a contract made
electronically, fully or partially.

An e-contract is, thus, a species of an enforceable agreement created, fully or partially, in

electronic form. It’s not a paper-based contract, but a contract in an electronic form.
There is no hard and fast definition of e-contract. The realm of e-contract is much bigger
than the realm of traditional mode of contract. E-contract can be defined in following
words:1

E-contract is a kind of contract formed by negotiation of two or more

individuals through the use 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.

Etymologically one can give as many as definitions for e-contract, but there is no border
line for it meaning. In broader sense, it can be summed up as contracts made using
computers, either via e-mail or the Internet, or that involve computer related products,
such as databases and software.2 The International Chamber of Commerce refers to
electronic contracting as the automated process of entering into contracts via the parties

1
US Legal Definitions, available at http://definitions.uslegal.com/e/e-contract/ last visited on 28
November, 2012

2
Available at, http://highered.mcgraw-hill.com/sites/0073524948 /student_view0

/glossary.html last visited on 28 November, 2012

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computers, whether networked or through electronic messaging.3

chapter IV of IT Act contains provisions relating to electronic contracting. Sections 11,

12 and 13 deals with attribution, acknowledgment and dispatch of Electronic Records
respectively.

TYPES OF E CONTRACT

There are two ways through which commercial contracts can be entered electronically. A
common and popular method is through the exchange of electronic mail e-mail. The
other method of contracting is using the World Wide Web or website. Further the
website based is divided into following kinds:

▪ Click Wrap

▪ Browse Wrap and

▪ Shrink Wrap

E-MAIL CONTRACT

A contract can be entered into and concluded following the exchange of a number of e-
mails between the parties. Here the e-mails serve the same purpose as normal letters,
do had a contract been negotiated through letters written by both parties. The fact that a
contract has been negotiated electronically will not raise any specific legal or
contractual consideration sui generis to the type although there may be evidential
considerations raised dependant on the existing legislation and if there are any formal
requirements for a written signed contract.

CONTRACT THROUGH WEBSITES

Normally, a vendor would provide a display of products on his website and indicates
cost of such product. A customer can scroll through the website previewing the items
or products on offer, click on the item for further information and if interested in the by

3
General Usage for International Digitally Ensued Commerce (GUIDEC) Version II, International
Chamber of Commerce, available at, http://www.iccwbo.org/ last visited on 28 November, 2012

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purchase, can place an order by filling in an order form and clicking ‘Submit’ or ‘I
Agree’ or ‘I Accept’ or something similar button. Shrink wrap,4click wrap and browse
wrap are common types of agreements used in electronic commerce.

Click-wrap Contracts

In click-wrap agreements, a party after going through the term and conditions provided
on the website or program has to, normally, signify his assent to the same, by way of
clicking on an “I Agree” icon or decline the same by clicking “I Disagree”. This type of
acceptance is usually conveyed before receiving the merchandise. Sometimes instead of
the ‘I Agree’ button, there may be similar other way by which acceptance of a user may
be signified. These sort are extensively used on the internet, whether it be granted of a
permission to access a site or downloading of any software or selling something via
website.

A click-wrap agreement is predominantly found, as part of the installation or

downloading process of software packages. It is also known as ‘click-through’
agreement or ‘click-wrap’ license’. Click-wrap agreements can be the following kinds:

•Type and Click: In this case, the user must type “I accept” or other specified
words in an on-screen box and then click a “submit” or similar button. This
demonstrates acceptance of the terms of the contract. A user cannot proceed to
download or view the target information without observing these steps.

•Icon Clicking: in this case, the user must click on an ‘OK’ or ‘I Agree’ button
on a dialog box or pop-up window. A user may signify rejection by clicking
‘Cancel’ or by closing the window.

• Simon Blount in his book, Electronic Contracts, describes click-wrap as

‘cases where consumers have assented to terms displayed on a screen either
by CD-ROM or on-line, clicking on a virtual button’. Thus, in this sense
click-wrap contracts may be either ‘CD-ROM click-wrap’ or ‘online click-
wrap’ contracts. CD-ROM click-wrap or shrink-wrap contracts present

4
The clinging transparent plastic film that is used to shrink-wrap the Compact Disks.

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 challenge to the Court when additional terms different from those of the
(original) offer are introduced along with the product.

