Contracts play an essential part in our lives. Whether we buy groceries or clothes there is a contract between the seller and buyer. Contracts are a basic part of everyone’s life. Be it a businessman or a street vendor contracts are done by everybody. With the development in technology and communication now remote contracts between two people who are at different places are made possible. This process of agreement between two or more individuals or organisations through online mode can be considered as an E contract.
Generally, E-contracts happens in the course of e-commerce by the interaction of two or more individuals using electronic means, such as e-mail, agreement with the help of an electronic agent, such as a computer, laptop, I-pad or the interaction of at least two electronic agents that are programmed to recognize the existence of a contract. E- contracts are essential in today’s age. Let’s take an example of an Indian Exporter and an American importer. If it is not for an E-contract the Indian exporter has to write an agreement letter sign it, couriers it to America where it has to be signed and sent back. Only then a Valid contract comes into existence. This is not feasible in today’s world and it is also time-consuming. Therefore E-contracts is the easiest way through which an agreement can be confirmed. This mode of the contract helps businessmen to save time designs of the product and can create products in accordance with the particular need of the consumer.
Essentials for the fulfillment of an E-contract
There are certain essential elements like any other contract that has to be fulfilled to have a valid e-contract. They are-
1. Valid Offer
It is essential to have a valid offer for a contract to come into existence. It is important to note that the items displayed in any e-shopping app are only an invitation to offer and not an offer in itself. There is an offer when the person selects a particular item into the cart or gives an order.
2. An offer needs to be acknowledged with legal consideration
It is important that the offer has to be accepted. Acceptance should reach the offeror by any method. (Mail, message etc). The offer is revocable until the acceptance is made. consideration given from the party should be legal to have a valid e-contract. For example, selling narcotic drugs or pornography is strictly prohibited and cannot be considered as valid consideration.
3. Parties must be able to contract with each other
In online contracts as there is no real-time connection, it is important to note that there should be a confirmation that both the parties are humans as computers are not able to enter into a contract. This is a very important part of an e-contract and one should be careful as cases of cyberbullying and online fraud are increasing.
4. Free consent
Consent should always be free. Consent is said to be free when it is not caused by coercion, misrepresentation, undue influence, or fraud.
When it is certain that these above-mentioned elements are present, only then an e-contract is confirmed. Along with these elements, a contract is only possible when there are a lawful object and possibility of performance’.
The territorial jurisdiction of an E-Contract
It might wonder everyone how can the territorial jurisdiction of an E contract be determined? But there are legal provisions which ascertain the jurisdiction.
Section 9 determines the jurisdiction of courts in India. It is basically dealt by two things-
- The place of residence of the defendant and
- The place where the cause of action arises.
Since E contracts are not physically taken place, normal rules will not hold good for the purpose. Because of this, a special provision has been there under the Information Technology Act 2000. Section 13 of the IT Act explains the jurisdiction of E-contracts in India. Section 13 talks about the time and dispatch of E-Contract.
Section 13(1) – if not agreed otherwise the offer is said to made as soon as the electronic dispatch occurs outside the resource of the originator.
Example – When one person clicks on the buy button in an e-shopping app the offer is said to be made.
Section 13(2) – If not agreed otherwise the time of the receipt of an electronic record shall be as follows-
- If the addressee has entered a computer resource for receiving electronic resources then it is considered that the receipt occurs at the time when record enters the designated computer resource.
- If the record is sent to a computer that is not designated by the addressee then receipt happens when the addressee retrieves them.
Section 13(3) – If not agreed between the parties then the electronic recorded is considered to be dispatched where the originator runs his business and considered to be received at the place where the addressee runs his business.
Section 13(4) – Sub-section 2 will not apply to withstand the place if the computer resource at a different place than the place where the electronic record is considered to be received under sub-section 3.
Section 13(5) – Subsection 5 talks about exceptions and special circumstances.
- If any party has more than one business then the primary place of business will be considered
- If any party does not have a place of business then his place of residence will be considered.
- Here usual place of residence means the place where the body corporate is registered.
Section 13 thoroughly deals with the territorial jurisdiction of an E contract. The high court of Andhra Pradesh gave these references in the case in PR Transportation agency v Union of India and ors. Our common legislatures implement that a contract be it electronically or physically is valid until it satisfies all the required legal conditions. India is revamping its IT structure and with the development of artificial intelligence and other online modes of communication, a better legal provision is required. Sooner or later the provisions will be outdated as they are supposed to be, The only way of having a better IT law is timely restructuring and moulding of laws as required.
It is quintessential that the administration keeps an eye on these as development and technological advancement never stops. There are problems of continuous monitoring and authentication when it comes to E contracts. Along with these the problem of solving disputes arises as a non-complimenting party should perform corrective action. There are many other problems like this and government has to be vigilant and responsive as the application of e-contract will only increase in the future.
This article has been written by Nilesh Beliraya K, 1st year BBA LLB student at Chanakya National Law University.
Also Read – The Legal Challenges To Internet Banking