CYBER LAW IN CONTRACT

Cyber Law

Cyber law is the set of laws, rules, and regulations that guide the Internet.
They are meant to stop cybercrime, keep digital assets safe, and control
what people can do online.

E-Contract: Definition and Meaning

An E-Contract is any agreement that is entered on Internet by competent

parties, with lawful consideration, and free consent, without any hidden
motive and to create a legal relationship. E-Contracts are also referred to as
'cyber-contract' or 'digital contract' or 'online contract'.

Types of E-Contracts

There are several types of e-contracts, each with its unique features:

a) Unilateral and Bilateral E-Contracts:

Unilateral e-contracts involve one party making an offer, and the other
party's acceptance is not required, whereas bilateral e-contracts require
mutual agreement between both parties.

Unilateral e-contracts are typically used in reward-based scenarios, while

bilateral e-contracts are commonly seen in business-to-business (B2B) and
business-to-consumer (B2C) transactions.
b) Click wrap Agreements:

These e-contracts require users to click on an "I Agree" button to accept the
terms and conditions before using a service, such as signing up for an online
platform.

Clickwrap agreements are commonly used in e-commerce, software

licensing, and online services. Courts have generally upheld the validity of
clickwrap agreements, as long as they meet the essential requirements of a
valid contract.

c) Browse wrap Agreements:

In these e-contracts, the terms and conditions are displayed on a website,

and users agree to them by merely browsing the site. Unlike clickwrap
agreements, browsewrap agreements do not require users to actively accept
the terms and conditions.

Courts have been more skeptical of browsewrap agreements, as they may

not provide sufficient notice of the terms, making it unclear whether users
have genuinely consented to them.
d) Shrink wrap Agreements:

These e-contracts are used in the software industry, where the terms and
conditions are contained within the software's packaging.

Shrinkwrap agreements are considered binding when the user opens the
software package, thereby accepting the terms and conditions.

Courts have generally upheld the validity of shrinkwrap agreements,

provided that they do not contain unconscionable or unfair terms.

e) Smart Contracts:

Smart contracts are self-executing e-contracts built on blockchain

technology, which automatically enforces the contract terms.

Smart contracts have the potential to revolutionize various industries by

automating transactions, reducing human error, and minimizing the need for
intermediaries.
However, the legal status of smart contracts remains uncertain in many
jurisdictions, and the technology is still in its nascent stages.

The Electronic Signatures in IT act, 2000 Act has played a significant role in
legitimizing e-contracts, as it grants electronic signatures the same legal
status as handwritten signatures.

Advantages of Electronic Contracts:

1- Low Transaction Cost: Compared to traditional contracts, electronic

contracts have a lower overall transaction cost. Changes to terms and
conditions, especially those affecting a high volume of agreements, are
especially challenging. The new terms can, for example, automatically be
accepted by all relevant parties as part of a sophisticated clickwrap
agreement. The system will then save employees’ time by capturing
important information. Additionally, it reduces the cost of paper, ink, and
other contract-related expenses.

2- Convenient Use: A significant advantage of electronic contracts is their

ease of use. In addition to being modifiable, they are also more accessible. A
dynamic repository can store digital agreements, making them easy to find
and use. Business contracts can be automatically assessed across the
organization by analyzing data and metrics from contracts kept in the
repository.

3- Time Efficient: Contracts traditionally require extensive redlining and e-

mail correspondence. Signing the document or discussing the remaining
details may even require an in-person meeting. There is no need to meet in
person when dealing with electronic contracts.

The disadvantages of E-Contract:

Even though E-Contract is one of the best concepts introduced in the

business world, it still contains some disadvantages, which are mentioned
below:

1. Unassured security: there’s no proper assurance that the vendors would

provide protection for business deals, as a result, you should exercise
extreme caution when dealing with potentially dangerous electronic
software, which can be a disadvantage of electronic signatures.

2. Reliance on proprietary software: One disadvantage of electronic

signatures is the reliance on proprietary software, which may be a concern
for businesses that do not want to contract with other vendors.

3. Restricted storage: one of the disadvantages of E-Contract is that some of

the electronics companies you sign with have limited storage, making it
difficult for them to store all of the documents on their servers. This makes
these businesses depend on other sources, but many are concerned about
the security of customer information.

PROCEDURES OF E-CONTRACT

1. Offer

A binding contract must have a specific and understandable offer of a valid

item that the other party accepts. The offer and acceptance must be clear
and present in the contract, eliminating questions about what is being
offered and the terms of acceptance.