Shrink-Wrap Contracts

The sale of software in stores, by mail and over the internet has resulted in quite a few
specialized forms of licensing agreements. For instance, software sold in stores is
commonly packaged in a box or other container and then wrapped in clear plastic wrap.
In such a case, the full agreement cannot be read before purchasing the software. The
license agreement generally explains that if the buyer does not wish to enter into a
contract by purchasing the software, he must return the product prior to opening the
sealed package containing the CD on which the software resides. If the software is
returned with the packages unopened, refund will be obtained.

However, in cases where the entire license terms cannot be printed on the exterior of the
box, and are provided in the user’s manual inside the box or appear on the user’s screen
every time the program is run; then, such a shrink license agreement is valid only if the
buyer is afforded a right to return the software (and have the refund) should be
unacceptable to the buyer/user. The buyer, nonetheless, is to exercise his right to return
within a reasonable time. These licenses have to be known as “shrink-wrap licenses”.

• One notable distinction between a shrink-wrap contract and a click-wrap

contract is that in the former case a consumer mostly implicitly signifies his
assent (either by opening the product package or by retaining or using the
product) to the contract terms; whereas in the latter case, the consumer
generally signifies his assent explicitly by clicking (or typing and clicking)
the “I Agree” or any other similarly worded icons.

Browse-wrap/Web-wrap Contracts

At times, internet users may find a ‘terms or conditions’ hyperlink, somewhere on the
web page that proposed to sell goods and services. According to these terms and
conditions, using the site for buying the goods and services offered (or just visiting the
site) constitutes acceptance of the conditions contained therein. This is also a common
way of getting into contract (website contracting). So, in this case, the online web page

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shows hyperlinks referring to terms displayed on related within the same website or on a
related website.

In browse-wrap contracting, entire agreement does not appear on the same screen until
the vendee accesses the terms by clicking on a hyperlink. These types of contracts are
susceptible to challenge for lack of notice and assent to terms, as unlike click-wrap
agreements, there is no actual or constructive notice, and a product can be used without
even viewing the terms of the agreement, and users may not even realize that a contract
is being formed.

On account of the internet’s capacity to replace conventional commerce, these kinds of

contracts (mainly web-wrap browse and click-wrap) are very common. Some critics
contended that browse wrap terms are not enforceable because they do not satisfy the
basic elements of contract formation; however one may, on the other hand very well,
argue that the browse-wrap terms satisfy the elements of an implied contract by the
consumer’s actions.

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 REGULATORY CHALLENGES OF E CONTRACT

There is lack of provision in formation of e-contract, the Information Technology Act,

Cyber law, Indian contract Act, Indian Evidence Act not wholly justified to electronic
contract. Today’s computerized generation need more protection. Our Indian judiciary in
many landmark judgments’ rejected legality of computer. it’s very difficult to define our
even justified validity of electronic contract.

Legal challenges

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. A practical approach is required to
minimize the difficulties and for resolving all cyber disputes, happening in our
cyberspace. With the advent of the internet, transmission of information and transacting
of business across borders, various issues related to cyberspace have cropped up on legal
front. Some of the major issues are determination of jurisdiction, cyber crime,
intellectual property, cyber forensic, E-commerce, Electronic Evidence, privacy and
contract. One of the greatest lacunas for resolving these issues are the absence of
comprehensive law anywhere in the world. The problem is further aggravated due to
disproportional growth ratio of Internet and cyber law. Though a beginning has been
made by the enactment of I.T. Act and Amendment made to Indian Penal Code, Indian
Evidence Act etc, but problems associated with regulation of cyber crime continues to
persist

Statutory effect- The Indian Contract Act, 1872 gives a statutory effect to the basic
common law contractual rule that a valid contract may be formed if it is made by free
consent of the parties, competent to contract, for a lawful consideration and for a lawful
object and which is not void ab initio. In general contract, we see that the acceptor can
revoke acceptance of the offer before it comes to the knowledge of the offeror, but what
would be the case where an acceptance is sent via an electronic record, it may not be
possible for the acceptor to revoke it before it comes to the knowledge of the offeror.
However, there may be one possibility where revocation may still take place i.e. when

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the acceptance is sent by an electronic record and the same is sent to a computer resource
which is not the designated computer resource of the offeror, but it is not clear what
would prevail when both the acceptance-revocation are retrieved by the offeror at the
same time.

