E-CONTRACTS – LATEST TRENDS AND CHALLENGES

E-CONTRACTS : LATEST TRENDS AND

CHALLENGES
E-CONTRACTS : LATEST TRENDS AND CHALLENGES 2

E-Contracts: Latest Trends And Challenges

INTRODUCTION
Modern world is known as a digital and a computerized era. With the fast growing
technological advancements industries are also growing along with it. All business want to
develop a consumer-friendly relationship with their consumers to gain maximum profits. The
relationship between the customer and the company are mostly tied up with legal obligations
and rights. These Rights and obligations depend upon some kind of legal contract between
the parties.

All that we do in our everyday needs like be it an item buying from the market or hiring a
taxi, we are represented by contracts in which some we know and some we unknowingly
became a part of. Now with the growth of technology everything we do from shopping
product online to the signing.an international treaty over the internet is under a contract.
These types off contract which are done through internet are known as an E-contract. In an e-
contract the offer, invitation to offer, counter offer or acceptance etc. are all by electronic
means and such a communication leads to an agreement. So let’s first see the basics of a
contract and its essentials.

Contracts

Agreements which are enforceable by law are known as Contracts. To make an enforceable
understanding which falls under the ambit of Contract Act following conditions referenced
under Section 10 of the Indian Contract Act, 1872 must be fulfilled:-
1. Offer and acknowledgment: To make an enforceable understanding it is fundamental
conditions that a proposal/offer must be made by one gathering and a similar proposition
must be acknowledged by the other party to an agreement.
2. Competency: Competency is implied by the capacity to frame an agreement and the basic
component of competency under the Indian Contract Act, 1872 are as per the following;
a. The individual framing an agreement more likely than not achieved the age of the
dominant part that implies the individual probably finished the age of 18 years.
b. The individual framing an agreement must be rationally fit at the season of marking the
agreement.
c. The individual must not be barred by law to frame an agreement.
E-CONTRACTS : LATEST TRENDS AND CHALLENGES 3

3. There must be a legitimate thought, and thought is met by "something consequently" and
the thought must not be illicit in nature.
4. The object of the understanding should be legal.
5. There must be free consent of the parties, in other words the consent of the parties ought
not to be gotten by power, influence, or force.
6. The agreements which are caused must to not explicitly be banned by law.

REVIEW OF LITERATURE
E-contract is a virtual agreement between two parties for exchange of goods and
services through Electronic means. The legal framework surrounding the E-contract is laid by
The Indian Contract Act 1872, which ensures the smooth flow of transaction with legal
enforceability. There are lots of differences between an ordinary contract and an E-contract
but E-contracts have major advantages over an ordinary contract. But regarding the legal
obligations and rights are considered there are still lots of doubts about the validity of an E-
Contract. How an E-Contract is formed and what consists of an E-Contract is also something
that is confusing. I have discussed a case study of Trimex International FZE vs Vedanta
Aluminum Limited in this to give a brief idea about the complexities happening in an E-
contract.

CONCEPTUAL FRAMEWORK
E-Contracts or Electronic Contracts can be defined as contracts formed by interaction of
two or more individual through the use of electronic means such as Electronic-mail, the
interaction of an individual with an electronic agent, computer program, or the interaction of
at least two electronic agents that are programmed to verify the existence of a contract. These
E-contracts takes place through a digital mode of communication like Internet.

Types of E-Contracts
1. Shrink wrap agreement –These are licensed agreements or other terms and conditions
which can only be read and accepted by consumer after opening or using the product.
They are usually for software purchases. The moment you use the product it means
you agree to the conditions. The term shrink wrap is used to describe the plastic
covering which protects a particular product.
2. Click or web wrap agreements- They are web based agreements in which the user has
to click the ‘I agree’ button. If you disagree then you won’t be able to use the
E-CONTRACTS : LATEST TRENDS AND CHALLENGES 4

product. The terms of the agreement are shown before the agreement of the users.
There are two types of click wrap agreement :-
a. Type and click – In this case the user must type and accept or other specified
words and then click submit.
b. Icon clicking – In this case the user must click on an ok or I agree or similar
icon for acceptance of the contract.

