Unit 1 CL Material 2022

III B.
COM PA CYBER LAW
DEPARTMENT OF B.COM PA
CYBER LAW
COURSE MATERIAL
Prepared by: Ms. R. Akshaya Sudarshana
UNIT – 1
CYBER LAW: INTRODUCTION
SYLLABUS
Cyber Law: Introduction - Concept of Cyberspace – E - Commerce in

India - Privacy factors in E – Commerce - Cyber law in E - Commerce -
Contract Aspects.
1.1 CYBER LAW - INTRODUCTION
"Cyber" is a prefix used to describe a person, thing, or idea as part of the computer and
information age. Taken from kybernetes, Greek word for "steersman" or "governor," it was
first used in cybernetics, a word coined by Norbert Wiener and his colleagues. The virtual
world of internet is known as cyberspace and the laws governing this area are known as
Cyber laws and all the netizens of this space come under the ambit of these laws as it
carries a kind of universal jurisdiction. Cyber law can also be described as that branch of
law that deals with legal issues related to use of inter-networked information technology. In
short, cyber law is the law governing computers and the internet.
UNIT 1 – CYBER LAW SRI KRSHNA ADITHYA COLLEGE OF ARTS AND SCIENCE 1
III B.COM PA CYBER LAW
The growth of Electronic Commerce has propelled the need for vibrant and effective
regulatory mechanisms which would further strengthen the legal infrastructure, so crucial to
the success of Electronic Commerce. All these regulatory mechanisms and legal
infrastructures come within the domain of Cyber law.
Cyber law is important because it touches almost all aspects of transactions and
activities on and involving the internet, World Wide Web and cyberspace. Every action and
reaction in cyberspace has some legal and cyber legal perspectives.
Cyber law encompasses laws relating to –
• Cyber crimes
• Electronic and digital signatures
• Intellectual property
• Data protection and privacy
HISTORY OF CYBER LAW IN INDIA
The information Technology Act is an outcome of the resolution dated 30th January
1997 of the General Assembly of the United Nations, which adopted the Model Law on
Electronic Commerce on International Trade Law. This resolution recommended by all the
states.
The Department of Electronics (DoE) in July 1998 drafted the bill. However, it could
only be introduced in the House on December 16, 1999 (after a gap of almost one and a
half years) when the new IT Ministry was formed. It underwent substantial alteration, with
the Commerce Ministry making suggestions related to e-commerce and matters pertaining
to World Trade Organization (WTO) obligations. The Ministry of Law and Company Affairs
then vetted this joint draft.
After its introduction in the House, the bill was referred to the 42-member Parliamentary
Standing Committee following demands from the Members. The Standing Committee
made several suggestions to be incorporated into the bill. However, only those suggestions
that were approved by the Ministry of Information Technology were incorporated. One of
the suggestions that was highly debated upon was that a cyber café owner must maintain a
register to record the names and addresses of all people visiting his café and also a list of
the websites that they surfed. This suggestion was made as an attempt to curb cybercrime
and to facilitate speedy locating of a cyber criminal. However, at the same time it was
ridiculed, as it would invade upon a net surfer’s privacy and would not be economically
viable. Finally, this suggestion was dropped by the IT Ministry in its final draft.
The Union Cabinet approved the bill on May 13, 2000 and on May 17, 2000, both the
houses of the Indian Parliament passed the Information Technology Bill. The Bill received
the assent of the President on 9th June 2000 and came to be known as the Information
Technology Act, 2000. The Act came into force on 17th October 2000.
With the passage of time, as technology developed further and new methods of
committing crime using Internet & computers surfaced, the need was felt to amend the IT
Act, 2000 to insert new kinds of cyber offences and plug in other loopholes that posed
hurdles in the effective enforcement of the IT Act, 2000.
This led to the passage of the Information Technology (Amendment) Act, 2008 which
was made effective from 27 October 2009. The IT (Amendment) Act, 2008 has brought
marked changes in the IT Act, 2000 on several counts.
CYBER LAW IN INDIA
In India, cyber laws are contained in the Information Technology Act, 2000 ("IT Act")
which came into force on October 17, 2000. The main purpose of the Act is to provide legal
recognition to electronic commerce and to facilitate filing of electronic records with the
Government.
The following Act, Rules and Regulations are covered under cyber laws:
1. Information Technology Act, 2000
2. Information Technology (Certifying Authorities) Rules, 2000
3. Information Technology (Security Procedure) Rules, 2004

4. Information Technology (Certifying Authority) Regulations, 2001
NEED FOR CYBER LAW
In today’s techno-savvy environment, the world is becoming more and more digitally
sophisticated and so are the crimes. Internet was initially developed as a research and
information sharing tool and was in an unregulated manner. As the time passed by it
became more transactional with e-business, e-commerce, e-governanceand e-procurement
etc. All legal issues related to internet crime are dealt with through cyber laws. As the
number of internet users is on the rise, the need for cyber laws andtheir application has also
gathered great momentum.
In today's highly digitalized world, almost everyone is affected by cyber law.
For example:
▪ Almost all transactions in shares are in demat form.

▪ Almost all companies extensively depend upon their computer networks and keep
their valuable data in electronic form.
▪ Government forms including income tax returns, company law forms etc. are now
filled in electronic form.
▪ Consumers are increasingly using credit cards for shopping.
▪ Most people are using email, cell phones and SMS messages forcommunication.
▪ Even in "non-cyber crime" cases, important evidence is found in computers / cell
phones e.g. in cases of divorce, murder, kidnapping, tax evasion, organized crime,
terrorist operations, counterfeit currency etc.
▪ Cyber crime cases such as online banking frauds, online share trading fraud, source
code theft, credit card fraud, tax evasion, virus attacks, cyber sabotage, phishing
attacks, email hijacking, denial of service, hacking, pornography etc are becoming
common.
▪ Digital signatures and e-contracts are fast replacing conventional methods of
transacting business.
Technology is never a disputed issue but for whom and at what cost has been the issue in
the ambit of governance. The cyber revolution holds the promise of quickly reaching the
masses as opposed to the earlier technologies, which had a trickledown effect. Such a
promise and potential can only be realized with an appropriate legal regime based on a
given socio-economic matrix.
NEED FOR CYBER LAW IN INDIA

✓ India has an extremely detailed and well-defined legal system in place. Numerous
laws have been enacted and implemented and the foremost amongst them is The
Constitution of India. We have inter alia, amongst others, the Indian Penal Code, the
Indian Evidence Act 1872, the Banker's Book Evidence Act, 1891 and the Reserve
Bank of India Act, 1934, the Companies Act, and so on. However the arrival of
Internet signaled the beginning of the rise of new and complex legal issues. It may be
pertinent to mention that all the existing laws in place in India were enacted way
back keeping in mind the relevant political, social, economic, and cultural scenario
of that relevant time. Nobody then could really visualize about the Internet. Despite
the brilliant acumen of our master draftsmen, the requirements of cyberspace
could hardly ever be anticipated. As such, the coming of the Internet led to the
emergence of numerous ticklish legal issues and problems which necessitated the
enactment of Cyber laws.
✓ The existing laws of India, even with the most benevolent and liberal interpretation,
could not be interpreted in the light of the emerging cyberspace, to include all
aspects relating to different activities in cyberspace. In fact, the practical
experience and the wisdom of judgment found that it shall not be without major
perils and pitfalls, if the existing laws were to be interpreted in the scenario of
emerging cyberspace, without enacting new cyber laws. Hence, the need for
enactment of relevant cyber laws.
✓ None of the existing laws gave any legal validity or sanction to the activities in
Cyberspace. For example, the Net is used by a large majority of users for email. Yet
till today, email is not "legal" in our country. There is no law in the country, which
gives legal validity, and sanction to email. Courts and judiciary in our country have
been reluctant to grant judicial recognition to the legality of email in the absence of
any specific law having been enacted by the Parliament. As such the need has
arisen for Cyber law.
✓ Internet requires an enabling and supportive legal infrastructure in tune with the
times.
SCOPE OF CYBER LAW
Cyber law is that stream of law where all the cyber-crimes such as theft, fraud,etc. all of
which are subject to the Indian Penal Code are addressed by the Information Technology Act,
2000. With advanced technology and changing times, almost all the processes are now going
on IT platform. This is giving rise to increase of cyber-crimesin India as well as abroad.
Cyber-crimes are broadly categorized in two different categories:
1. Using a computer to target other computer - for eg. Virus attacks, hacking,
etc.
2. Using a computer to commit crimes - for eg. Credit card frauds, cyber
terrorism,etc.
Cyber-crime is a criminal exploitation of the internet. A misconduct that is committed