Consumers in e-Contracts: An Actual Situation (Weak Position)

It is observed by the researcher that there are various legal provisions to protect
consumers from exploitation in marketing, however, consumers face severe challenges
from the revolution brought by the Internet with regard to commercial communications
and contracts concluded at a distance. The ways of exploitation have become more
sophisticated, latent, unidentifiable and difficult to trace. The applicability and
effectiveness of traditional rules of consumer protection in the online environment is
limited. Consumers in e-Commerce confront lots of difficulties and unfair treatment in
transactions.
The general practice is that a standard contract is deemed to have been agreed upon by
both parties once consumers accept the product. There is rare opportunity to negotiate
the detailed provisions in the final contract because most of such online contacts are pre-
prepared or standardized (click-wrap agreements and shrink wrap agreements)5Various
scholars debate the appropriateness of standard contracts but the fact is that these
contracts are widely used in modern commerce and the burden of risk is undertaken by
consumers no matter how unfair doing so may appear.

Consumers are expected to thoroughly read and live up to contractual provisions, except
in exceptional cases when the wording of the provision is regarded as incomprehensible.
Ignorance of law is no defense and before purchase, it is presumed that customer has
read all the terms and conditions. Practically, the technical cum legal wording of
standardized online contracts (click-wrap agreements as well as shrink wrap agreements)
is difficult for laymen to understand. Another common behavior of online shoppers is
that during online transactions they hardly give any attention to these terms and
conditions. Most importantly, consumers still do not have effective methods for asserting

5
G.E. Maggs, “Internet Solutions to Consumer Protection Problems”, South Carolina Law Review, Vol. 49,
1998, p. 889.
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their rights and resolving disputes. Consumers would expect to see their interests being
protected on the Internet, but the increasing cross border nature of electronic commerce
makes it difficult to protect consumers from fraud and other damaging activities6 .It
reveals the fact that consumer is weaker party in electronic contracts as the terms of
contracts are dictated by one party (seller) and these are accepted by the other
(consumer). It is suggested that (a) it must be made mandatory for all online business
web sites to communicate contract information lucidly on the home page of their web
site, (b) the web sites must have authentication from Trust Pay and suchsss other
authenticated systems and (c) businesses must take active role in communicating all the
terms and conditions of online contract whether by phone, fax, e- mail and verbal
communication.
The Information Technology Act of India has been passed to regulate e
Commercial transactions but it does not sufficiently provide one-for-all protection to
online consumers.7 Consumer protection policy is indispensable in building consumer
confidence and establishing a balanced relationship between businesses and consumer in
online transactions.

ONLINE CONTRACTING & IMPEDIMENTS TO JUDICIARY

Judiciary is one of the pillars of democracy. It is the judiciary which interprets the law.
It is the judiciary which declares vires of legislations. Law relating to e-contract is of
recent origin, it is more or less techno-legal in nature. Present judicial system works
under settled legal environment. Therefore courts require assistance from experts on all
technical issues. Further Section 45 of Indian Evidence Act, 1872 speaks about expert
opinion. It is read as under,

When the Court has to form an opinion upon a point of foreign law, or of science, or
art, or as to identity of handwriting or finger impressions, the opinions upon that point
of persons specially skilled in such foreign law, science or art, or in questions as to

6
J. Rothchild, “Protecting the Digital Consumer: The Limits of Cyberspace Utopianism”, IndianLaw
Journal, Vol. 74, No. 4, 1999, p. 925.
7
Hossein Kaviar, 2011, pp. 96- 99.
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identity of handwriting or finger impressions are relevant facts. Such persons are
called experts.
Therefore Courts can certainly take expert opinion from person who is well versed in
computer and internet. It is the well settled principle of law that the expert opinion is
not binding on courts. Even if courts take any opinion from expert still it has to come to
its own independent conclusion. This sort of situations would cause some impediments
in adjudicating process.

Order XIII of Code of Civil Procedure, 1908 seeks marking of documents. In e-contract
there are no documents. As per Evidence Act one has to submit primary document.
Courts in India decide almost all civil cases on the basis of primary documents. As we
don‘t find primary documents in e- contract, so it is bit difficult for judiciary to decide
cases relating to online contracts.

Although legislatures have enacted IT Act, 2002, it is substantive law. IT Act is of its
own kind which includes both legal and technical provisions. To tackle techno-legal
issues we need well establish procedural law to support substantive law. IT Act is
substantive law which deals with rights and liabilities of parties, whereas not such law is
enacted so as to deal with procedure. By not enacting procedural law for IT Act the
legislators have created hurdle for enforcement of IT Act. Even this hurdle applies to
judiciary too. Without clear procedure it is difficult for judiciary to interpret law upto the
mark. We have CPC for civil law and CrPC for criminal, then why not ITPC i.e.
Information Technology Procedure Code.

