Chapter 1 : Introduction

During the past two decades, the business world has witnessed a technological revolution
known as electronic commerce or e-commerce. This revolution has allowed businesses all
over the world to carry business in ways that could not be dreamt two decades ago. 1 This
backbone of this revolution is development of Internet. Today goods and services of varied
nature are transacted internationally via internet. With the fast development of internet, the
whole world has become a market where everything is available on a click of a mouse on
your laptop or on your mobile. This online trading is known as e- commerce and to give
validity to e-commerce, a contract is required to enter into which is named as e-contract. In
the year 2015, an initiative known as ‘Digital India’ was launched by Narendra D. Modi, the
present Prime Minister of India. This campaign was launched to ensure that government
services available to the citizens of our country in any electronic way which will lead to the
improvement of online infrastructure and internet connectivity in our country. The initiative
of Digital India aims to connect rural areas with high speed internet networks and consists of
three components such as the creation of digital infrastructure, Delivery of services digitally
and digital literacy. Its main object is to make our country digitally empowered in the field of
technology.

With the wide spread expansion and globalization of technology, existence of online contract
has become regular in our life right from buying daily groceries from the market to
withdrawing money from an ATM. Electronic contracts by use of technology is much cost
effective and delay can be instantly removed in comparison to traditional paper based
contracts. There is less chance of committing errors as it is much automated. It provides an
opportunity to the seller to reach millions of consumers irrespective of distance and most
importantly without the involvement of middlemen or any brokers. 

The Indian Contract Act, 1872 provides a basic contractual rule that a contract is valid if it is
made by competent parties out of their free consent for a lawful object and consideration.
There is no specific way of communicating offer and acceptance; it can be done verbally, in
writing or even by conduct. Thus oral contracts are as valid as written contracts; the only
condition is they should possess all the essentials of a valid contract. It was held in the case
of Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas, “that ordinarily, it is
the acceptance of offer and intimidation of that acceptance which results in a contract. This
1
Mehdi Khosrowpour, IT Solutions Series: E Commerce Security, IGI Global (2015)
intimation must be by some external manifestation which the law regards as sufficient.
Hence, even in the absence of any specific legislation validating e-contracts cannot be
challenged because they are as much valid as a traditional contract is.”

An online contract is simply a communication between two parties in regard to transfer of

goods/services. And as per Indian Evidence Act any e- mail communication and other
communication made electronically is recognized as valid evidence in a Court of law. By
considering the points, it can be concluded that the contract that follows the communication
is valid too and Indian law thus recognizes the validity of online contracts. 

The citizens of India are encouraging the concept of Digital India, but there are no definite
legislations relating to the transactions done over computerized communication networks.
Several laws such as The Indian Contract Act, 1872, Information Technology Act, 2000,
Indian Copyright Act, 1957 and the Consumer Protection Act, 1986 to some extent are
working and acting on resolving issues that arise relating to the formation and validation of
online contracts. The internet, a composition of several thousand networks, has continually
expanded over the past few decades to become an invaluable medium for commerce on a
global level. However the power of internet to reach the world carries with it a variety of
legal issues, such as how to form contracts, validity of e-contract, and authenticity of e-
contract, consumer protection laws and jurisdiction, alternative dispute resolution and so on.
The Information Technology Act, 2000 is the Act that governs the transactions conducted
over internet and explains the considerable mode of acceptance of the offer and provides the
rules for revocation of offer and acceptance in a vague or indefinite manner. Hence, a
separate law for regulating contracts based on electronic devices is highly recommended.
Authorities seeking to apply their laws in traditional ways or to expand legal control over
international links face many challenges due to the global nature of internet. 2This research
provides an overview of some of the legal issues related to e-contract.

On-line commerce is one of the fastest growing components of Western economies. The way
a Government chooses to regulate e-commerce is, therefore, of central importance to that
country’s economic policy. If regulation is too heavy-handed, they risk stifling
entrepreneurial activity, causing a slow-down in the e-commerce sector. If regulation is too

2
M Ali Nasir, Legal issues involved in E-Commerce (2004), https://doi.org/10.1145/985605.985607, last
accessed 11 Oct 2021.
weak, they risk damage to consumer confidence, leading to an equally dangerous downturn 3.
At the heart of the development of the e-commerce lies the ability for consumers to enter into

and perform contracts online. Without legal enforceability, no commercial transaction can
take place by traditional ways or by ways of internet and, if takes place, the commercial
activity doesn’t have legal significance attached with it. Therefore, the need to provide a solid
and balanced legal foundation upon which e-commerce may flourish persuaded the United
Nations to provide a Model Law designed to afford certainty and security for all parties
involved in electronic data transactions which was ultimately finalized in 1996 as the
UNCITRAL Model Law on Electronic Commerce which is used by all the countries as the
basis upon which individual national regulations are being made. Similarly, UN has also
adopted Model Law on Electronic Signature, on arbitration, international conciliation etc. to
provide more certainty in the online world.