against an individual or groups of individuals with an unlawful intention to hurt the position of
the victim or cause any mental or physical harm to the victim directly or indirectly by using
advanced IT and related sources such as Internet and mobile phones is termed as cyber-
crime. Such crimes may be harmful for a country.
All these activities leading to crimes have given rise to a relatively new field in law for
protecting the interests of an individual which is called cyber law. Cyber law is important
because it touches almost all aspects of transactions and activities on and concerning the
Internet, the World Wide Web and Cyberspace.
Cyber law is concerned with every individual these days. This is primarily because we
all use internet in some or the other form daily. Internet is used when we create any account
online, while performing e-commerce transactions, net banking, sending or receiving emails,
surfing the net to take out some important information, etc.
There are several advantages of Cyber Law to protect the individuals from getting
trapped in any cyber violations. The IT Act 2000 provides several guidelines inthis regard.
• Organizations shall now be able to carry out e-commerce using the legal infrastructure
provided by the Act.
• The Act throws open the doors for the entry of corporate companies in the business of
being Certifying Authorities for issuing Digital SignaturesCertificates.
• Under the IT Act, 2000, it shall now be possible for corporates to have a statutory
remedy in case if anyone breaks into their computer systems or network and cause loss.
• The Act now allows Government to issue notification on the web thus indicating e-
governance.
• The IT Act also addresses the important issues of security, which are so critical to the
success of electronic transactions.
It is to be noted that since cyber law cannot be restricted to a geographical area, therefore,
a single transaction may involve the laws of at least three authorities: (1) the laws of the
state/nation in which the user resides, (2) the laws of the state/nation that apply where the
server hosting the transaction is located, and 3) the laws of the state/nation which apply to
the person or business with whom the transaction takes place.
There is a tremendous scope of cyber law in India as the number of activities through
internet is on increase with the changing times, the requirement for cyber laws and their
application is gathering momentum and hence the career option as a cyber- lawyer seems
very lucrative option for students.
REQUIREMENTS TO BE A SUCCESSFUL CYBER

LAWYER:
• Capability of analyzing a problem along with a deep understanding ofthe
subject.
• Good observer and ready to accept challenges
• The person should be technically aware of the changes taking place inthe
IT sector.
• Being quick and concerned to look at the web as an information providerare

the other two qualities.
As for this branch of law is concerned, there are several job opportunities which are on
its way for students who aspire to be into cyber law. One can join as a cyber- consultant in an
IT firm, police departments or in banks, or as research assistants in a law firm, or a technology
firms, or as advisers to web developers, in the ministry of information & technology or in
corporate houses.
IMPORTANCE OF CYBER LAW
✓ We are living in highly digitalized world.
✓ All companies depend upon their computer networks and keep their valuable
data in electronic form.
✓ Government forms including income tax returns, company law forms etc are now
filled in electronic form.
✓ Consumers are increasingly using credit cards for shopping.
✓ Most people are using email, cell phones and SMS messages for communication.
✓ Even in “non-cyber crime” cases, important evidence is found in computers/ cell
phones e.g. in cases of divorce, murder, kidnapping, organized crime, terrorist
operations, counterfeit currency etc.
✓ Since it touches all the aspects of transactions and activities on and concerning the
Internet, the World Wide Web and Cyberspace therefore Cyber law is extremely
important.
ROLE OF CYBER LAW
Cyber Laws have an important role in representing and defining the norms ofthe
cyber society.
Cyber Laws help in giving the right to enter into legally enforceable digital
contracts.
Cyber Laws help in maintaining the Cyber properties.Cyber Laws help in to carry
on online business.
Cyber Laws help in providing legal reorganization for Electronic documents and
Digital signature.
JURISPENDENCE OF CYBER LAW

Jurisprudence studies the concepts of law and the effects of social norms and
regulations on the development of law. Jurisprudence refers to two different things.
➢ The philosophy of law, or legal theory

➢ Case Law
LEGAL THEORY:
Legal theory does not study the characteristics of law in a particular country (e.g. India
or Canada) but studies law in general i.e. those attributes common to all legal systems.
CASE LAW:
Case law is the law that is established through the decisions of the courts and other
officials. Case law assumes even greater significance when the wordings of a particular law
are ambiguous. The interpretation of the Courts helps clarify the real objectives and meaning
of such laws.
AREAS OF CYBER LAW
Cyber laws contain different types of purposes. Some laws create rules for how individuals
and companies may use computers and the internet while some laws protect people from
becoming the victims of crime through unscrupulous activities on the internet. The major
areas of cyber law include:
1. Fraud:
Consumers depend on cyber laws to protect them from online fraud. Laws are
made to prevent identity theft, credit card theft and other financial crimes that happen
online. A person who commits identity theft may face confederate or state criminal
charges. They might also encounter a civil action brought by a victim. Cyber
lawyers work to both defend and prosecute against allegations of fraud using the
internet.
2. Copyright:
The internet has made copyright violations easier. In early days of online
communication, copyright violations was too easy. Both companies and individuals need
lawyers to bring actions to impose copyright protections. Copyright violation is an area of
cyber law that protects the rights of individuals and companies to profit from their own
creative works.
3. Defamation:
Several personnel use the internet to speak their mind. When people use the
internet to say things that are not true, it can cross the line into defamation. Defamation
laws are civil laws that save individuals from fake public statements that can harm a
business or someone’s personal reputation. When people use the internet to make
statements that violate civil laws, that is called Defamation law.
4. Harassment and Stalking:
Sometimes online statements can violate criminal laws that forbid harassment
and stalking. When a person makes threatening statements again and again about
someone else online, there is violation of both civil and criminal laws. Cyber lawyers
both prosecute and defend people when stalking occurs using the internet and other
forms of electronic communication.
5. Freedom of Speech:
Freedom of speech is an important area of cyber law. Even though cyber laws
forbid certain behaviours online, freedom of speech laws also allow people to speak their
minds. Cyber lawyers must advise their clients on the limits of free speech.
ADVANTAGES OF CYBER LAW:

The IT Act 2000 attempts to change outdated laws and provides ways to deal with
cyber crimes. We need such laws so that people can perform purchase transactions over the
Net through credit cards without fear of misuse. The Act offers the much-needed legal
framework so that information is not denied legal effect, validity or enforceability, solely on the
ground that it is in the form of electronic records.
In view of the growth in transactions and communications carried out through
electronic records, the Act seeks to empower government departments to accept filing,
creating and retention of official documents in the digital format. The Act has alsoproposed a
legal framework for the authentication and origin of electronic records / communications
through digital signature.
• From the perspective of e-commerce in India, the IT Act 2000 and its provisions
contain many positive aspects. Firstly, the implications of these provisions for the e-
businesses would be that email would now be a valid and legal form of
communication in our country that can be duly produced and approved in a court of
law.
• Companies shall now be able to carry out electronic commerce using the legal
infrastructure provided by the Act.
• Digital signatures have been given legal validity and sanction in the Act.
• The Act throws open the doors for the entry of corporate companies in the business of
being Certifying Authorities for issuing Digital Signatures Certificates
• The Act now allows Government to issue notification on the web thus heralding e-
governance
• The Act enables the companies to file any form, application or any other document
with any office, authority, body or agency owned or controlled by the appropriate
Government in electronic form by means of such electronic form as may be prescribed
by the appropriate Government.
• The IT Act also addresses the important issues of security, which are so critical to the
success of electronic transactions. The Act has given a legal definition to the concept
of secure digital signatures that would be required to have been passed through a
system of a security procedure, as stipulatedby the Government at a later date.
• Under the IT Act, 2000, it shall now be possible for corporates to have a statutory
remedy in case if anyone breaks into their computer systems or network and cause
loss.
LIMITATIONS OF CYBER LAW
❖ The law does not clearly identify the jurisdiction for implementation.
❖ The issues regarding matters such as domain name registration and domain
name disputes have not been included under the purview of the law
❖ The law cannot provide an exhaustive set of cyber crimes
❖ The most important aspects of e-commerce are privacy and content
regulations, but the Indian cyber laws do not deal with those areas.
❖ The introduction of cyber laws needs an associated change in other related
laws such as the Consumers Protection Act and the Income Tax Act. But no
steps have been taken regarding this.
1.2 CYBERSPACE
The technological development has given rise to a cyber world constituting cyber
space. Cyber space is witnessing considerable advancement with the rapid increase in the
information technology. It is always hard to determine or predict something in the future in an
accurate manner. There is a possibility to consolidate the technological advancements in the

past. The internet users are increasing tremendously every year and at the same time there is
also rise in the number of people using mobiles and smart phones.
CYBER SPACE – MEANING