As disputes pertaining to e-contract are techno-legal issues, it is difficult for a Judge or

an adjudicator to be expert in these matters. The modern day judges are not so well
acquainted with all these issues. Hence, they require training so as to update and
upgrade their skill and knowledge pertaining to realm of cyber law.
Apart from above stated things there must also be special provisions for training of
courts staff and advocates about the intriguing issues of e- contract and cyber law.
Further in disputes pertaining to e-contract most of the data would be in electronic
format, special provision must also be made for saving, retaining and retrieving e-data
when it is presented before the Court.

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MISCELLANEOUS ISSUES : JURISDICTION

PLACE OF FORMATION : For determining the jurisdiction of the Court in a dispute

between the contracting parties, it is necessary to know where the contract in question
was concluded. The place of formation of the contract determines the jurisdiction of the
court where breach of contract gives rise to cause of action. It is well settled principle
that contract concludes, (a) where letter of acceptance is posted in case of postal
communication and (b) where letter of acceptance is received where instantaneous
means of communication has been used.

Quite different from the above two rules, the IT Act lays down rules for place of
dispatch and receipt of electronic records which may not necessarily by the actual place
of dispatch or receipt of the electronic record. Furthermore, it is quite possible that a
contract may be actually concluded at a place different from that where the electronic
record is deemed to be received. The IT Act has laid down an objective test which is
the place of business of the originator or that of the addressee where an electronic
record is deemed to have been dispatched or received as the case may be. The location
of the computer resource is not a determining factor. In a given situation the computer
resource of the originator or addressee used for the dispatch or receipt of the electronic
record, may be located in a jurisdiction other than that in which the originator or
addressee has a place of business. Further, parties may not be aware of the location of
the computer resource used for dispatch or receipt of the electronic record. To address
this uncertainty, precise test has been laid down which takes into account pace of
business, regardless of the location of the computer resource. However, contracting
parties are free to agree on a different rule. The Courts in India will be called to
determine the compatibility of the above provision with Section 20 of the Civil
Procedure Code. It appears that the scope of cause of action‘ as a possible ground for
filing a suit in a particular court has been reduced. Section 20 of the Civil Procedure
Code, inter alia, provides that every suit shall be instituted in a court within the local
limits of whose jurisdiction defendant(s) carries on business or where cause of action
wholly or partly arises. The breach of contract gives rise to a cause of action and suit in
such case may be instituted under Section 20 of CPC either in place where contract is
formed or where defendant carries on business. But the IT Act fuses place of formation
of the contract with the place of business and lays down that the place of business shall

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be deemed as the place of dispatch or receipt of the electronic record as the case may
be. This means that the place of business shall be a place where a case has to be
instituted in case of breach of contract which may not be necessarily the place where
the contract has been concluded.
JURISDICTION : A cyberspace transaction knows no national or international
boundaries, and is not analogous to three dimensional world in which Common Law
principles developed. From the beginning of internet, the issue of jurisdiction has
continued to challenge legal minds, societies and nations in the context of the
peculiarly inherent character of internet. Different principles were being evolved in
different national jurisdictions in this regard.
The e-commerce applications of internet are limitless and the jurisdictional issues
spawned by it are many and diverse. However, it is not the end, once e-commerce
applications of internet are unfolded to its potential, jurisdictional issues likely to emerge
may not be forceable at present. It is quite possible that the supplier and customer may
be residing in two different countries. The questions which are likely to arise are: which
country has the jurisdiction in case of dispute? Whether the laws of the country in which
customer resides or the laws of the country in which supplier resides, apply? How to
enforce judgment?
Considering the entire issue of jurisdiction from the Indian perspective, there is, by far,
no established principle. Section 19 of the Code of Civil Procedure is a provision under
the Indian context which clarifies the position in case of domestic level multiple
jurisdictions.
Section 19 provides that, where a suit for compensation for wrong done to the person or
to moveable done to the person or to moveable done to the person or to moveable
property, if the wrong was done within the local limits of the jurisdiction of one court
and definition resides, or carries on business, or personally works for gain, within the
local limits of jurisdiction of another court, the suit may be instituted at the option of the
plaintiff in either of the said courts. There is nothing harm in applying above principle to
internet contracts. As it is already discussed jurisdictional issues in India are determined
either by the place of residence or place of business or cause of action. The first is an
objective one and easy to determine. The cause of action jurisdiction to pose serious issue
in e-commerce disputes. The cause of action jurisdiction is a subjective and is most
likely debated in e-commerce cases. It appears that Section 13 of the IT Act is not in