3
Radut Carmen and Petria Licuta, Legal aspect of electronic commerce (2010), https://mpra.ub.uni-
muenchen.de/22313/ , last accessed 10 Oct 2021.
 Chapter 1 : E-Contracts

1.1. Meaning of E-contracts

Contracts, in general, provide the basic premise for any commercial or trading activity.
Legally enforceable agreements form the edifice of all commercial activity. Electronic
contracts may be said as legally enforceable promises or set of promises that are concluded
using electronic medium.4 An Electronic or Digital Contract is an agreement “drafted” and
"signed" in an electronic form. An electronic agreement can be drafted in the similar manner
in which a normal hard copy agreement is drafted. According to the United Nations
Commission on International Trade Law (UNCITRAL) Model Law on Electronic Commerce,
electronic contract, merely states that a contract can be made by exchanging data messages
and when a data massage is used in the formation of contract, the validity of such contract
should not be denied.

Computer Information Transaction Act, 1999 states that an electronic contract is a transaction
formed by electronic messages in which the messages of one or both parties will not be
reviewed by an individual as routine step in forming the contract. This explanation replaces
the “writing” requirement with a record to equate electronic record with paper records and
accepted electronically formed contract as valid.

The electronic may take the form of e-mail contracts or web contracts. 5 In the first type of
contract the sender of an offer or acceptance types it including e-mail address and sends it to
the recipient as it is done in an offline environment. The difference in e-mail related contract
is that the e-mail requires the technical assistance of a third party who is called as Internet
Service Provider (ISP). The Internet Service Provider provides e-mail accounts and stores
the message until the message is downloaded. A contract can be concluded exclusively by e-
mail communication only or it can be mixture of web offer and e-mail acceptance.

E-contract is any kind of contract formed in the course of e-commerce by the interaction of
two or more individuals using electronic means, such as e-mail, the interaction of an
individual with an electronic agent, such as a computer program, or the interaction of at least

4
L. Kidd, Donnie, Jr. & H. Daughtery, Jr, 2000, “Adapting Contract Law to Accommodate Electronic Contracts:
Over view and Suggestions” 12 Rutgers Computer and Tech L.J, 225.
5
Werner, J., “E-Commerce Co.UK - Local Rules in Global Net: Online Business Transactions and the
Applicability of Traditional English Contract Law Rules”, International Journal of Communications Law &
Policy, Vol. 6, p. 2 (2000).
two electronic agents that are programmed to recognize the existence of a contract. The
Uniform Computer Information Transactions Act, 1999 provides rules regarding the
formation, governance, and basic terms of an e-contract. Traditional contract principles and
remedies also apply to e-contracts. This is also known as electronic contract6.

A web contract is concluded by mouse click only. In a virtual shop the supplier will place an
e-catalogue, the customer then has to tick a box to select particular item. In order to complete
the order, the purchaser has to provide the credit card number and click “Pay” or “I Accept”
or similar button.

It may be either E-contract or web-contract, but the means by which it operates is different
from traditional commerce and electronic commerce raises some new and interesting
technical and legal challenges. For recognition of E-contracts following issues are needed to
be considered:

 To create a secured atmosphere of transacting online with alternative mode to paper

and writing.

 To create an electronic documentation system which will safeguard the contracting

parties on par with the traditional mode of contracts.

 To create statutory status monitoring/verifying authorities for such electronic

transactions.

 To check frauds, intentional and unintentional transactions to promote and build

confidence in genuine online transactions.

 To create necessary legal structure to oversee such transactions to establish standard

rules and regulations for smooth functioning of online transaction.

 To make Digital signature legally valid and incorporating the same with the existing
legal regime of contracts, sale of goods, evidence and consumer acts.