3. Browse-wrap agreements These agreements are similar to click and wrap agreement
the only difference is that the page on which terms and conditions has to be accepted
comes on different page or separate page.

4. Other types of E contracts

a. Electronic Data Interchange (EDI) – EDI is the computer exchange of
business documents in a standard electronic format between business
partners.
b. E-mail Contracts- A contract can be entered through email when there is offer
by one person and acceptance by another person with the help of E-mail.

Legal Framework of E-Contract

An E-Contract is enforceable under the Information Technology Act (2000). Section 10-A of
the IT Act states:
"Section 10-A: Validity of contracts formed through electronic means. –
Where in a contract formation, the communication of proposals, the acceptance of proposals,
the revocation of proposals and acceptances, as the case may be, are expressed in electronic
form or by means of an electronic record, such contract shall not be deemed to be
unenforceable solely on the ground that such electronic form or means was used for that
purpose."

The only requirements that an E-Contract needs to validate itself is the pre requisites coming
in the Indian Contract Act. The courts also take E-Contracts as evidences under the Indian
Evidence Act (1872), Indian Copyright Act (1957) & Consumer Protection Act (1986).
E-CONTRACTS : LATEST TRENDS AND CHALLENGES 5

CASE STUDY

A. SELECTION OF SECTOR.
The case which I have chosen is Trimex International Fze Limited v. Vedanta Aluminium
Limited. The sector selected is Construction and related engineering where the Trimex
International FZE Limited,the petitioner, applied to the Supreme Court of India of the Indian
Arbitration and Conciliation Act, 1996 for the constitution of an arbitral tribunal.

B. CRITICAL ANALYSIS
Trimex offered, via an email, the supply of bauxite to Vedanta Aluminum Ltd (VAL) which,
after several exchanges of e-mails, was subsequently accepted by latter, confirming the
supply of 5 shipments of bauxite from Australia to India. Though a draft contract had also
been prepared but it yet needed to be formalised. After VAL received first consignments of
goods, it requested Trimex to hold back next consignment of goods so as to enable them to
check bauxite’s utility value. However, on same day, ship owners nominated the ship for
loading the cargo. Trimex terminated the contract reserving the right to claim for damages,
the ship-owners made a claim of US $ 1 Million towards commercial settlement. Trimex
informed VAL to pay a sum of US $1million towards compensation for the loss on account of
the estimated loss for five shipments. VAL rejected the claim of the petitioner on damages
stating that no official contract had come in agreement between them. After negotiations,
Trimex paid US$ 600,000 to the ship-owners in instalments. Later Trimex served a notice of
claim-cum-arbitration on VAL to make the payment immediately otherwise treat the notice
for referring the dispute to arbitration as per Clause 29 of the purchase order. VAL rejected
the claims, Trimex further filed the petition for appointment of an arbitrator.

C. DISCUSSION
There are two aspects to this case:
 Whether there was a concluded contract between Trimex and Vedanta;
 Whether there was an arbitration agreement between the parties.
According to VAL, as seen from the counter-affidavit, there was no concluded contract
between the parties and the draft contract received from the petitioner was yet to be
accepted/confirmed by VAL. The commercial offer provided two options of shipment lot
namely, two shipments and five shipments. The only understanding that had been arrived
E-CONTRACTS : LATEST TRENDS AND CHALLENGES 6

between the parties as a result of the correspondence subsequent to the receipt of the
commercial offer from the petitioner was that the transactions would be in respect of five
shipments. All other terms and conditions and essentials to the transaction were under
negotiations as is evident from correspondence between the parties. Also while negotiations
were going on during this time VAL received the first shipment under the previous
commercial offer, since VAL had to analyse the product they have given notice to Trimex for
deferment of shipment. VAL claimed in spite of notice Trimex permitted the nomination of
the vessel to take place. So thereby VAL proposed that it was not responsible for the liability
of Trimex as mentioned in the petition.
After reviewing the petitioner and respondent the following decision was made-