An offer states the exchange of value between the contracting parties, and
the offer’s details may be highly detailed. For example, some contract
requirements may include an identifying number of an item, such as a
vehicle’s VIN, for the contract to be valid. Simply making an offer for “a blue
car” may not be specific enough.

An offer may be revoked, changed, or altered at any point in contractual

negotiations until it is accepted. Furthermore, the offeree (the person to
whom the offer is extended) can make a counteroffer. At this point, the
original offer is terminated, and both parties may negotiate the terms of the
counteroffer.

2. Acceptance

If the offeree accepts the proposed offer — whether the original offer or a
counteroffer — they may do so verbally or in writing. Acceptance of an offer
can come in several forms, including:

Conditional acceptance — accepting the offer once the offerer meets

conditions.
Option agreement — accepting the offer during a preset time for a preset
price.

Acceptance by action — the offeree’s actions demonstrate agreement.

Inaction does not constitute agreeing to accepted terms of an agreement.

For example, if the offer states that the proposal will be accepted “unless we
hear otherwise,” the offeree’s non-response may not hold up as valid
consent to the contract.

Explicit acceptance is one of the universal requirements of a valid contract in

the United States. Both sides must act to commit to the contract.

The main requirement for contractual acceptance is that a clear, direct

statement must be present accepting all listed terms and conditions of the
offer.Don't leave your agr 3. Mutual Consideration

Each of the parties involved must agree to the terms and conditions and be
bound by the contract. For a contract to be legally binding, both parties must
be aware of what they are agreeing to.

Each party must:

Recognize that the contract exists

Be an active participant in the contract

Consent to the terms listed in the contract

Decisively indicate that the agreement is authentic

Agree of their own free will to be bound by the obligations set forth in the
deal

An absence of one of these elements of a contract may be grounds to void

the contract. For example, if the consent to the terms and obligations was
made under duress or fraud, then the contract would not be valid. Awareness
must be made clear in a contract for it to be valid.

4. Competency

All parties agreeing to the contract must be competent to enter into a legally
binding agreement. In short, an individual cannot unwittingly sign away their
rights or property. Competency is a common argument in the validity of a will
or other estate planning documents.
U.S. contract law requires all parties signing the contract to demonstrate that
they are in possession of their faculties and are able to give consent. A minor
(someone under the age of 18) is not legally able to consent to a contract,
for example, and so their signature on a contract could render it invalid.

Minors aren’t the only category or persons who may be deemed legally
incompetent to sign a contract. Someone falling into one of these categories
may also not have the capacity to enter into a contractual agreement:

Someone under the influence of alcohol or drugs.

An individual with cognitive declines, such as dementia.

Someone who doesn’t have a sufficient understanding of the contract’s

obligations.

However, just because someone falls into one of these categories doesn’t
mean they cannot participate in the contract.

A minor child can have their legal representatives, such as their parent or
guardian, sign a contract for them, or in the case of someone who doesn’t
understand the language of the original contract, a certified translated copy
may be provided for them to sign.

5. Legal Purpose

A contract, either written or verbal, serves to legally bind all parties to the
terms of the agreement. The legal purpose of a contract is to provide
enforceable options for an aggrieved party if the other party fails to honor
the terms of the agreement.

6.Transaction Details

The explicit details of the transaction may be stated in a contract. If, for
example, one party purchased an item from another party and agreed to pay
for it in installments, then the details of the payments, such as a calendar of
the date, time, or amount, would be part of the contract.

Other transaction details in the contract could include proof of sale for an
item or service, such as a copy of the sales receipt. Or transaction details
may be the date and method of delivery of an item, as one might find when
buying something online and having it delivered.

7.Digital Signature
A digital signature is an electronic version of a fingerprint or a wet signature.
It guarantees that a digital document, such as a text file, email, or
spreadsheet, is genuine.

Digital Signature

Hash value of a message when encrypted with the private key of a person
is his digital signature on that e-Document. Digital Signature of a person
therefore varies from document to document thus ensuring authenticity of
each word of that document. As the public key of the signer is known,
anybody can verify the message and the digital signature.

Signing certificate and certificate authority

Digital signatures get their official status through signing certificates. Signing
certificates serve as authentication for transmitted documents, their
contents and the author of these documents. An official third-party certificate
authority is responsible for administering these certificates. CAs verify that
organizations are in compliance with cybersecurity standards, such as
International Organization for Standardization (ISO) standards. Only after an
organization has been approved is a certificate provided.

The approval process starts with the CA assessing the needs of the author
and ensuring their methods comply with regulations. The CA then issues a
signing certificate and the cryptographic key pair needed to secure the
documents' contents. A mathematical algorithm generates this key pair to
ensure the contents can't be accessed without both keys. Ultimately, the
digital signature includes the following:

The author's electronic signature of the document.