1.2. Essentials of an E-contract

As in every other contract an electronic contract also requires the following necessary
ingredients. It is generally accepted that both natural persons and legal persons are capable of
entering contracts. Computers are clearly not natural persons and neither American nor
6
www.definition.uslegal.com as accessed on 28.12.2016.
English contract law, at present, deem them to be legal persons. Computers, therefore, are not
capable of being parties to contracts. In our scenario, both the buyer and the seller are natural
persons, and consequently, are capable of being parties to the transaction. The autonomous
computer, however, clearly cannot be a contractual party as the law now stands. An
agreement is a consensus ad idem - a meeting of minds. According to our definition, the
minds in question have to be the minds of the parties to the agreement. In our scenario, can it
be said that there is a meeting of the parties' minds in any meaningful sense? In both
American and English contract law, the normal analytical tool used to test for such a meeting
of minds is that of offer and acceptance. To be precise, the key question that the court must
answer is, "what was the mechanism for offer and acceptance? What, therefore, constitutes an
offer? It is, a communication by an offeror addressed to an offeree where: (1) the words or
conduct used are detailed and certain enough to be capable of forming an agreement by the
mere fact of acceptance; and (2) the words or conduct, when objectively interpreted, evince
an intention to be bound by mere acceptance.

 Offer

Just like paper made or conventional contract, one of the most essential elements of online
contract is the requirement of an offer to be made. There must be a lawful proposal or offer
made by one party known as the proposer and it is the starting point of a contract. By
browsing and choosing the goods and services available on the website of the seller, the
consumer makes an offer to purchase such in relation with the invitation to offer made by the
seller. A proposal must be distinguished from the invitation to offer or treat and must be
made with an intention to create legal relationship. An offer or proposal is revocable and can
be withdrawn at any time before it is accepted because once it is accepted by the other party,
it becomes a promise.

 Acceptance

An acceptance is a final and unqualified expression of assent to the terms of an offer, made in
the manner specified or indicated by the offeror. Generally, the offeree is required to
communicate to the offeror his notice of acceptance. If no notice is given, no contract is
formed.7

7
Entores Ltd. v. Miles Far East Crp [1955] 2 QB 327.
In the online environment, when an online customer makes an offer to purchase a product and
the e-business agrees to sell, when does acceptance occur?

An e-business has four possible ways to convey its acceptance:

i) by sending an e-mail or web-mail message of acceptance to the offeror; or

ii) by delivery online of an electronic or digital product or service; or

iii) by delivery of the physical product; or

iv) by any other act or conduct indicating acceptance of the offer.

 Consideration

Consideration is one of most important element of a contract. The basic rule is that when a
party to a contract promises to perform his promise he must get something in return for the
performance of his promise. Consideration is something of some value in the eyes of law. It
may be of some benefit, right, interest or profit given to the party as inducement of promise.
An act constituting consideration must be moved at the desire of the promisor and must be
legal, real and not imaginary. Promises that are physically impossible to perform cannot have
real consideration. For eg. an online site that offers purchase of house on mars   

 Intention

If there is no intention of creating legal relationship on the part of the parties to contract, there
is no contract between them. It is an essential element of valid contract that parties to the
contract must have intention to create legal relationships. The intention of the parties is to be
considered by the Court in each case and must be ascertained from the terms of the agreement
and surrounding consequences. Agreement of social or domestic nature do not create legal
relationship, hence they are not contracts and are not enforceable by law. In the case of
arrangements regulating social relations, it follows as a matter of course that parties do not
intend legal consequences to follow. For example, an invitation for marriage to a friend or
family through e- mails or fax or through any means of telecommunication is not a contract.

 The parties must be competent to contract

All the parties to the contract must be legally competent to enter into the contract, every
person is competent to contract who is of the age of majority according to law to which he is
subject, and who is of sound mind and is not disqualified from contracting by any law to
which he is

 There must be free and genuine consent

Consent which is defined under Section 13 of the Indian Contract Act, 1872 is an essential
requirement of a contract. It is basically the meeting of minds of the parties. When both agree
upon the same thing in the same manner, they are said to consent. In case consent is caused
by coercion, it is voidable at the option of the party whose consent was so caused. Coercion
includes physical compulsion, threat, and violence. Consent has to be free and genuine and
not induced by misrepresentation, undue influence i.e a case where one person is in a position
to dominate the will of another. But in case of online contract there is a narrow scope of
physical communication between the website and the customer availing their service, they
just give consent by clicking the option that ensures free and genuine consent.  