The term cyber space has garnered numerous definitions and interpretations given by
both experts and lexicographers. According to Adnan (2010), cyberspace is an unreal world
where information is constantly transmitted through or between computers. On the other
hand, the cyberspace according to Pfaffenberger (2000) refers to the virtual space that
computer systems have aided in its creation.
The core feature of cyberspace is an extremely interactive virtual environment for an

incredibly large range of participants. Through the cyberspace, users are allowed to share
information, swap ideas, engage in social discussions, interact and play games, create media,
conduct business and engage in multiple other activities
The term cyberspace was introduced by William Gibson in his book “Neuromancer” in
1984. Although Gibson criticized the term by calling it redolent and meaningless, it is still used
worldwide to describe facilities or features that are linked to the internet. Gibson initially
explained the cyberspace as “a consensual hallucination experienced daily by billions of
legitimate operators in every nation.”
Program developers such as Chip Morningstar stated that the cyberspace gained its
popularity as a medium for social interaction as opposed to its technical execution and
implementation. Thus, unlike most computer jargon, the term ‘cyberspace’ doesn’t have a
standard or objective definition. Instead, it is simply used to describe the virtual world of
computer systems that extends across a globalnetwork of computers.
HISTORY OF CYBER SPACE
In 1984, Wiliam Gibson published his science fiction book – Necromancer, which
describes an online world of computers and elements of the society who use these
computers. The word cyberspace first appeared in this book. In the book, a hacker of
databases stole data for a fee. The author portrayed cyberspace as a three-dimensional virtual
landscape. Also, a network of computers creates this space. According to him, cyberspace
looked like a physical space but was actually a computer generated construction. Also, it
represented abstract data.
The book caught the imagination of many writers and in 1986, major English language
dictionaries introduced the word ‘cyberspace’. According to the New Oxford Dictionary of
English, ‘Cyber Space’ is the notional environment in which people communicate over
computer networks. Since cyberspace is a virtual space, it has no boundaries, mass, or
gravity. It simply represents the interconnected space between computers, systems, and other
networks.
It exists in the form of bits and bytes – zeroes and ones (0’s and 1’s). In fact, the entire
cyberspace is a dynamic environment of 0’s and 1’s which changes every second. These are
simply electronic impulses. Also, it is an imaginary location where the words of two parties
meet in conversation.
EMERGING TRENDS AND CHALLENGES IN CYBER LAW
Cyber law is likely to experience various emerging trends with the increased usage of
digital technology. The various emerging trends include
A. CHALLENGES IN MOBILE LAWS
B. LEGAL ISSUES OF CYBER SECURITY
C. CLOUD COMPUTING & LAW
D. SOCIAL MEDIA & LEGAL PROBLEMS
E. SPAM LAWS
1. CHALLENGES IN MOBILE LAWS
• Today, there are lots of activities in the mobile ecosystem. The increasing competition
has introduced new models of mobile phones, personal digital assistors (pda), tablets
and other communication devices in the global market.
• The intensive use of mobile devices has widened the mobile ecosystem and the
content generated is likely to pose new challenges for cyber legal jurisprudence across
the world.
• There are no dedicated laws dealing with the use of these new communication devices
and mobile platforms in a number of jurisdictions across the world as the usage of
mobile devices for input and output activities is increasing day by day.
• With the increasing mobile crimes, there is an increasing necessity to meet the legal
challenges emerging with the use of mobile devices and ensure mobile protection and
privacy.
2. LEGAL ISSUES OF CYBER SECURITY
• The other emerging cyber law trend is the need for enacting appropriate legal
frameworks for preserving, promoting and enhancing cyber security.
• The cyber security incidents and the attacks on networks are increasing rampantly
leading to breaches of cyber security which is likely to have serious impact on the
nation. However, the challenge before a lawmaker is not only to develop appropriate
legal regimes enabling protection and preservation of cyber security, but also to instill
a culture of cyber security amongst the net users.
• The renewed focus and emphasis is to set forth effective mandatory provisions
which would help the protection, preservation and promotion of cyber security in
use of computers, allied resources and communication devices
3. CLOUD COMPUTING AND LAW
• With the growth in internet technology, the word is moving towards cloud
computing.
• The cloud computing brings new challenges to the law makers. The distinct
challenges may include data security, data privacy, jurisdiction and other legal
issues. There pressure on the cyber legislators and stakeholders would be to
provide appropriate legal framework that could benefit the industry and enable
effective remedies in the event of cloud computing incidents.
4. SOCIAL MEDIA AND LEGAL PROBLEMS
• The social media is beginning to have social and legal impact in the recent times
raising significant legal issues and challenges. A latest study indicates the social
networking sites responsible for various problems. Since the law enforcement
agencies, intelligence agencies target the social media sites; they are the preferred
repository of all data.
• The inappropriate use of social media is giving rise to crimes like cyber harassments,
cyber stalking, identity theft etc. The privacy in social media is going to be undermined
to a great extent despite the efforts by relevant stake holders.
• The challenge to the cyber legislators would be to effectively regulate the misuse of
social media and provide remedies to the victims of social media crimes.
• Social Media Litigations are also likely to increase concerning the association or nexus
with the output of social media.
• The litigations regarding defamation, matrimonial actions are popularly increasing and
with the data, information resident on social media networking there is an emerging
trend of various other litigations in the coming years.
5. SPAM LAWS
There is considerable growth of spam in emails and mobiles. Many countries have
already become hot spots for generating spam. As the number of internet and mobile
users increase the spammers make use of innovative methods to target the digital users. It
is therefore necessary to have effective legislative provisions to deal with the menace of
spam.
1.3 HISTORY OF INTERNET AND WORLD WIDE WEB
The Internet is a global system of interconnected computer networks that use the
standardized Internet Protocol Suite (TCP/IP). It is a network of networks that consists of
millions of private and public, academic, business, and government networks of local to global
scope that are linked by copper wires, fiber-optic cables, wireless connections, and other
technologies. The Internet carries a vast array of information resources and services, most
notably the inter-linked hypertext documents of the World Wide Web (WWW) and the
infrastructure to support electronic mail, in addition to popular services such as online chat,
file transfer and file sharing, online gaming, and Voice over Internet Protocol (VoIP) person-to-
person communication via voice and video. The origins of the Internet dates back to the
1960s when the United States funded research projects of its military agencies to build robust,
fault-tolerant and distributed computer networks. This research and a period of civilian funding
of a new U.S. backbone by the National Science Foundation spawned worldwide participation
in the development of new networking technologies and led to the commercialization of an
international network in the mid 1990s, and resulted in the following popularization of
countless applications in virtually every aspect of modern human life.
The terms Internet and World Wide Web are often used in everyday speech without
much distinction. However, the Internet and the World Wide Web are not one and the same.
The Internet is a global data communications system. It is a hardware and software
infrastructure that provides connectivity between computers. In contrast, the Web is one of the
services communicated via the Internet. It is a collection of interconnected documents and
other resources, linked by hyperlinks and Uniform Resource Locator [URLs].
The World Wide Web was invented in 1989 by the English physicist Tim Berners-Lee,
now the Director of the World Wide Web Consortium, and later assisted by Robert Cailliau, a
Belgian computer scientist, while both were working at CERN in Geneva, Switzerland. In
1990, they proposed building a "web of nodes" storing "hypertext pages" viewed by
"browsers" on a network and released that web in December. Overall Internet usage has seen
tremendous growth.
1.4 E-COMMERCE
Electronic commerce, commonly known as e-commerce or e-comm, is the buying and

selling of products or services over electronic systems such as the Internet and other computer
networks. Electronic commerce draws on such technologies as electronic funds transfer,
supply chain management, Internet marketing, online transaction processing, electronic data
interchange (EDI), inventory management systems, and automated data collection systems.
Modern electronic commerce typically uses the World Wide Web (www) at least at one point in
the transaction's life- cycle, although it may encompass a wider range of technologies such as
e-mail, mobile devices and telephones as well. Contemporary electronic commerce involves
everything from ordering "digital" content for immediate online consumption, to ordering
conventional goods and services, to "meta" services to facilitate other types of electronic
commerce. On the institutional level, big corporations and financial institutions use the internet
to exchange financial data to facilitate domestic and international business. Data integrity and
security are very hot and pressing issues forelectronic commerce.
E-commerce can be divided into:
• E-tailing or "virtual storefronts" on Web sites with online catalogs, sometimesgathered

into a "virtual mall".
• The gathering and use of demographic data through Web contacts.
• Electronic Data Interchange (EDI), the business-to-business exchange of data.
• E-mail and fax and their use as media for reaching prospects and establishedcustomers (for
example, with newsletters)
• Business-to-business buying and selling.
• The security of business transactions. E-commerce in India India has an internet user
base of over 100 million users. The penetration of ecommerce is low compared to
markets like the United States and the United Kingdom but is growing at a much faster
rate with a large number of new entrants.
The industry consensus is that growth is at an inflection point with key drivers
being:
• Increasing broadband Internet and 3G penetration.

