Issues related to E-contract

The Contract Act requires meeting of minds and the involvement of two parties is an underlying
presumption. But in case of e-contracts, the minds that meet are minds of the programmed
computer systems. The Information Technology Act contains provisions regarding attribution,
acknowledgement, dispatch and receipt of electronic records. The IT Act has tried to sufficiently take
care of the requirements of e-contracts. However, some of the legal challenges are yet to be
resolved and the law is yet to address and plug certain glaring loopholes pertaining to e-contracts.
There is plethora of legal challenges faced by contracting parties when it comes to e-contracts. Some
of the major issues pertaining to e-contracts are:
 choice of law
 jurisdiction
 consent
 time of acceptance
 non-negotiable terms and conditions.

Jurisdiction Issues
Generally, the law governing e-contracts is the law of the place having the most proximate nexus
with the contract. The parties, however, have the freedom of choice of law by which the contract
and the issues arising therefrom are to be governed. But at the same time, the choice of law
available to the parties is subject to the requirement that the parties cannot contract contrary to
what is permissible by the national laws. In this context, morality and public policy considerations
come into play. The question of determining the jurisdiction becomes simpler once the place of
formation of contract is ascertained. The cause of action, in whole or in part, may arise in a particular
place and the contract may also have to be concluded at a particular place. Since internet is not
limited by geography, people may come into contract without seeing each other and from thousands
of miles away.

IT ACT vs Consumer Protection Act

Section 13 of IT act is contrary to Consumer protection act. It provides that where the originator or
the addressee has more than one place of business, then principal place of business shall be deemed
as the place were electronics record was dispatched or received.
The Consumer protection act provides that a consumer can file a complaint against the opposite
party in a District forum within the local limits of whose jurisdiction the opposite party, inter alia has
a branch. The conflict between both the provisions can cause problems to consumers especially
where principal office is situated outside India.

Competent to Contract or not ?

The parties, while agreeing on a certain contract must be competent. Indian Contract Act
incapacitates a minor, a lunatic, a person of unsound mind and a person in a drunken state of mind
from entering into contract. The difficulty in online transactions is that the competence of one party
to contract is unknown to the other party. The complex nature of e-contracts makes it impossible for
one party to figure out whether the other party behind the computer screen is competent to
contract or not. The parties to contract being at distance and the absence of face to face interaction
makes it almost impossible to ascertain the competence of the other. Most common example of
such problem posed by this complexity of communication is minors placing order for goods or
masquerading as adults.
In Shilapa Stock Broker vs V. sharavankumar, the court pointed out that the submission that the
respondent was illiterate and never aware of the email practice and/or procedure and/or never uses
and/or opened the site, as submitted first time in the court are of no assistance.
Flaws in Contract and time of contract?
Flaw in consent can take place in three ways; mistake, misrepresentation and fraud. It is desirable
that there is a presumption in law that the parties to e-contracts have agreed to bind themselves by
the terms and conditions but that would lead to problems as the chances of misrepresentation in
cases of online transactions are high. Internet does not consist of a direct line of communication
between the sender and receiver of e-mail as in ordinary means of communication. The message is
broken into chunks in the process of delivery. This raises issues of the exact time of communication
of acceptance of the contract as such a time is critical for determination of the rights of the parties.
Juno Online Services, L.P. v. Juno Lighting, Inc., 979 F.Supp. 684 (N.D. Ill. 1997)
In this discrepancy regarding the utilization of Internet area names, the court held that the
insignificant enlistment of a space name, without setting up a site or email benefit, does not
constitute "exchange or trade" or sum to "trickiness" as required by the Illinois customer distortion
and misleading business repetition proclamation.

Click-Wrap Contract – Read or not read ?

Furthermore, several issues arise whether a person is bound by the terms of contract without
reading it or without being able to negotiate the terms, as is the case with standard form contracts
where the
customers are required to just sign on the dotted lines. These contracts are termed as click-wrap
contracts which are legally enforceable, but then, issue that needs to be addressed is that what
would be the terms of the contract and whether the acceptance of the contract would, without even
reading it be classified as deemed acceptance?
These basic requirements would be applicable to e- contracts just like contracts on paper or oral
contracts. However, a question often arises- How do we know whether the offeree has accepted the
offer?
ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, a United States contract case involving a "shrink
wrap license". One issue presented to the court was whether a shrink wrap license was valid and
enforceable. Judge Easterbrook wrote the opinion for the court and found such a license was
valid and enforceable. The court held that Zeidenberg did accept the offer by clicking through.
The court noted that he "had no choice, because the software splashed the license on the screen
and would not let him proceed without indicating acceptance". The court stated that Zeidenberg
could have rejected the terms of the contract and returned the software.
Arizona Retail Systems, Inc. v. Software Link, Inc., 831 F.Supp. 759 (D. Ariz. 1993)
In this case, the Step-Saver, the court held that shrink-wrap terms that were on the bundling and
were conflicting with particular portrayals made by the dealer were unenforceable (Kłos and
Trebiina, 2014). The court inferred that extra "terms and conditions" unveiled after the shipment of
the products were invalid without the purchaser's communicated particular consent.

Transactions on the Internet, particularly consumer-related transactions, often occur between

parties who have no pre-existing relationship, which may raise concerns of the person’s identity with
respect to issues of the person’s capacity, authority and legitimacy to enter the contract. Digital
signature is one of the methods used to determine the identity of the person. Though, the
regulatory frameworks with respect to digital signatures are governed by the provisions of the IT Act,
better clarity is required.
So, it is very much evident that e-contract has its own complexities and challenges which needs to be
addressed systematically.