 The object of the contract must be lawful

A valid contract presupposes a lawful object, the consideration or object of an agreement is

lawful, unless it is forbidden by law or is of such a nature that, if permitted, it would defeat
the provisions of any law, or is fraudulent, or involves or implies injury to the person or
property of another, or the court regards is as immoral, or opposed to public policy.8

In each of these cases, the consideration or object of an agreement is said to be unlawful.

Every agreement of which the object or consideration is unlawful is void. Thus a contract for
selling narcotic drugs or pornography online is void.

 There must be certainty and possibility of performance

the terms and conditions of agreement must be certain and not vague and must also be such
as are capable of performance. An agreement to do an act impossible in itself cannot be
enforced as per section 29 of the Indian Contract Act, 1872. It is the general rule that the
promisors of the contract to perform the promise but there other persons also who may
perform under certain circumstances such as an agent if appointed by the promisor for this
8
Section 23 of Indian Contract Act, 1872.
purpose, legal representative in case of death of a promisor. The time, place and manner of
the performance of contract are fixed generally at the desire and conveniences of the parties.
Various rules regarding the time and place of contract are laid down under section 46 to 50
and section 55. When the time is the essence of contract, a promisor is expected to perform
his promise with the stipulated time period and if he fails to do so, the contract becomes
voidable at the option of the promisee.

1.3. Legal formalities and pertinent aspects of E-contract

Therefore, an e-contract cannot be validly executed unless it satisfies all the essentials of a
valid contract, as prescribed under the Contract Act. In Trimex International FZE Ltd, Dubai
v. Vendata Aluminum Ltd, the Supreme Court (SC) held that a contract entered into between
the parties that was unconditionally accepted through e-mails

Recognition of e-contracts under the IT Act: . To provide security and legal recognition to
the transaction executed electronically, the Indian Parliament enacted the IT Act 2000
modelled on the UNCITRAL Model Law, though it departs in many respects from the spirit
of the Model Law. Immediately after the enactments, it was proved that certain significant
provisions were missing in this enactment, its provisions lacked harmony and above all many
legal issues have not been explained properly, hence, the IT Act 2000 was amended in the
year 2008.

One of the objectives of the original IT Act spelt in the statement of objects and reasons is to
legalize e-commerce. However, there was no express provision in the original IT Act
validating contracts executed electronically. The IT (Amendment) Act 2008 (under section
10-A) now provides that where in a contract formation, the communication of proposals, the
acceptance of the proposals, the revocation of the proposals and acceptances, as the case may
be, are expressed in electronic forms 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.

For any contract to be valid, signatures of parties to contract are required to showcase
acceptance of terms and conditions of contract. In case of an e-contract, an electronic
signature comes to play.
Additionally, Section 4 of IT Act provides legal recognition to electronic records and states
that where any law which requires information or matter to be in a written or printed form,
then such requirement will be deemed to be satisfied if the information or matter is available
and accessible in an electronic form. As per the second schedule of the IT Act, the following
documents cannot be executed in the electronic or digital form and needs to be executed in a
physical form in order to be valid and enforceable before the court of law: 

o Negotiable instruments (other than cheques) as defined under the Negotiable

Instruments Act, 1881
o Power of attorneys as defined under the Powers of Attorney Act, 1882
o Trusts under the Indian Trusts Act, 1882
o Wills/testamentary dispositions as defined under the Indian Succession Act,
1925
o Any contract for sale/conveyance of immovable property or any interest in
such property

Recognition of e-contracts under the Evidence Act: Under the Evidence Act, 1872 (Evidence
Act), an e-contract has the same legal effect as a paper-based agreement. It may be noted that
the term 'evidence' has an inclusive definition in Section 3 of the Evidence Act as including
all documents including electronic records produced for the inspection of the Court being
termed as documentary evidence. Section 67A of Evidence Act is pertinent in respect of the
loan and financing documents wherein, apart from secure electronic signature, proof of the
electronic signature of the subscriber needs to be proved which may be done through
testimony of the subscriber himself. Delhi High Court in case of State of Delhi v. Mohd.
Afzal and Ors held that, 'Electronic records are admissible as evidence. If someone
challenges the accuracy of a computer evidence or electronic record on the grounds of misuse
of system or operating failure or interpolation, then the person challenging it must prove the
same beyond reasonable doubt'. In Harpal singh and Ors. v. State of Punjab9, SC has
reiterated that any electric record in the form of secondary evidence cannot be admitted in
evidence unless the requirements of Section 65B are satisfied.