• Rising standards of living and a burgeoning, upwardly mobile middle
classwith high disposable incomes.
• Availability of much wider product range compared to what is available at
retailers.
• Busy lifestyles, urban traffic congestion and lack of time for offline
shopping.
• Lower prices compared retail driven by disintermediationand reduced
inventory and real estate costs.
• Increased usage of online classified sites, with more consumers buying
andselling second-hand goods.
• Evolution of the online marketplace model with sites like ebay etc.
Some of the aspects of Indian e-commerce that are unique to India (and potentially to other
developing countries) are:
• Cash on Delivery as a preferred payment method. India has a vibrant cash

economy as a result of which 80% of Indian e-commerce tends to be Cash on Delivery
(COD).
• Direct Imports constitute a large component of online sales. Demand for

international consumer products is growing much faster than in-country supply from
authorized distributors and e-commerce offerings. E-commerce websites are Internet
intermediaries within the meaning of IT Act, 2000. "Intermediary" with respect to any
particular electronic records, means any person who on behalf of another person
receives, stores or transmits that record or provides any service with respect to that
record and includes telecom service providers, network service providers, internet
service providers, web hosting service providers, search engines, online payment sites,
online-auction sites, online market places and cyber cafes. The IT (Intermediaries
Guidelines) Rules of 2011 regulate the functioning of e-commerce websites. Cyber law
due diligence is the main aspect that all e-commerce site ownersshould comply with.
When Was Online Shopping Invented?
Companies have been using computer networks to conduct business since as far
back as the 1960s, but that version of e-Commerce would be almost unrecognizable to
us nowadays.
In 1968, ARPA (Advanced Research Projects Agency) commissioned the world’s

first routers. Within a year, a network called ARPANET was created to ensurethat crucial
lines of communication would be maintained in the event of a nuclear attack.
Three years later, researchers developed a new method for dialing into
ARPANET using just a computer terminal. Terminal Interface Processor (TIP) eventually
led to Transmission Control Protocol and Internet Protocol (TCP/IP), a familiar
combination even in modern times. This technology helped take the Internet from
military bases and university labs to business offices.
Companies used it to share business documents with one other, relying solely on
Electronic Data Interchange (EDI), a digital information transfer technology that could
replace mail and fax for sharing documents. This technology made it possible to transfer
information from computer to computer seamlessly without the need for human
involvement.
It wasn’t until 1979 that the American National Standards Institute (ANSI) finally
stepped in and introduced a standard for sharing business documents. It was called
ASC X12 and gave companies a reliable standard for sharing documents over electronic
networks.1979 also witnessed another first for the Internet Age: the origin of e-
Commerce.
The Origins of e-Commerce
In 1979, English inventor Michael Aldrich introduced and pioneered what would
eventually become known as e-Commerce by connecting television and telephone lines.
The story goes that Aldrich thought of the idea while on a walk with his wife,
bemoaning the inconvenience of making regular trips to the market. Wouldn’t it be so
much easier if you could just order what you needed through the TV? Shortly, thereafter,
he invented a system that advertised goods and services on television, giving viewers
the ability to call in to a processing center to place orders. Aldrich called his system
"teleshopping."
Throughout the 80s and into the early 90s, the Internet continued to evolve as
new technologies like SSL made it something more and more people were comfortable
using.
In 1982, French innovators launched the Minitel, a service that was a precursor to
the World Wide Web. This service was free for telephone subscribers and used a
Videotex terminal and telephone lines to connect millions of people. The Minitel
expanded, and by 1999, more than 9 million terminals connected about 25 million
people.
However, the World Wide web soon caught up. Debuting to the public in 1991, its
rapid rise quickly eclipsed the Minitel. In 2012, France Telecom officially discontinued
the Minitel service.
FEATURES OF E-COMMERCE
➢ Global Reach
E-commerce businesses are conducted online on a worldwide level. It covers large
areas serving large number of customers at a time. Its operations vary from one country
to another. There is no restriction on expanding the business to large areas. It is not
confined to a particular area like in case of a physical market. These businesses due to
their operations in large areas earn high profits.
➢ 24×7 Service
This is one the important feature of the e-commerce business. E-commerce
businesses carry out their business 24 hrs. & on all days of the week. Customers can
avail their services all the time at their home comfort. In the physical market, there is a
timing for opening & closing. Customers need to visit accordingly as per schedule. There
is nothing such in e-commerce business. Peoples can anytime & from anywhere can do
shopping from these as per their choices.
➢ Easy Navigation
It means that the product required can be easily searched in less time over the E-
commerce business. Customers are not required to waste their time searching for a
specific product. Product is simply searching in the search bar of the website of
business. If it is not available over a particular website, customer can easily search it
over several other websites. It can be booked & will be delivered to customer address in
less time.
➢ Ubiquity
It means that the services of the business are accessible anytime & from anywhere.
These businesses are not confined to a particular area like a traditional business.
Customers can as per their choice & comfort can do transaction & activity here. The
website can be easily accessed from customer cell phones, tablets or tablet anytime. It is
completely user-friendly & it brings ubiquity to it.
➢ Easy Product Comparison

There are a large number of products available over the internet. Comparison of
these products is quite easy. Products in terms of their price, quality & various other
features can be compared over different websites. Customers can easily find the best
product as per their choice after better comparison. This feature of e-commerce satisfies
the customers & help in increasing sales.
➢ Interactivity
It refers to the communication between the business & the customer. Customer can
easily interact with the business. They can raise their queries & problems through the
business website. Customers also provide suggestions & feedback about business
products & services. This feature helps in developing better relationships between
business & customers.
TYPES OF E-COMMERCE MODELS
Electronic commerce can be classified into four main categories. The basis for this
simple classification is the parties that are involved in the transactions. So the four basic
electronic commerce models are as follows,
1. Business to Business
This is Business to Business transactions. Here the companies are doing

business with each other. The final consumer is not involved. So the online transactions
only involve the manufacturers, wholesalers, retailers etc.
2. Business to Consumer
Here the company will sell their goods and/or services directly to the consumer.
The consumer can browse their websites and look at products, pictures, read reviews.
Then they place their order and the company ships the goods directly to them. Popular
examples are Amazon, Flipkart, Jabong etc.
3. Consumer to Consumer
Consumer to consumer, where the consumers are in direct contact with each
other. No company is involved. It helps people sell their personal goods and assets
directly to an interested party. Usually, goods traded are cars, bikes, electronics etc. OLX,
Quikr etc follow this model.
4. Consumer to Business
This is the reverse of B2C, it is a consumer to business. So the consumer provides a