A piece of data called a cryptographic hash that is unique to the author's

documents and is used to verify the authenticity of the document.

The signing certificate from the CA, which contains the public key and the
written proof that the CA has approved the process.

The private key, which the author must keep confidential and which is used
to encrypt the documents.

Signing certificates assure recipients of the authenticity of both the author

and documents and that the documents are free from prior tampering or
forgery. The author sending the documents and the recipient receiving them
must agree to use a given CA.
What are the benefits of digital signatures?

Digital signatures offer the following advantages:

Security. Security capabilities are embedded in digital signatures to ensure a

legal document isn't altered and signatures are legitimate. Security features
include asymmetric cryptography, personal identification
numbers (PINs), checksums and cyclic redundancy checks (CRCs), as well as
CA and trust service provider (TSP) validation.

Timestamping. This provides the date and time of a digital signature and is
useful when timing is critical, such as for stock trades, lottery ticket issuance
and legal proceedings.

Globally accepted and legally compliant. The public key infrastructure (PKI)
standard ensures vendor-generated keys are made and stored securely. With
digital signatures becoming an international standard, more countries
are accepting them as legally binding.

Time savings. Digital signatures simplify the time-consuming processes of

physical document signing, storage and exchange, letting businesses quickly
access and sign documents.

Cost savings. Organizations can go paperless and save money previously

spent on the physical resources, time, personnel and office space used to
manage and transport documents.

Positive environmental effects. Reducing paper use cuts down on the

physical waste paper generates and the negative environmental impact of
transporting paper documents.

Traceability. Digital signatures create an audit trail that makes internal

record-keeping easier for businesses. With everything recorded and stored
digitally, there are fewer opportunities for a manual signee or record-keeper
to make a mistake or misplace something.

What are the challenges of digital signatures?

Challenges sometimes crop up when organizations use digital signatures.

These include the following:

Insecure channels. Despite the security layer digital signatures provide, the
channels used to transmit documents can still have inadequate security
measures. Without proper encryption and authentication, they could lead to
compromised documents and data loss.
Key management. Compromised or lost keys are useless; therefore,
organizations must be prepared to craft policies and procedures for
employees to properly manage their keys, which can be complicated.

Compliance. Different standards are used in different jurisdictions regarding

digital signatures, so an organization must consult with legal experts or have
a knowledgeable person to handle these matters.

E-Contracting security requirements

While the security requirements of e-commerce and e-business generally

have been explored (Knorr & Rohrig 2001; Rohrig & Knorr 2004), the security
requirements of eContracting systems used in the construction industry have
not been closely examined in the literature to date. An eContracting system
should satisfy the following security goals:

• Confidentiality: Confidentiality ensures the protection of electronic records

in the eContracting system from unauthorised disclosure or use. The identity
of authorised parties will be determined by the agreement between the
contracting parties.

• Integrity: Establishing the integrity of electronic records involves ensuring

that they are not duplicated, modified or deleted.

• Authenticity: Authenticity ensures that the parties using or accessing the

eContracting system are who they purport to be. The contracting parties
must authenticate themselves to the eContracting system and their
credentials need to be recorded and maintained.

• Cryptographic non-repudiation: Where cryptographic non-repudiation

exists, parties cannot deny from a technical point of view having performed
the action or actions attributed to them. For example, a party could not deny
having entered into a contract, sending or receiving a message or updating
an electronic record.

• Availability: Availability ensures that eContracting systems and electronic

records relevant to the contract are available to authorised parties when
required.

Cryptographic mechanisms

This section lists the cryptographic mechanisms or tools that may be used to
achieve the security goals of an eContracting system. A more detailed
description of these mechanisms is provided in the later sections of this
report.

• Internet security protocols such as Secure Socket Layer (SSL) or Transport

Layer Security (TLS) ensure the confidentiality and integrity of messages
exchanged using an eContracting system.

• The computation of a digital signature for an electronic record can ensure

the integrity, authenticity and non-repudiation properties of a record. Digital
signature schemes are based on cryptographic hash functions and public key
cryptography.

• Digital time stamping of an electronic record ensures the existence of the

electronic record at a particular point of time. Digital time stamping schemes
are based on cryptographic hash functions and public key cryptography.

• Logging and auditing of electronic records and communications made using

an eContracting system provide evidence of the existence of a record at a
particular point of time and the identity of any computer user who has
accessed or altered the record. Digital signatures and digital time stamps are
more reliable methods of establishing these matters.

• The goal of availability is not met by cryptography