Introduction
How many times has it happened that you installed an application on your smartphone and read through the ‘Terms and Condition Pop-up box’ without hurrying to click the I Agree button? Or have you ever signed-in to a website only after reading the dialogue box that pops up when you create an account? We guess the chances of you, reading those terms and conditions, are as same as India winning the 2011 Cricket World Cup final without MS Dhoni i.e. very limited. The reason being that in this contemporary world where everyone is so hassled to get their job done, nobody cares to read those clauses and ponder upon them. Not even succinctly.
What we will take you through, is a journey where we will evaluate that what happens when you skip through those important clauses of ‘Terms and Conditions’ and jump to the main content. Moreover, we will be discussing what would have happened if you had read through those. We have certain instances where a consumer or any third party gambolled through the imperative clauses which they must have read and then, it made them land into trouble. So let’s commence our journey towards becoming a conversant consumer and let’s get familiar to the world beyond the ‘I Agree button’.
What exactly are E-Contracts?
An Electronic Contract (or an E-Contract) is a valid contract as per the provisions defined in the Indian Contract Act, 1872. It includes all the essential elements as that of a traditional contract. Many issues regarding the formation and validity of E-Contract have been solved with the introduction of the Information Technology Act, 2000. Section 10-A of the Information Technology Act, 2000, deals with the validity of a contract that is formed through electronic means.
It says, “Where in a contract formation, the communication of proposals, the acceptance of proposal, the revocation of proposals and acceptance, as the case may be, are expressed in electronic form or employing an electronic record, such contract shall not be deemed to be unenforceable solely because such electronic form or means was used for that purpose”.
E-contracts are governed by the general principles of the contract law which is practised throughout the world. The Indian Contract Act, 1872 does not deal with the provisions of E-contract specifically but provides for the provisions and essentials of a valid contract.
When the essentials of a contract as given under the provisions of the Indian Contract Act, 1872, has been fulfilled, an E-Contract can be enforceable by law. The legal recognition of an E-Contract has been given by the IT Act, 2000. There are many instances where the Indian Judiciary under the provisions of the Indian Evidence Act, 1872, has given concern to e-contracts. The sections 65-A and 65-B of the Act provides for the procedure for furnishing electronic documents as valid evidence in the court of law.
Types of E-Contracts in India
1. Click Wrap Contracts
This type of contract can be seen in our daily lives. These contracts can be described as ‘It’s either my way or the highway’ agreement. One such instance would have been witnessed by all when we downloaded WhatsApp from Google Play Store for the first time, and we in a way compelled and made to click the ‘I Agree’ button, simple reason being, the application would never move to the next windows. As stated in point number 4 of an article, “You will be prompted to agree to the Terms & Conditions. Accept this and move on to the next stage”
The above statement clears even WhatsApp doesn’t allow us to enter further into the application then the case more complex in other applications. Whenever we install any kind of application/software or website, the terms and conditions clause always comes bundled with them. All the ‘Terms and Conditions’ are put up before its user ab initio so that a user is aware of the clauses and is provided with the option to either ‘Accept it’ or ‘Decline it’. The users have to click the checkbox irrespective of whether they fully agree to the ‘Terms & Conditions’ or not, to enable themselves to enjoy and avail the benefit of that particular application/ software or website. This leaves the users with no other option but to click the ‘I Agree Button’. A huge chunk of the masses never pay heed to those ‘Terms & Conditions’ and simply click on the ‘I Agree’ button to fasten the process and save their valuable time.
2. Shrink Wrap Contracts
Shrink Wrap in literal sense means ‘Wrapping a product with a plastic wrapper’. A Shrink Wrap Agreement refers to “A legal agreement that sets forth the terms to use software but is contained within the package or product and can only be viewed after purchasing and opening the product”.
In the case of ProCD Inc. v. Zeidenberg, the respondent purchased a telephone directory database, SelectPhone, by ProCD. After he opened the packaging, he installed the software on his PC and uploaded the information on a website at a rate less than what ProCD used to charge for the CD which violated the license agreement. The package had few terms and conditions involved and there was a formation of ‘Shrink-Wrap contract’ via ‘Click-through license’ as Zeidenberg accepted the license terms agreement by clicking to assent which was prohibited in the license agreement. The court, in this case, held that the respondent is bound by the agreement as he has given his consent to it by accepting the ‘Terms & Conditions’ of the agreement.
The court held that Zeidenberg was offered license agreement and he accepted that as there was no other option as the agreement was flashing without taking him to the next window.
3. Browse Wrap Contracts
These types of contracts are somewhat similar to click-wrap contracts. The website browsing link is generated which has terms and conditions in it which are predetermined. The user needs not to give his/her express consent to this whether he/she agrees to the terms and conditions rather, browsing the website itself leads to their acceptance.
Let’s understand this by a short example,
Suppose I went to my browser and clicked on a link of an entertainment website which was rated as 18+. There would be a pop-up window exclaiming about the information that if I am browsing this website, I would be assumed to be above 18 years of age and the related consequences (if any) will be dealt with assuming the same. This what you exactly infer from Browse-Wrap Contracts.
Essentials of an E-Contract
Like a traditional Contract, there are ‘5 Essential Elements’ required for the formation of a valid E-Contract. These provisions have been specified in the Indian Contract Act, 1872 read with the Information Technology Act, 2000.