good or some service to the company. Say for example an IT freelancer who demos and
sells his software to a company. This would be a C2B transaction.
Examples of E-Commerce
• Amazon
• Flipkart
• eBay
• Fiverr
• Upwork
• Olx
• Quikr
ADVANTAGES OF E-COMMERCE
• E-commerce provides the sellers with a global reach. They remove the barrier of
place (geography). Now sellers and buyers can meet in the virtual world, without the
hindrance of location.
• Electronic commerce will substantially lower the transaction cost. It eliminates many
fixed costs of maintaining brick and mortar shops. This allows the companiesto enjoy a
much higher margin of profit.
• It provides quick delivery of goods with very little effort on part of the customer.
Customer complaints are also addressed quickly. It also saves time, energy and
effort for both the consumers and the company.
• One other great advantage is the convenience it offers. A customer can shop 24×7.The
website is functional at all times, it does not have working hours like a shop.
• Electronic commerce also allows the customer and the business to be in touch
directly, without any intermediaries. This allows for quick communication and
transactions. It also gives a valuable personal touch.
DISADVANTAGES OF E-COMMERCE
• The start-up costs of the e-commerce portal are very high. The setup of the
hardware and the software, the training cost of employees, the constant
maintenance and upkeep are all quite expensive.
• Although it may seem like a sure thing, the e-commerce industry has a high risk of
failure. Many companies riding the dot-com wave of the 2000s have failedmiserably.
The high risk of failure remains even today.
• At times, e-commerce can feel impersonal. So it lacks the warmth of an

interpersonal relationship which is important for many brands and products. This
lack of a personal touch can be a disadvantage for many types of services and
products like interior designing or the jewellery business.
• Security is another area of concern. Only recently, we have witnessed many security
breaches where the information of the customers was stolen. Credit card theft,
identity theft etc. remain big concerns with the customers.
• Then there are also fulfilment problems. Even after the order is placed there can be
problems with shipping, delivery, mix-ups etc. This leaves the customers unhappy
and dissatisfied.
SECURITY ISSUES IN E-COMMERCE
E-Commerce is defined as the buying and selling of products or services over electronic
systems such as the Internet and to a lesser extent, other computer networks. It is
generally regarded as the sales and commercial function of eBusiness. There has been a
massive increase in the level of trade conducted electronically since the widespread
penetration of the Internet. A wide variety of commerce is conducted via eCommerce,
including electronic funds transfer, supply chain management, Internet marketing, online
transaction processing, electronic data interchange (EDI), inventory management
systems, and automated data collection systems. US online retail sales reached $175
billion in 2007 and are projected to grow to $335 billion by 2012. This massive increase
in the uptake of eCommerce has led to a new generation of associated security threats,
but any eCommerce system must meet four integral requirements:
• privacy – information exchanged must be kept from unauthorized parties

• integrity – the exchanged information must not be altered or tampered with
• authentication – both sender and recipient must prove their identities to each
other and
• non-repudiation – proof is required that the exchanged information was indeed
received
These basic maxims of eCommerce are fundamental to the conduct of secure business
online. Further to the fundamental maxims of eCommerce above, eCommerce providers
must also protect against a number of different external security threats, most notably
Denial of Service (DoS). These are where an attempt is made to make a computer
resource unavailable to its intended users though a variety of mechanisms discussed
below. The financial services sector still bears the brunt of e- crime, accounting for 72%
of all attacks. But the sector that experienced the greatest increase in the number of
attacks was eCommerce.
Privacy
Privacy has become a major concern for consumers with the rise of identity theft and
impersonation, and any concern for consumers must be treated as a major concern for
eCommerce providers. According to Consumer Reports Money Adviser, S Attorney
General has announced multiple indictments relating to a massive international security
breach involving nine major retailers and more than 40 million credit- and debit-card
numbers. US attorneys think that this may be the largest hacking and identity-theft case
ever prosecuted by the justice department. Both EU and US legislation at both the federal
and state levels mandates certain organizations to inform customers about information
uses and disclosures. Such disclosures are typically accomplished through privacy
policies, both online and offline.
IMPORTANT ISSUES IN E-COMMERCE

Although E-commerce is something which brings so many advantages and utility it
comes with its own set of technical difficulties and consequences. E-commerce being a
Global phenomenon, its issues also have global characteristics. Few of the important
issues in global e-commerce can be understood as below:
1. Legal aspects of e-commerce: As discussed earlier, the e-commerce model

legislation has been accepted by the UNCITRAL, but whenever an
international model code is formulated it is accompanied with its own
safeguards to the individual state sovereignty wherein the Municipal
Legislation keeping the model laws as standards may deviate in accordance to
its own municipal laws.
2. E-security: the security of the end-users has always been a matter of grave
concern globally since the internet has netted two ends of the globe now it is
easier for a person(hacker) to sit in his remote physical location and cause the
data or financial breach of the Victims.
3. Jurisdiction: the Internet is open to the globe and hence the jurisdiction of the
cases has been given to all the courts.
4. Contracts and Liability: the E-contracts made in the cyber-world have been
given legal recognition and the liabilities are also enforceable but the same
becomes a mammoth task when parties belong to two different nations and have
not made a clause regarding the application of specific law.
5. Taxation: Various facets of taxation such as tax collection, collection of sales tax,
determination of taxpayer’s residence, determination of the origin of income,
jurisdiction are inherently a difficult task in the plane of taxation, but on integration
with the fact of expansion of the market to the present scale of globe the calculation of
the Taxes becomes additionally difficult, wherein various nations apply various tax
evaluation methods in accordanceto their own legislations.
6. Copyrights: Global e-commerce is like an ever-expanding universe of sellers
and buyers and products, it becomes difficult to keep a tap at the copyright
violation in such a huge number to deal with.
1.5 CONTRACT ASPECTS IN CYBER LAW
WHAT IS A CONTRACT?
Definition: The term contract is defined as an agreement between two or more parties
which has a binding nature, in essence, the agreement with legal enforceability is said to
be a contract. It creates and defines the duties and obligations of the parties involved.
Process of Contract
First and foremost, an offer is made by one party to another, which when
accepted by the party to whom it is made, leads to the agreement. If that agreement is
enforceable in the court of law, it is known as a contract.
Essential Elements of a Contract
1. Agreement: The primary element that creates a contract between parties is an

agreement, which is a result of offer and acceptance, that forms consideration for the
parties concerned.
2. Free Consent: Consent of the parties is another important aspect of a contract, which
means the parties entering into the contract, must agree upon the same thing in the
same sense. The consent of the parties is said to be free when it is not influenced by
coercion, undue influence, fraud, misrepresentation and mistake.
3. Competency: Competency refers to the capacity of the parties to enter into the contract,
i.e. he/she has reached the age of maturity, he/she must be of sound mind, and he/she
is not disqualified from contracting, as per the law like the alien enemy, foreign
sovereigns, etc.
4. Consideration: It implies the price agreed to be paid for the promisor’s obligation by the
promisee. It must be adequate and lawful.
5. Lawful object: The object for which the contract is created must be lawful, or else it is
declared as void.
6. Not expressly declared as void: The law should not expressly declare the contract as
void, such as contract in restraint of marriage, trade or legal proceedings.
Other important elements of the Contract
▪ There must be at least two parties to constitute a contract, i.e. one who proposesand
another accepts the same.
▪ The parties entering into the contract must intend to create a legal obligation forone
another.
▪ It must be in writing.
▪ There must be certainty of meaning. the terms of the parties must be clear to the
parties, i.e. the party should not interpret anything wrong, there must be a consensus
ad idem.
▪ There should be a possibility of performing the contract.
So, these are some paramount elements of a contract, without which it cannot be
enforced in the court of law.
THE PROVISIONS RELATING TO PHYSICAL CONTRACTS
A contract is defined by Cowel as a covenant or agreement with a lawful

consideration or cause. Blackstone defines it as an agreement upon sufficient
consideration to do or not to do a particular thing. The Indian Contract Act 1872 defines
Contract as an agreement enforceable by law. All agreements are contracts if they are
made by the free consent of the parties competent to contract, for a lawful consideration,
and with a lawful object and are not expressly declared to be void.
Contracts may be classified into three types:
1. Contracts of record such as judgements, and recognisance (recognisance is a

bond or similar obligation made and recorded before a court by which a person
binds himself to perform some act or fulfil some condition at a specifiedtime.)
2. Contracts under seal which includes categories of contracts like contracts

unilateral, (like bonds) and contracts inter partes (like indentures of demise) and
3. Simple contracts or contracts not under seal or specialty which are either written
or verbal.
A contract under seal is a contract in writing, the execution where of is

