Introduction:
The era of information technology and increasing use of internet and E- commerce has witnessed the emergence of new forms of contracts. An attempt is made here to analyze the enforceability of such contracts.
In India the first step to make the electronic contracts enforceable is the Information Technology Act, 2000 basing the UNICITRAL Model Law on Electronic Commerce 1996 with additions made in 1998.
The Government of India has also considered various legislation prevailing in other countries like Utah digital Signature Act, 1995, Malaysia Digital Signature Act, 1997, Malaysia Computer Crimes Act, 1997, Singapore Electronic Transactions Act, 1998, Texas Penal Code Chapter on Computer Crimes in addition to the above the UNICITRAL Model before enacting The Information Technology Act, 2000.
The Act provide legal recognition for transactions carried out by means of electronic data interchange and other means of electronic communication, commonly referred to as “electronic commerce”, which involve the use of alternatives to paper-based methods of communication and storage of information, to facilitate electronic filing of documents with the Government agencies.
Essential Elements of Electronic Contract:
When forming a electronic contract one has to be careful to see the essential pre-requisites of a contract under the Indian Contract Act, 1872, the valid contract must fulfill the following essential pre-requisites:
(i)Consensus ad idem (consensus of minds on the subject matter) by way of offer and acceptance, Section 2(a) and (b)।
(ii)The proposal must be supported by consideration, Section 2(d).
(iii)The parties must be competent to contract, Sec 11,12.
(iv)The agreement must be made by the free consent of the parties, Section 13 to 22.
(v)The object must be lawful, Section 23 to 25.
(vi)The agreement must not be expressly declared to be void, Sections 26 to 30.
(vii)The agreement must comply with the provision of any law requiring it to be in writing attested or registered.
The Digital signatures:
While talking of Electronic Contract the first issue that raises is about the authenticity of the source from which the offer has come. This is solved by the use of digital signatures which affirms the authenticity. The Information Technology Act has defined digital signature in Sec.2(p) as follows:
Digital signature means authentication of any electronic record by a subscriber by means of an electronic method or procedure in accordance with the provisions of Sec.3.
Sec.3 speaks about Authentication of electronic records: (1) Subject to the provisions of this Section any subscriber may authenticate an electronic record by affixing his digital signature.
However most of the electronic contacts are still entered into through without using the Electronic Signatures. The reasons are many, one of the reasons is that, though India’s IT sector is developing the cost of installing a Digital Signature system and registration is high and still continues to be a gray area for most of the importers and exporters.
Fax is also used for entering into contract and the acknowledgment sent from particular number in reply to the offer affixing signatures of the accepting party is considered as acceptance of the offer.
The Shrink wrap agreements and Click wrap agreements:
An area which has to be included in the Information Technology Act 2000 is the enforceability and validity of shrink wrap agreements and Click wrap agreements. These types of agreements. These new forms of agreements have dispelled well-settled notions of contract law.
The “Shrink wrap agreements” are terms and conditions that accompany software that is sold in computer stores. The terms and conditions are often contained in paper form within the sealed package or they appear electronically as part of the installation process of the software on one’s computer.
In either case, the terms and conditions are not known or accessible to the buyer of software until he or she actually buys it by paying for it and either opens the packaging or commences the installation process.
“Click wrap agreements” are electronic variations of the shrink wrap agreement. These usually appear on websites on the Internet, and are terms and conditions through which the user must navigate before conducting a transaction on-line.
These agreements require the user to click the button “I Agree” on the website before proceeding with an on-line transaction, thereby requiring a positive act on the part of the user which constitutes his or her assent to the contract.
The terms are usually heavily sided in favor of the service provider and onerous on the user and there is rarely any clause to protect the interest of the buyer.
In a landmark decision relating to enforceability of "shrink wrap license" the United States Court of Appeals in ProCD Vs Zeidenberg, 86 F.3d 1447 (7th Cir., 1996), held that such a license was valid and enforceable.
E-mail correspondence
Courts in U.S has recently ruled that proposals through e-mail correspondence will be recognized as binding as a written contract. See Shattuck v. Klotzbach, (14 Mass.L.Rptr. 360, 2001 WL 1839720). In Schattuck the Massachusetts Superior Court denying the defendants' motion, held that, “Here, all e-mail correspondence between the parties contained a typewritten signature at the end. Taken as a whole, a reasonable trier of fact could conclude that the e-mails sent by the defendant were "signed" with the intent to authenticate the information contained therein as his act.” New York courts also have expressed similar standards, “the 'signature' on the e-mail is valid under our general statute of frauds...” See, Vista Developers Corp. v. VFP Realty LLC, 2007 NY Slip Op 27418, 5 (N.Y. Misc. 2007).
The bottom line is that, a record or signature may not be denied legal effect or enforceability solely because it is in electronic form.
Recommendation
In spite of innumerable transaction through these types of electronic contracts, there is no step taken to lay down regulation protecting consumers as well as business men who enter into these types of contracts which does not give any right or protection to the consumer or buyer.
The Rules may be laid down in such a way that:
The user of such contract should be given a reasonable opportunity to review the terms and conditions of the contract before it is concluded.
The user should have the opportunity to reject the transaction upon review of the terms and conditions.
The warranties, disclaimers and limitations of damages should be conspicuous and should not be unfair or excessive.
The Language of the terms and conditions should be intelligible to the common person.
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