Following are the essentials to form a valid E-Contract-
1. Offer: As according to the Indian Contract Act, 1872, an offer when it comes to the knowledge of the offeree is said to be a valid offer. For instance, when we shop online, everything offered there is just an invitation to offer. When we click on the ‘Buy Now’ tab, we offer them that we are willing to purchase that particular product. An offer must be made to the offeree and the offeree must know about the offer also it should be accepted by the offeree to result in a valid agreement.
2. Acceptance: By clicking on the ‘I Agree’ button you communicate to the offeror that you’ve accepted to the terms and conditions of that agreement and are willing to face all the circumstances which may arise out of that. Acceptance of the offer is necessarily be communicated to the offeror.
3. Parties competent to Contract: For a contract to be enforceable by law, the parties entering into a contract must be competent to contract. When a minor uses an application or website and then
4. Lawful object and lawful consideration: As per Section 23 of the Indian Contract Act, the object and the consideration of the Contract should be lawful. For instance, when Flipkart tries to sell drugs, here, Flipkart is trying to make a sale where the object is illegal in the eyes of law. A consideration is said to be valid as given under Section 24 if it is not lawful. Consideration is important in a contract, otherwise, the agreement is said to be void.
5. Consent should be freely given: When a party agrees on the same thing in the same sense and there is Consensus ad idem, the party gives its consent to it. It is important that the consent is freely given and not caused by coercion, undue influence, fraud, misrepresentation or mistake as governed under Section 20, 21 and 22.
Benefits of E- Contracts
The Internet has been creating a great impact on business and changing the lifestyle of the people. This change has given the advancement to E-commerce. There is no such difference between a contract made online and an offline contract. All the essentials need to be fulfilled in both the type of contracts. In E-contract, the parties do not surely meet physically. A contact formed through the electronic medium is known as E-contract.
With the advancement of technology, there has been a shift towards e-commerce as it is now a smarter and better alternative to a traditional way of forming a contractual relationship. E-contracts have more benefits than a traditional contract in many ways. There has been the advancement of information and communication technologies (ICT). To save time, people nowadays tend to go for an online method as E-commerce provides multiple benefits to the consumers and helping them in saving their time and reducing efforts. All the agreements that a consumer makes by clicking on the ‘I Agree’ button.
1. Saves Human Efforts
There is no need of contacting the other party personally and this saves efforts. A customer can any time, from anywhere and from any device that is, through their phone, personal computer, laptops, or any other electronic means perform the essentials of an E-contract. This saves a customer’s time of travelling and meeting the party face to face and agree. A customer can just click on the ‘I Agree’ button or through an E-signature agreement. Section 3 A of the Information Technology Act, 2000 deals with Electronic Signature.
2. Easier to track data
This being of the great benefit of E-contract over a traditional contract. When you go for a traditional contract you’ve to go through every page to read all its clauses. When you’ve to look back for any specific term or any other thing you’ve to go through it again and search for the thing you were looking for. In the case of E-contract, you can just do a quick search over the document.
3. Saves money and time
E-contracts are cost-effective. It saves a lot of your money and time in printing, posting, etc. When you want to change or modify or alter any of the clauses or terms and conditions in a traditional contract, you’ve to spend all your money and time on it again. Whereas, in E-contract, you can just alter, change or modify anything and at any time saving your time and money which is precious. E-contract has an edge over the traditional contract.
RISKS INVOLVED IN FORMATION OF E-CONTRACT
1. Minor entering into a contract.
There is always a risk involved in the formation of a Contract through electronic means. When E-Contract is formed, the physical appearance of both parties is not essential. A minor can represent himself/herself as a person of age competent to contract and can enter into a legal agreement.
2. Restriction on a counteroffer
This is one of the major problems faced by consumers while dealing with E-contract. Their freedom to raise any objection with any of the clauses is restricted. A consumer can just click on the ‘I Agree’ button and agree to its terms and conditions without having any option to challenge its conditions. Even if a consumer is satisfied with all the terms and conditions and then later, he faces any problem concerning it can do nothing much as he/she has agreed on its terms and conditions.
3. No provision to bargain
E-contracts differ from a traditional contract and one of the benefits of traditional contract over E-contracts is that of a contract based on bargain method. A person has no option but to agree on the terms and conditions. Remember the times when you liked a product while shopping online but have to let go because you think the price is not worth it. when you are in front of a shopkeeper, you tend to lower down the price of the product as it comforts you. You give a counteroffer to the shopkeeper and willing him to accept that and conclude the purchase. But in case of an E-contract you’ve got no choice to bargain on any product.
Conclusion
After studying the various case laws and minor ridges of the E-Contract laws in India, we came to know about various further detailed aspects that are involved in the Contract Law. Moreover, we feel that there must be a separate statute that shall be governing the E-Contracts law independently. This would ensure that the cases and issues about the deeper aspects will not get a legal cover under the provisions of the Indian Contract Act, 1872. Through this article, we conclude that there are many things further than just the ‘I Agree’ button.
This article is authored by Prakhar Mishra, 2nd Year Law Student at National Law University Odisha.
Also Read – What Are The Legal Rules As To a Valid Contract?