accompanied with certain solemnities which not merely indicate the ascent of the contracting
parties but give to their contract peculiar force and efficacy; An instrument under seal, when
used between private persons is called a 'deed' (factum). This is because, it is the most
solemn and authentic act that a man can possibly perform with relation to the disposal of his
property, or with a View to affecting in any manner his own interests. ;the instrument in
question may be unilateral or made by one party only, or it may be inter partes (made between
two or more parties). A contract under seal is distinguished from a simple contract in writing by
virtue of certain solemnities attended on its execution viz., by sealing and delivery. It may be
noted that in earlier times, signing was in no case deemed essential to the validity and
obligatory force of a deed which had been executed by sealing and delivery. Delivery is
essential to the due execution of a deed.
E-CONTRACTS
In recent times, the conventionally functioned models of business have become out-of-
date and in many cases are not execution enough income to the owners or shareholders of
the company. A usual example of such a situation in the business of newspaper in the United
State of America wherein many of the noticeable newspaper have shut down or have lifted
purely to the online medium. New and inventive models and type of business need to be
invented and worked. Existence of e-contract in the market is accomplishing the need for
innovativeness in the traditional business segments. Businesses, both existing and new are
trying to create an online individuality and an e-contract stand keeping in view the needs of the
modern times.
E-contract is one of the divisions of e-business. It holds a similar meaning of traditional

business wherein goods and services are switched for a particular amount of consideration.
The only extra element it has is that the contract here takes place through a digital mode of
communication like the internet. It provides an opportunity for the sellers to reach the end of
consumer directly without the involvement of the middlemen.
New models of business demands different organisational charters. E-contract demands

an organizational charter which caters to its new marketing needs. This mode of business
enables businesses to save time on product design and device products according to the
individual customer requirement, track sales and get immediate feedback from the customer.
Contracts have become so common in day-to-day life that most of the time we do not
even recognize that we have entered into one. Right from buying a vegetable and hiring a
Cab or to buying an airline ticket online, uncountable thing in our daily exists is governed by
contracts.
The Indian Contract Act, 1872 rules the way in which contracts are made and completed
in India. It rules the way in which the requirements in a contract are implemented and codifies
the effect of a breach of contractual provisions.
Electronic contracts (contracts that are not paper based but relatively in (electronic
form) are born out of the need for speed, ease and efficiency. Imagine a contract that an
Indian manufacturer and an American exporter wish to enter into. One selection would be that
one party first draws up two copies of the contract, signs themand couriers them to the further,
who in turn signs both copies and guides one copy back. The other option is that the two
parties meet someplace and sign the contract. In the electronic age, the whole contract can
be accomplished in seconds, with both parties simply fixing their digital signatures to an
electronic copy of the contract. There is no need for behind couriers and additional travelling
costs in such a situation.
There was primarily a fear between the legislatures to identify this modern technology,
but now many countries have legislated laws to recognize electronic contracts. The
conventional law involving to contracts is not satisfactory to address all the issues that arise in
electronic contracts. The Information Technology Act describes some of the irregular issues
that arise in the formation and verification of electronic contracts.
WHAT IS ELECTRONIC CONTRACT?
Contracts have become so common in daily life that most of the time we do not even
recognize that we have entered into one. Right from hiring a taxi to buying airline tickets online,
countless things in our daily lives are ruled by contracts.
The Indian Contract Act, 1872 governs the manner in which contracts are made and
performed in India. It governs the way in which the requirements in a contract are implemented
and codifies the effect of a breach of vowed provisions. Within the outline of the Act, parties
are free to contract on any terms they choose. Indian Contract Act comprehends of limiting
factors subject to which contract may be entered into, executed and breach enforced. It only
provides an outline of rulesand regulations which govern creation and performance of contract.
The rights and duties of parties and terms of agreement are definite by the contracting parties
themselves. The court of law acts to enforce agreement, in case of default.
Electronic contracts (contracts that are not paper based but rather in electronic
practise) are born out of the need for speed, suitability and efficiency. Imagine a contract
that an Indian exporter and an American importer wish to enter into. One option would
be that one party first pulls up two copies of the contract, signs them and couriers them to
the other, who in turn signs both copies and couriers one copy back. The other option is
that the two parties meet someplace and sign the contract.
In the electronic age, the whole contract can be completed in seconds, with both
parties simply attaching their digital signatures to an electronic copy of the contract. There is
no need for delayed couriers and additional travelling costs in such a situation. There was
initially a hesitation amongst the legislatures to recognize this modern technology, but now
man y countries have passed laws to recognize electronic contracts.
Essentials of an electronic contract:
As in every other contract, an electronic contract also requires the following

necessary requirements:
1. An offer requirements to be made
In many contacts (whether online or conventional) the offer is not made directly
one-on-one. The consumer ‘browses’ the available goods and services showed on the
seller’s website and then chooses what he would like to purchase. The offer is not made
by website showing the items for sale at a particular price. This is essentially an invitation
to offer and hence is revocable at any time up to the time of acceptance. Theoffer is made
by the customer on introduction the products in the virtual ‘basket’ or ‘shopping cart’ for
payment.
2. The offer needs to be acknowledged
As stated earlier, the acceptance is usually assumed by the business after the
offer has been made by the consumer in relation with the invitation to offer. An offer is
revocable at any time until the acceptance is made.
Processes available for forming electronic contracts include:
I. E-mail: Offers and acceptances can be exchanged entirely by e-mail, or can be
collective with paper documents, faxes, telephonic discussions etc.
II. Web Site Forms: The seller can offer goods or services (e.g. air tickets, software etc.)
through his website. The customer places an order by completing and communicating
the order form provided on the website. The goods may be actually delivered later (e.g.
in case of clothes, music CDs etc.) or be directly delivered electronically (e.g. e-tickets,
software, mp3 etc.).
III. Online Agreements: Users may need to take an online agreement in order to be able
to avail of the services e.g. clicking on “I accept” while connecting software or clicking on
“I agree” while signing up for an email account.
3. There has to be legal consideration
Any contract to be enforceable by law must have legal consideration, i.e., when
both parties give and receive something in return. Therefore, if an auction site eases a
contract between two parties where one Ecommerce – Legal Issues such as a person
provides a pornographic movie as consideration for purchasing an mp3 player, then such
a contract is void.
4. There has to be an intention to create lawful relations
If there is no intention on the part of the parties to create lawful relationships, then
no contract is possible between them. Usually, agreements of a domestic or social
nature are not contracts and therefore are not enforceable, e.g., a website providing
general health related data and instructions.
5. The parties must be able to contract.
Contracts by minors, lunatics etc. are void. All the parties to the contract must be
lawfully competent to enter into the contract.
6. There must be free and unaffected consent
Consent is said to be free when there is absence of coercion, misrepresentation,

undue influence or fraud. In other words, there must not be any agitation of the will of any
party to the contract to enter such contract. Usually, in online contracts, especially when
there is no active real-time communication between the contracting parties, e.g.,
between a website and the customer who buys through such a site, the click through
process ensures free and genuine consent.
7. The object of the contract need to be lawful
A valid contract presumes a lawful object. Thus a contract for selling narcotic
drugs or pornography online is void.
8. There must be conviction and possibility of performance
A contract, to be enforceable, must not be ambiguous or unclear and there must be

possibility of performance. A contract, which is impossible to perform, cannot be
enforced, e.g., where a website promises to sell land on the moon.
TYPES OF ELECTRONIC CONTRACTS
Employment Contracts
The Information Technology is determined by manpower in Indian context and

thus employment contracts are vital. With a high erosion rate as well as the
confidentiality involved in the work employment contracts become crucial. Apart from
that Indian Labour practices are based on tough labour laws and not the hire and fire
processes of the first world. In this background copyright issues of software
development assumes vital importance. Apart from those contracts for on-site
development and sending the workforce abroad and security clauses will play a crucialrole
in employment contracts. Firms hiring personnel abroad apart from their personnel need to
include the relevant employment contract of the place of action.
Consultor Agreements
The normal requirements of Indian Contracts Act of 1872 will apply on any
consultant agreement. But particularly in Information Technology industry where the
infrastructure to function is low and connectivity is very high consultancy with experience
marketing and business development and technology development is a very dominant
mode of contract. Here proper care to be taken in Consultant agreements where issues
of Intellectual Property Rights, privacy will play an important role. If care is not taken it
may lead to cost of business and loss of clients.
Contractor Agreements
As manufacturing companies subcontract their business, Information Technology

also subcontract their work due to changing orders and would like to cut on the cost of
regular workforce and attendant legal and financial problems. At the same time in
manufacturing business, tough labour laws like the Contract Labour (Abolition and
Regulation) Act of 1970 in force could lead to a different type of legal twist. However if
care is taken to subcontract keeping the requirements of the contractAct and the Contract
Labour abolition act the anticipated objectives could be met. Here again privacy,
consumer liability and copy right issues assume great importance and care to be taken
in representation such contracts.
Sales, Re-Seller and Distributor Agreements