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harmony with Section 11 of the Consumer Protection Act, 1986. Section 13 of IT Act
provides that where the originator (offeror here) or the addressee (offeree here) has more
than one place of business, then principle place of business shall be deemed as the place
where the electronic record has been dispatched or received as the case may be. The
place of business will determine the jurisdiction of the court and in case there is dispute
between the parties involving contract formed electronically, then the suit shall be in the
court within the local limits of whose jurisdiction, inter alia, principal place of business
of the opposite party is situated. Against this, the Consumer Protection Act provide that a
consumer can file a complaint against the opposite party in a District Forum within the
local limits of whose jurisdiction the opposite party inter alia, has a branch office. There
is an apparent conflict between the two provisions and rule incorporated in Section 13 is
likely to cause inconvenience to the consumers especially where the opposite party has
principle office outside India an inconvenience which the Consumer Protection (Amendment)
Act, 1993 removed by incorporating the present rule.8

8
The present rule was incorporated in the Consumer Protection Act after the decision of the
National Commission in Indian Airlines Corporation v. Consumer Education and Research Society,
Ahmadabad, (1991) 3 Comp. LJ 166 (NCDRC), where it was laid down that a complaint cannot be
filed in a district forum within the local limits of whose jurisdiction opposite party has only branch
office. The amendment was suggested in the report submitted by the Working Group to make
necessary amendments to Consumer Protection Act and MRTP Act, 1969

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 CONCLUSION

It is important to note that the Internet as with all path-breaking technological

developments gives us all the opportunity to act as a global community, advertise and
operate across all frontiers, over borders and beyond the control of any national
government, but it also created serious problems, challenges for the legal world in all
aspects of law due to its borderless nature. We need to promote and facilitate the fair use
of cyber space among general masses, to educate civil society groups about the legal
constitutional issues, to assure citizens regarding their concern on privacy, personal
liberties, to make citizens aware of various kinds of commonly committed cyber
offences such as Fraud, Identity Theft, Hacking, Phishing etc. and freedoms and also
there is an immediate requirement of skilled investigators and trained judges for fair and
effective dispute resolution. India needs to identify the possible areas of conflict and
operational problems, to address various questions; issues’ relating to cyberspace and the
most appropriate way to start is the creation of a comprehensive legislation which should
address broad area of cyberspace taking into consideration sect oral, institutional and
individual requirements. The amendments in several laws by the IT Act are a good
beginning but several changes are still needed for the act to ensure both functional
equivalence and technological neutrality. International agreements by way of convention
and cooperation are required for various dispute resolutions in International arena.

For the Security of e contracting in cyberspace such things must be consider that in spite
of recent development in evaluation methodology, many uncertainties still remain which
effect on filtering spam techniques and check the validity of spam filter evaluation
techniques. Here we are going to advocate several prevalent filtering techniques and
propose our work to acknowledge them. So the next time you uninterestingly click on an
"I agree" button without even caring to see the terms or hurriedly tear the wrap of
software CD being least interested about the terms typed on it "Think Twice"! They are
all are valid contracts and you could be made liable for the terms and conditions laid
down there.

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 BIBLIOGRAPHY

 Taxmann’s IT Act (2000), “Information Technology Act, 2000”, New Delhi:

Taxmann’s Allied Services Ltd.
 D.P. Mittal (2000), “Taxmann’s Law of Information Technology”, New Delhi:
Taxmann’s Allied Services Ltd.

 Pavan Duggal (2000), “Cyber Law India - An Analysis”, New Delhi: Saaksharth Law
Publication, 2nd Edition, 2004.

 Justice Yatindra, "Cyber Laws", Universal Law Publishing Co., 4th Edition, 2010.

 P.L. Mehta (2004), “Cyber Crime Law in India: Some Reflections”, Indian Socio-
Legal Journal, Universal Law Publishing Co.
 Vakul Sharma, “Information Technology: Law and Practice”, Universal Law
Publishing (Lexis Nexis), 4th Edition, 2015 (Reprint - July 2015) (ISBN:
9789350355275).

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