9
 Chapter 2 : Standing of Online Contracts globally

POSITION IN UNITED STATES

The United States (the federal of 50 States), where evolved the most developed e-commerce
community, has led the way to the enactment of several laws designed to give effect to the
Model Law. The US legislation which gives primary effect to the Model Law is the Uniform
Electronic Transactions Act (UETA). The US regulates through a mixture of Federal and
State Laws. The regulation of commerce is done by the States laws and the Federal
Government has no right to interfere. However, the interstate commerce, require a uniform
response from the state legislatures which is the foundation of the Uniform Commercial Code
(UCC) providing a common code for sales and leases, commercial paper, bank deposits,
letters of credit and more. UETA is neither a Federal nor State Law but is in fact simply
another model law. It achieved authority through further enactment by State legislatures. By
the year 2003, UETA has been enacted by forty-seven States except for Alaska, New York
and Washington, however, these States have statutes pertaining to electronic transactions. In
addition UETA has achieved a degree of Federal recognition in § 102(a) of the Electronic
Signatures in Global and National Commerce Act, 2000 (E-sign) which provides State Law
to modify, limit or supersede the electronic contracting provisions of E- Sign under limited
conditions. Therefore despite its status as a Model law, it is reasonable to refer to UETA to
deal with electronic contracting in the United States. UCITA is also a studied in this research,
however, the relevancy of this Act for the current research is limited as this Act deals only
with contracts or transactions in “computer information”. Contracts dealing with goods and
services which are not related to computer information are not dealt under this Act.

Regarding authentication of e-records, United States has provided equal recognition to all
types of electronic signatures, though the genuineness of the information is left to be decided
by the courts on case by case basis.

United States has a very elaborative system regarding evidentiary value of e-evidence. The
Federal Rules of Evidence deal very elaborately with each finer aspect of evidence.

Regarding jurisdictional issues, United States courts have adopted long arm statute providing
more weightage to minimum contact test, and purposeful availment test to assume
jurisdiction over foreign nationals.

As judicial system is complex and dilatory, US has the Federal Arbitration Act as well as
Uniform Mediation Act to provide speedy and hassle-free remedy to online users.

THE POSITION IN ENGLAND

United Nations Model Law on E-commerce is the first and foremost law to guide nations
regarding enactment of national laws. The European Union has given recognition to the
Model Law by adopting two key Directives. The first of these is the Directive on Electronic
Signatures and the second Directive is the E-Commerce Directive. As European Union is the
union of European countries, these Directives also provide the framework within which
European countries are expected to do enactments at national levels, so is for the England.
Within the guidance of Model Law and European Directives, Electronic Communication Act
2000, Electronic Signature Regulations, 2002 and Electronic Commerce (EC Directive)
Regulations, 2002 were passed in England. In most legal systems, a contract is formed
through the exchange of offer and acceptance. However, the EU Commerce Directive under
whose guidance Electronic Commerce (EC Directive) Regulations, 2002 is enacted
introduces a third step in contract formation - confirmation in the form of acknowledgement.
This third step is not needed as per the US laws. In India, Section 12 of Information
Technology Act, 2000 also deals with the term “acknowledgement”. As e-contract is not
restricted to a particular nation, it has crossed the boundaries decided by the nations, it is also
necessary to come at a consensus with regard to uniformity of laws at international level.
Hence, this study also suggests necessary changes in Indian law to keep pace at the laws
made at international level especially in context of US and England.

Regarding evidentiary aspect of e-records, England has two different approaches as to civil
and criminal matters. Criminal Evidence Act, 2013 deal with Criminal matters and Civil
Evidence Act 1995 deal with civil cases. English courts uses real and “substantial
connection” and “substantial justice” test to assume jurisdiction. Regarding arbitration,
English Arbitration Act 1996 provides the rules to govern how to arrive at the possible and
amicable solution.

