CONTRACT ACT COUPLED WITH IT ACT

This modern world has communication as one of its most vital elements and with the
advancement of technology, there have been much improved communication through different
mediums and gadgets. The telephone, mobile phones and television has surpassed the traditional
newspaper. News are instantly shared on social media platforms. The cyberspace has left a
significant mark in the world and an enormous revolution has been made in the field of
Information Technology (IT). The appearance of technology has ensured robust e-commerce in
the country. Without a legal framework and policy for the usage of technology, will create a
chaos in the society and will also prove counter productive for business. The Indian Contract
Act, 1872, the Technology Act, 2000 and the Evidence Act, 1872 are the three crucial
legislations which regulates the validity of E-contract. The computer, the digital devices, the
cyberspace all have brought a drastic change in the field information technology. Cyber space is
the sum total of all computer-based communications and data storage that is accessible through
computer network. The Information technology is generally concerned with all aspects of
managing and processing the data, in order to produce information. It also includes the
networking of databases and the computers and feeding information to one another. The lifestyle
of people has hanged by the arrival of technology. There has been introduction of E-Contracts,
which are formed by way of exchange of Emails and through online agreements. There are
browse wrap, shrink wrap and click wrap agreements, which are all valid under the Indian law,
to comply with the prerequisites of a valid contract. The Indian Contract Act, 1872 prescribes the
law relating to contracts in India and is one of the major acts regulating Indian law. The Act is
precisely based on the principles of English Common Law. It is applicable to all states of India.
It determines all kinds of circumstances in which promises made by the parties to a contract shall
be legally binding. Under Section 2(h), the Indian Contract Act defines a contract as an
agreement which is enforceable by law. The major issues which arise pertain to capacity to
contract, free consent, decision on the applicable law and decision on the court jurisdiction.
Though, the Indian legal system adequately addresses the e-contracts, the challenge before the
law makers will be to keep abreast of the issues which will arise with evolving technologies and
to adequately address them. Section 232 of the Indian Contract Act, 1872 ("Act"), enumerates
three issues, i.e. consideration for the agreement, the object the agreement and the agreement per
se. Section 23 creates a limitation on the freedom of a person in relation to entering into contracts
and subjects the rights of such person to the overriding considerations of public policy and the
others enunciated under it.3 Section 23 also finds its bearing in the other sections of the Act,
namely section 264, 275, 286 and 307.
Every time you click a button that says you agree to the terms and conditions of using a website,
you have used cyber law. There are terms and conditions for every website that are somehow
related to privacy concerns. The word "law" in section 23(1) talks about judicial law, that is, the
law enacted by government and it is not permissible to a party to a contract to claim on the basis
of a contract which is prohibited by a law. The question, whether a particular transaction is
forbidden by an Act or tends to defeat its provisions is always one of construction of the Act, the
rule for which is that it should be construed according to the intention of the persons passing it
and such intention should be gathered from what they have said in the Act. Section 10A of
Information Technology Act, 2000 provides the legal validity to electronic contracts in India.
While the Indian Contract Act 1872 does not exclude electronic contracts, ITA 2000 specifically
provides for them. According to Section 2(d), Consideration is defined as: "When at the desire of
the promisor, the promise or any other person has done or abstained from doing, or does or
abstains from doing, or promises to do or abstain from doing something, such act or abstinence
or promise is called consideration for the promise". Consideration means 'something in return'. It
must move at the desire of the promisor. An act constituting consideration must have been done
at the desire or request of the promiser. If it is done at the instance of a third party or without the
desire of the promiser, it will not be good consideration. The Information Technology Act, 2000
provides the legalization around e-commerce, electronic contracts and e-signatures for India. It
also defines certain acts of cybercrime and outlines penalties. It was notified on October 17,
2000 by the Indian parliament. It contains 94 sections, divided into 19 chapters, and also contains
4 schedules. The aim of the project is to trace the history of the Indian Contract Act, 1872 and
analyze the developments that led to its enactment in 1872. The project also ventures to seek the
history of ‘Law of Contracts’ in general and present a brief view on the changing notions about
the contract law. The project covers the development of the ‘Law of Contracts’ right from the
early stages of human civilization, making its way through Roman and English notions that
eventually led to the formation of the Indian Contract Act. The project also shows the relevance
of such legislation, codifying the principles of contract making.
Under the provisions of the Information Technology Act, 2000 particularly Section 10-A, an
electronic contract is valid and enforceable. The only essential requirement to validate an
electronic contract is compliance with the necessary pre-requisites provided under the Indian
Contract Act, 1872. Also, the courts in India give due regard to electronic contracts under the
provisions of the Indian Evidence Act, 1872.
The provisions of the Information Technology Act, 2000 (IT Act) give legal recognition to an
electronic (E -Contract) particularly section 10-A of the IT Act which states 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 above provision was
introduced by the Information Technology (Amendment Act), 2008 after recognizing the
growing dependence on electronic means to reach commercial agreements. This applies where
contract formation, communication of the proposal and acceptance is carried out electronically.
E-Contracts can be entered into through modes of communication such as e-mail, internet and
fax. The only essential requirement to validate an E-Contract is compliance with the necessary
pre- requisites provided under the Indian Contract Act, 1872. Which are:
Offer and Unconditional Acceptance - Which may be made online or by e-mail communication.
Lawful Purpose and Consideration - A contract is enforceable by law only when it is made for a
lawful purpose and for some consideration. It must not defeat any provision of law and must not
be fraudulent in nature.
Capacity of Parties and Free Consent - Parties to a contract are capable of entering into a
contract, if they satisfy the requirements of Section 11 and 12 of the Indian Contract Act, 1872
(capacity to contract), and consent of the parties must be free as per Section 13 of the Indian
Contract Act, 1872.
The lucidity of the execution of an E-Contract being confounding, many sometimes wonder
about its validity, especially when compared to a traditional written contract. The simple truth
lies in the fact that the Indian Contract Act, 1872 has not specifically laid out any specific way of
communicating an offer and what constitute its acceptance. This can be achieved verbally, in
writing or even through conduct. This shows that even in its simplicity, an E-Contract is as valid
as a traditional written contract; the only condition/ requirement being that an E-Contract should
possess all the essentials of a valid contract as mentioned above.
An inference can be drawn from the facts, that the parties that intend to be bound only when a
formal agreement has been executed, the validity of an agreement would not be affected by its
lack of formality. Hence, once the parties are at consensus-ad-idem, then the formal execution of
the contract is secondary. Therefore, once an offer is accepted through modes of communication
such as e-mail, internet and fax then a valid contract is formed unless otherwise specifically
provided by law in force in India; such as the Registration Act, 1908, the various Stamp Acts etc.
Also, Section 1(4) of the IT Act lists out the instruments to which the IT Act, does not apply,
which are as follows:

 Negotiable Instruments;
 Powers of Attorney;
 Trust deeds;
 Wills;
 Contracts for Sale or Transfer of Immovable Property
It may be concluded that where various steps of a contract have been affected through electronic
means, the parties are at consensus-id-idem and such an agreement fulfills all the essentials of a
valid contract under the Indian Contract Act, 1872, such contract is valid and legally enforceable.