In software and Internet dealings though the order of middle men are done away
with, it still requires a circulation network and hence prescribed issues come into play in
that feature of business. In first place one needs to see whether software is a good in the
Sale of Goods Act.
Software is a programme of instructions, which operate the system or hardware to

function in a planned manner. Hence there arises an effort to classify and define in legal
terms of the vague nature of software in comparison with other products. The code and
its source can be understood as information planned in a way to operate the system
leading to the conclusion it is not a property and not a good in the legal intellect. In
Aerodynamics Systems Product v. General Automation limited, the argumentupraised by
the defendants that though software can be a subject matter of sale, software themself is
pure information, and the transmission of software is a service and not sale of goods.
There is another explanation of Software to be considered as Goods where it is likened
to that of a book containing information, which is considered as goods under the Sale of
Goods Act. As the value of the book is not the mere value of the inlet jacket, paper and
materials used in its creation, but one that of the value of the information limited in it,
software is also a product –a floppy, or a CD-ROM or simply stored in hard disc but the
value is much higher than the simple storage device.
Hence software due its high value in terms of application is measured as goods for the
purpose of legal classification. Having recognised it as good the distribution, reseller
agreement should take care of the aspect of Monopoly Restrictive Trade Practices (in
future the competition law) provincial authority and other tax instruments.
Non-Disclosure Agreements
Non-Disclosure Agreements are part of IT contracts, which identify binding

agreements with employees apart from the standard confidentiality agreements. The
Indian Contract Act 1872 has provisions for the same and it undertakes importance in an
industry which is purely knowledge based and one which can be easily repeated ruining
the business.
Software Development and Licensing Agreements
A license is an authorisation given to do a specific

manufacture/sales/marketing/distribution, which is legitimate. License plays a prevailing
form of contract in mass marketing activity of any kind including Information Technology.
Software licensing has a historical background where originally it was pushed with the
hardware and was given free and its use and application was limited to that of operating
the system and few other features. Later in late 60’s and early 70’s hardware makers in
Europe marketed software distinctly. Later software makers resorted to license their
products distinctly from that of the hardware. In normal ownership, the product sold
becomes the exclusive property of the buyer who can do whatsoever he wants. In case
of software, the product can be copied easily and will adversely affect the manufacturer
of his sale and thus the entire investment-return processes and future spur to invest in
making software. Thus software business became a business of license command.
These licenses are issued in persistence or for a limited period. Licensing agreement
normally forbids reverse-engineering, de- compiling or any other manipulation of the
software, which can be marketed easily with some alterations. Licenses are issued for a
single machine practise at a specified location with a provision for backup in the same
machine in case of a crash or unreliable functioning. Multiple machine licenses are also
given. The license agreement also protects the user from any copyright or other
intellectual property violation of the manufacturer. The licensing agreements become
vital in Cyber Contracts. Similarly software development is another agreement between
joint ventures of companies or for awarding development of software to multiple parties,
which assume vital importance in contracts of cyber world.
Shrink Wrap Contracts
A Shrink Wrap contract is the former license agreement required upon the buyer
when he buys software. Before he or she tears the pack to use it, he or she is made
mindful by tearing the cover or the wrap that they are sure by the license agreement of
the manufacture. This is done as previous deliberated to protect the interests of the
manufacturer where the consumer cannot replicate the package, copy it or sell it or
donate it to others moving the sale of the software. The license, which is contracted and
enfolded in the product, which becomes enforceable and taken as consent before the
buyer tears the package. The usual sections that are part of the shrink-wrap license are
that of
a) prohibiting illegal creation of copies
b) prohibiting payments of the software
c) prohibition of contrary engineering, de-compilation or adjustment
d) prohibition of usage in more than one computer definite for that purpose
e) disclaimer of contracts in respect of the product sold
f) limitations of responsibility
The reason and business sense is that to guard the manufacturer of the package,
as it is easy to copy, operates and duplicate under other brand name. Critiques contend
that shrink-wrap license agreement is in contradiction of the basic principle of contract of
offer, consideration and acceptance as the licensee is unsettled. Several cases to this
effect have been dispensed in US courts.
Source Code Escrow Agreements
In software development many principal firms who participate in development are

keen to guard the source code of the software, which is the most appreciated and
cautious part of the computer program. Copyright owners of such source code may have
to disclose this to countless developers who will be developing definite software based
on the source code. In these conditions, the copyright owner will credit the source code
to specified source code escrow agents who will release the code on the development of
the product upon agreed terms. In cyber contracts, such agreements and also the terms
and conditions to contract with the escrow agents becomes vital.
LEGAL FRAMEWORK RELATING TO E-CONTRACT
With the growing importance and value of e-contract in India and across the world, the
different stakeholders are continuously identifying and evaluating the nuances of legal outline
relating to it. The participation of different service providers in the transaction of e-contract,
which includes a payment gateway, the main website, the bank or card verification website,
the security authorisation website and the final service provider which can also comprise the
shipping agent has made the E-contract business more complex. Therefore, the need for
amendable it has augmented. In India, till date there are no definite legislations or guidelines
protecting the buyers and sellers of goods and services over the electronic medium.
However, several laws
acting in unification are trying to regulate the business transactions of E-contract. Theyare as
follows:
• Indian Contract Act,1872

• Consumer Protection Act,1986
• Information Technology Act,2000
• Indian Copyright Act,1957
Like any other types of business, E-contract business also works on the basis of
contracts. It is therefore, structured by the Indian Contract Act, 1872. Any valid and legal E-
contracts can be designed, completed, and enforced as parties replace paper documents with
electronic parallels. The contracts are move in between the service providers or sellers and
buyers.
Earlier, there was no definite law to regulate the intermediaries such as verification
service providers and shipping service providers to safeguard that the product or service is
actually delivered. However, the government has recently acquainted the Information
Technology (Intermediaries Guidelines) Rules 2011. The actual scope of the security provided
under these regulations would only be known after judicial interpretation of the provisions.
However, now it has been explained that even foreign intermediaries delivered to provide
service can be sued in India.
The payment gateways which footing a very important position as the primary
processor of the payment for the merchants were brought into the legal framework after
proclamation of the Payment and settlement Systems Act, 2007 (PSS Act, 2007). The
PSS Act, 2007 as well as the Payment and Settlement System Regulations, 2008 made
under the Act came into effect from August 12, 2008. Further, the Reserve Bank of India,
issued additional guidelines initiating all such gateways and payments processors to
register under the said act.
The authority of the transactions of E-contract is established under the Information
Technology Act, 2000 (IT Act, 2000). It explains the reasonable mode of acceptance of the
offer. IT Act, 2000 also rules the revocation of offer and acceptance. However, definite
provisions that regulate E-contract transactions conducted over the internet, mobile phones,
etc. are vague. With numerous cross border transactions also being conducted over the
internet, specific law guarding the Indian customers and Indian businesses are essential and
Indian laws are gravely insufficient on this issue.
In a bid to safeguard security, the government has made digital signatures