THE POSITION IN THE EUROPEAN UNION

In the late 1990s, Many European countries started to autonomously enact digital signature

laws relating to e-commerce. 10

The EU became anxious because of the inconsistencies in
those laws11.On 13 May 1998 the European Commission first circulated its Proposal for a
10
Anthony Burke, “EU and Irish Internet Law: An Overview”, Int‟ll. Practicum, 13, (2000), pp. 107, 113-15.
11
Mariam A. Parmentier, “Electronic Signatures”, colum. J. Eur. L., 6, 2000, pp. 251, 252.
European Parliament and Council Directive on a collective structure for electronic signatures
12
and a Directive was enacted in January 2000 („the Directive‟). It was essential for all
Member States to implement it by July 19, 2001. 13Its main provisions are related to the legal
recognition of electronic signatures, technological neutrality, free circulation of electronic
signatures, liability of certification service providers and international aspects.

The E-Signatures Directive differentiates between basic “electronic signatures” and

“advanced electronic signatures”. Advanced e-signatures are admissible in legal proceedings

and provide a higher level of security than basic e-signatures provide. An e-signature
becomes an “advanced” e-signature if satisfy few requirements such as: a unique link to the
signatory; ability to identify itself to the signatory; creation of document using signature
under the exclusive control of the signatory; and relationship with the detain a way that
makes the recipient able to detect any variations to the original document sent by the
signatory.14

The E-Signature Directive does not unequivocally specify the use of any particular

technology; apparently, it is technologically neutral. However, in the guise of attaining the

security, the Directive supports covertly the use of more sophisticated and security-minded
technologies, such as Public Key Infrastructure. The E-Signature Directive also requires
unequivocally for a system qualifying as a Certification Service Provider (“CSP”) 15

CHAPTER 3 : The Main Issues in Formation of E-contracts

12
http://www.uncitral.org/uncitral/uncitral_texts/electronic_commerce/2001Model_ signatures.html (last
visited on 2nd October, 2021)
13
Council Directive 1999/93/EC, 2000 O.J. (L 13) 12.
14
http://www.uncitral.org/uncitral/uncitral_texts/electronic_commerce/2001Model_ signatures.html (last
visited on 2nd October, 2021)
15
JochenZaremba, “International Electronic Transaction Contracts Between U.S. and EU Companies and
Customers”, Conn. J. Int‟l. l. 18, 2003, pp. 479, 512.
With online electronic communications, the phenomena of the electronic versions of the
elements of offer, acceptance and legal intent coming together are never precisely clear as the
reader will see. Accordingly, the main issues of electronic contracts concerns mainly:

1. The formation of contract;

Basic principles of formation of contract have remained in case of e- contract as well,

however, there are four main issues which needs to seek attention:

 Time of communication of acceptance - in case of e-contract, the situation has

undergone a change and time of communication of acceptance is same for both
offeror as well as offeree. The same is clearly held in the case of Household Insurance
Company v. Grant (1879)16. While receipt rule applies in case of communication
through website which is instantaneous means of communication just like telephone,
telex etc. As the IT Act has not made any clear provision in this regard, rules provided
in Indian Contract Act is still applicable in this regard. Hence, the need is to introduce
a clear provision to apply receipt rule in all type of communications made online.

 Meeting of mind - Meeting of mind is an essential requirement for contract formation

in traditional way. However, with the introduction of electronic agent which is
attributable to its originator, communication is done automatically by the software
even without the knowledge of the originator/addressee.

2. The compliance of legal formalities for specific contracts/ Jurisdiction –

One of the most influential internet related case in the US is the Zippo Manufacturing
Company v Zippo Dot Com, Inc17.Just as the Court in International Shoe Co. v Washington,
once found it necessary to adjust the assessment of jurisdictional claims due to technological
developments, the Court in Zippo came to the same conclusion. United States doesn’t provide
any special treatment to consumers. The Supreme Court of India in the Bhagwandas Kedia
18
case endorsed the ruling in the Entores case, that there will be instantaneous communication
when transactions are conducted over telephone. However, later developments like the
16
Household Insurance Company v. Grant (1879) 4 E and D 216
17

18
introduction of the Information Technology Act, 2000 have seriously impacted the
instantaneous communication rule since the Information Technology Act, 2000 provides that
email communication is deemed to be complete when the email goes out of the computer of
the sender. Therefore, there is a serious need to revise and update the laws regarding
jurisdiction under e-contracts.