D. DECISION
The Contract was finished up at first when, the acknowledgment was imparted to Trimex. As
per Section 4 of the Indian Contract Act, 1872 states:-
"Correspondence when complete.- The, correspondence of a proposition is finished with
regards to the learning of the individual to whom it is made.
The correspondence of an acknowledgment is finished,- as against the proposer, when it is
placed in a course of transmission to him, in order to be out of the intensity of the acceptor;
as against the acceptor, with regards to the, learning, of the proposer."
Against dispute of ambiguity, the court held that there was a concurrence on basic terms. The
court held that business parties frequently go into a concurrence on material terms and go into
a formal understanding later. Basically in light of the fact that gatherings planned to go into a
formal understanding does not forestall the agreement came to from being implemented.

E. IMPACT OF CASE
The decision of the Court affects contract arrangement and furthermore on arbitration
understandings. Through this choice, versus commencement of intervention, the Court has
eliminated the requirement of a formally executed document. This, however shows a positive
advance, has brought incidental perils into contract formation. Normally when a party wishes
to enter into a business contract, dealings happen, as per which a formal understanding is
executed containing the last terms and conditions commonly agreed upon. The decision of the
Court, be that as it may, gives adequate chance to either gathering to raise a debate and
submit to discretion where an agreement has not been officially executed, yet where the
gatherings have finished up dealings on the material terms and conditions.
E-CONTRACTS : LATEST TRENDS AND CHALLENGES 7

The decision focuses upon the throws light onto both the parties to arbitrate and for formation
of a concluded contract, by virtue of electronic mail and the action of petitioner pursuant to
the correspondence. In light of this choice, parties going into exchanges must be cautious in
wording their correspondence and unmistakably and completely show that a basic "yes" or
"no" does not suggest acknowledgment of the total proposition, in case the agreement be
viewed as concluded.

CONCLUSION
E-Contracts are one of the latest by products of technological advancements. They are also
taken as legal evidences just like regular contracts. Even though E-Contracts are protected
legally they do not have any laws specifically just for them. They are protected by bringing
them below already existing laws. Since no separate laws are there some aspects of E-
contracts are a bit vague to the common public. Since the people entering into E-Contracts
can be far away, lack of clarity of Jurisdiction is a major concern. The kind of people with
whom we enter into contract is also a problem. Since there may not be any physical meetings
it is difficult to know if the other person is a person who is legally able to enter into a
contract. Even with all these defects E-Contracts are something that more and more industries
are moving forward to as they have lots of advantages too. The main advantage of an E-
contract is convenience. People who are miles apart can get into a contract easily. The speed
with which we are entering a contract is faster compared to a traditional contract. The cost is
also much cheaper compared to physical contracts. So due to these advantages E-Contracts
are something that is gaining more traction day by day. Given enough time more laws will be
introduced solely for E-Contracts and that will help reduce whatever little ambiguity
surrounding it and one day it will be used in all sectors replacing physical contracts.

REFERENCE

BOOKS:-
 Kumar, K. (2019). All that you must know about E-Contracts.

 Mulla, M. (2018). India: Validity of Electronic Contracts in India.

 Ranka, S. (2015). All about E-contracts-Meaning, Types and law.

E-CONTRACTS : LATEST TRENDS AND CHALLENGES 8

RESEARCH PAPERS:-
 Case - Trimex International FZE vs Vedanta Aluminum Limited, India, 2010
http://psalegal.com/wp-content/uploads/2017/01/Dispute-Resolution-Bulletin-Issue-
VI06072010011120PM.pdf

WEBPAGES:-
 Case - Trimex International FZE vs Vedanta Aluminum Limited, India, 2010
https://indiankanoon.org/doc/658803/

 E-Contract Law and Legal Definition

https://definitions.uslegal.com/e/e-contract/

 E- Contracts - Indian National Bar Association

https://www.indianbarassociation.org/e-contracts/

 E-contracts and its Validity in India

http://www.indialawoffices.com/legal-articles/e-contracts-and-validity-india