3. The use of automation or electronic agents by merchants; and

unattended intelligent artifacts should be subject to liability, independent of human masters,

on consideration of universal concepts of accountability underlying legal systems throughout
history19. But with these kinds of electronic agents, contracts can be formed without the
parties using them having any knowledge of their existence and terms. Autonomous
machines can learn through experience, modify the instructions in their own programs and
even device new instructions. They can make decisions based on these self-modified or self-
created instructions. These processes include making choices, forming intentions, reaching
decisions and giving or with- holding consent.20

4. The use of electronic evidence in civil proceedings to prove the existence of a

contract and/or what were the terms agreed-

The IT Act 2000 has specified for the technology used for the authentication of e-records 21.By
the Amendment Act, 2008, Section 3A is inserted and electronic signatures are also
accommodated in the amended IT Act which is subject to the reliability test and specification
in the second schedule. England has also kept a differentiation between electronic signatures
and advanced electronic signatures22. Advanced electronic signatures are similar to Digital
Signature (as named in India) having a hierarchy of Cryptography Service Providers (CSPs).
As United States is more advanced in the field of internet, it has kept authentication of e-
record technology neutral and issues regarding authentication are decided by courts on case

19
Lawrence B. Solum, Legal Personhoodfor Artificial Intelligences, 70 North Caro- lina Law Review, 1231
(1992).
20
Tom Allen & Robin Widdison, Can Computers Make Contracts? 9 HARv. J. L. & TECH. 25 (1996).
21
Section 3 of the IT Act.
22
Section 2 of Electronic Signature Regulation, 2000.
by case basis. Hence, the need is to study the feasibility of electronic signatures in Indian
context.

Chapter 4 : Conclusion, Suggestions and Way forward

The advent of internet and related technologies has made irreversible changes to the world
today. The manifold increase in E-commerce has demanded the need for vivacious and
effective regulatory mechanisms, which could strengthen the legal infrastructure that is
crucial to the success of Electronic commerce. This rapid development of Information
Technology has heralded ubiquitous challenges to legal systems across the globe.
Transactions accomplished through electronic means — collectively 'electronic commerce' -
have created new legal issues.

The challenge before the law makers is to balance the sometimes conflicting goals of
safeguarding electronic commerce and encouraging technological development.

The Indian Contract Act 1872 is the basic law encompassing all rules dealing with the
formation of contract. This law deals with the issue when contract takes place between two
natural persons. With the advancement of internet, it is felt that the Indian Contract Act lags
behind rapidly developing technology. As the IT Act is also silent about formation of
contract, we have to look towards the Indian Contract Act to decide the legal issues involving
internet. Indian judiciary has also not got much opportunity to determine law on e-contract.
E-contracts are well suited to facilitate the re-engineering of business process occurring at
many firms involving a composite of technology, process and business strategies that aid the
instant exchange of information. The e-contracts have their own merits and demerits. On the
one hand they reduce costs, save time, fasten customer response and improve service quality
by reducing paper work, thus increasing automation. On the other hand, since in electronic
contract, the proposal focuses not on humans who make decisions and specific transaction but
on how risk should be structured in an automated environmental therefore, the object is to
create default rules for attributing a message to a party so as to avoid any fraud and
discrepancy in the formation of contract. Contract law is failing in the area of consumer
contracts, leaving this area ripe for regulatory and legislative action. Consumers are being
held to contracts to which they did not intend to agree. This is especially true with wrap
contracts, which are both ubiquitous and unobtrusive, and therefore, often ignored.
Consumers do not reasonably expect to be bound by contracts they did not actually see much
less read. Not surprisingly, we are already seeing sector specific regulations of consumer
contracts in certain areas, most notably banking but also increasingly, privacy. If courts fail to
adopt a more equitable approach to consumer contracts—one that reflects reality—then other
regulation will certainly follow. The role of the courts and contract law will shrink
accordingly and consumer contracts as a category will grow increasingly more segmented
and subject to different legal rules and regulatory regimes.

Suggestions
Some suggestive policy is being tendered for kind consideration with the existing legal
framework may ensure a unassailable enforcement of e-contracts.

1. There should be specific laws dealing specifically with the enforcement of e-

contracts like In the USA and EU.
2. there is a serious need to revise and update the laws regarding jurisdiction
under e-contracts.
3. the parties to the contract should have freedom of contract, that is, the terms of
the contract should be mutually agreed and acceptable to the parties. Such
acceptance can come only from open bargaining and negotiation
4. there should be a policy to promote e-contracts by pre-emptively resolving the
ambiguous and vague aspects of e-contracts.
5. The government should conduct training classes for judicial officers as well as
other officers of the government to appreciate the forensic aspects of
computers and the internet