necessary in several E-contract transactions mainly in the government to government
(G2G) or government to business (G2B) framework with a view to safeguarding the
identity of the transacting parties. E-contracts transactions on these modes require
digital signatures as essential parts. They are used for the verification of the electronic
contracts. These are controlled by the IT Act, 2000 which provides the outline for digital
signatures, their issues and verification. The Act thus tries to safeguard that trust
between both the parties is maintained through verification of identities and help prevent
cybercrimes and ensure cyber security practices.
In the light of the above discussion, it is to be said that the present laws in respect of
the guidelines of E-contract and its related operations are not suitable serving the purpose.
Propagation of laws is creating a confusion in the smooth procedures of the E-contract
accomplishments. Further, the present laws are salient on features of e-contract such as
payment instrument and delivery instrument and present standard practises which have been
settled by the industry. The Reserve Bank of India, however, has tried to support the
electronic payment mechanism through various orders, but such orders can only act as a
stop-gap procedure. The most important order in this regard was the application of second
factor verification in all Indian Payment Gateways. Commonly recognised as Verified by Visa
or MasterCard Secure Code, this had made card transactions on the internet moderately
more secure.
POSITION OF E-CONTRACT IN INDIA
• Indian Railway Catering and Tourism Corporation Limited
Indian Railway Catering and Tourism Corporation Limited (IRCTC) is certainly the
major e-commerce site in India and in India’s answer to private capitalist ventures.IRCTC was
set up as a subsidiary of the Indian railways for the exclusive purpose of providing catering
services and ticketing services for the Indian Railways. However, of late, it has extended its
wing and now covers sectors such as flights and hotel bookings. The flagship was
established in 2002 and has transformed the online travel booking business in India. IRCTC
functions both in the business to business and business to consumer segment. According to
the data released by IRCTC, it has more than 4-4.5 lakh reservations per day. In 2010-11,
IRCTC sold tickets value more than Rs. 8000 Crore. It claims to switch more than 8 lakh
equivalent transactions thereby speaking volumes about the prominence and the size of their
business.
The site offers the only link for purchasing Indian railway tickets online and even agent
sites (B2B) have to link them to IRCTC to provide online booking services for customers.
IRCTC offers a large option for consumers for payment of buying tickets online. IRCTC
however, is one of the few enduring e-commerce sites which charged transactions charges
from customers, which is different bank to bank.
Through IRCTS several customer enter daily into a new dimension of contract i.e.
E-contract. E-contract now plays an important role both for the customer and the seller.
Customer has a lot of choice to choose a product and seller through e-contract reach to large
customers.
Inferences that can be drawn from the above Case Studies:
The main issues that have been identified from the case studies can be stated as follows:
a) Lack of guideline regarding paymnt mechanisms
There is an outright lack of regulations regarding the mode of payments which needs to be
provided by any e-commerce website and the transactions charges which they can levy. It is
seen that numerous travels website levy additional charges on the payment made by the
customers. The websites state that it is an industry customary practise. This makes the
matter even more complex owing to issues of anti- competitive practises.
Further, there is no standard Reserve Bank of India rules available especially for the issues
of refund transactions in the case of credit card and debit card payments. The regular
guidelines available for point of sale (PoS) dealings may not apply to all e-contract
transactions due to the envelopment of multiple parties in these cases instead of two parties
in a normal PoS transaction.
b) Need for criteria for Consumers Grievance Redressal

There should be standards recommended by law regarding the customer service
requirements to be fulfilled by an e-contract undertaking. Providing a necessary physical
office and mandatory 24 hour call centre are some of the steps which should be
commenced. Further, the consumer courts should be made conscious the issue of e-
contract transactions and the special steps to be shadowed in such cases. Timelines should
be set for returning the amount back to the customer’s account in case of failed transactions or
order cancellations. These procedures should be applicable to the e-commerce merchants as
well as the banks and payment entries.
INTERNATIONAL SCENARIO IN RESPECT TO E-CONTRACT
New intimidations to consumer protection call for new protecting rules and measures. We
should distinguish the fact that better consumer protection in online environments shall have
an optimistic impact on the further development of electronic commerce and thereby on
merchants. Generally speaking, if electronic commerce is to increase, consumers must be
provided with at least the same guarantees they would be provided with in the older
marketplace.
The US and the EU have affirmed the importance of protecting a new type of consumers.
With the rise of electronic commerce, the role of consumers has changed affectedly. While
consumers were formerly a quiet body, today they have power in businesses. Sellers are
now in a comparatively submissive position. Their job is too merely to paste that product
information it becomes the accountability of consumers to evaluate and make active

decisions upon.
Where the precise field of argument firmness is concerned, both the US and the EU realize
the best way to safeguard consumers could be to provide them with suitable measures for
recompense. Consumer protection groups have created mediums where consumers can
both acquiesce e-mail based complaints when discontented with advertisements, goods or
services, and allege violators of self- regulatory codes of beliefs.
While consumer protection can take on diverse forms, dispute resolve mechanisms are its
final insurance. Principles for dispute management are finally more attractive to devices than
less formal intended arrangements since they can encourage more reliable conduct of
consumer benefits. In light of government practise, protection accessible by state power is
important. Some consumers even seek reserve in the court. In order to quarter the special
character of modern business without drifting too far from tradition, ADR mechanisms for
dispute firmness very cleverly entail state application support. Procedure for consumer
protection in electronic commerce dispute firmness must extend outside national limits.
Individual states privation the ability and initiative to adequately address issues related to
consumer protection in the background of electronic market. Many of the issues that arise
from cross border disputes are impaired by the fact that misleading marketing practice laws
vary from one jurisdiction to alternative. Possible standard electronic consumer policies
should be pertinent to cross-border dealings to which all or most countries can subscribe.
OECD Member States have acknowledged the necessity of an international synchronized

approach to deal with the issue of dispute firmness in electronic business. In one imperative
document framed by the OECD, Procedures for Consumer Protection in the Context of
Electronic Commerce, procedures for consumer protection in dispute firmness and amends
aim to safeguard consumers contributing in electronic business without founding barriers to
trade.
The rules serve as a reference to governments, businesses, consumers, and their

councils of the characteristics of active consumer protection for electronic business. The
rationale behind them is alike to that of the US and EU. Firstly, applicable law and jurisdiction
are singled out for likely amendment.
No broad creation of the new applicable law or principle of jurisdiction is pointed out, but
the rules do define features of suitable modifications. Equality, they suggest, is one of the
most important features in understanding consumer safety. The purpose of the fairness is to
offer consumers a level of protection not less than that afforded in other forms of commerce
and to provide consumers with eloquent contact to fair and timely dispute resolution and
redress without undue cost or burden. To complete fairness, one must provide a framework
for correcting unfairness.
As said in the guidelines, businesses, consumer councils, and governments should

work collected to endure to use and develop fair, effective, and clear self- regulatory and other
measures, which provide consumers with the choice of mechanisms to firmness their
disputes ascending out of consumer dealings.
Moreover, these efforts should be followed at an international level. To attain the

maximum reimbursements of the new arrangements, modern technology should be used to
improve consumer awareness and freedom of choice. From the breakdown above, we can
determine that the international community has touched a harmony on the general approach
toward consumer protection. While making developments on court procedures and the
application of principles, new means should be found out to quarter the new needs of electronic
business. The means should permit the expansion of new shops effective in a responsible
manner and resolving disputes accessibly online and, along with them, greater choices and
more antagonism. With new services in place, consumers shall positively be protected from
excessive costs of defiance withduplicative or varying guidelines.
E-contract in India has definitely came a long way from the days of bazee.com which
underway as the first large online retail website. At present, with the increase in number of
internet user, e-contract is organised to grow further. The growing trend ofinternet banking and
credit or debit cards along with the rise in the number of educatedand computer literate persons
will further support this growth. The need of the hour is law which covers all the aspects of e-
contract extending from payment mechanism and maintaining minimum standards in the
42
delivery of services. Such a legislation will help to restraint the growth of websites which rise
within a few days and then stop functioning in the absence of suitable funds for sustenance.
As all business through e-contract sites is ended through the internet without any direct
physical interfaces, the main basis connections is the trust of the customers which should be
engaged at any cost. A law in this field will detect the criminals who have used the internet as
a source for making quick money. This will also act a defence for the genuine e-contract
websites and help in further growing of business. There is also a need for the creation of an
authority in the consumer court to look into the grievances arising out of e- contract
transactions. Such an authority should have experts in area such as payment security. This will
embolden speedy redressal of disputes and promote e-contract transactions. E-contract which
is a developing segment in the commercial arenas scheduled to grow and it is the
accountability of the prevailing players to ensure that growth is not hindered by their acts and
policies.
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III B.

COM PA CYBER LAW

Cyber Law: Introduction - Concept of Cyberspace – E - Commerce in

1.1 CYBER LAW - INTRODUCTION

Cyber law encompasses laws relating to –

HISTORY OF CYBER LAW IN INDIA

CYBER LAW IN INDIA

1. Information Technology Act, 2000

2. Information Technology (Certifying Authorities) Rules, 2000

3. Information Technology (Security Procedure) Rules, 2004

NEED FOR CYBER LAW

▪ Almost all transactions in shares are in demat form.

NEED FOR CYBER LAW IN INDIA

Cyber-crimes are broadly categorized in two different categories:

Cyber-crime is a criminal exploitation of the internet. A misconduct that is committed

REQUIREMENTS TO BE A SUCCESSFUL CYBER

• Being quick and concerned to look at the web as an information providerare

IMPORTANCE OF CYBER LAW

✓ We are living in highly digitalized world.

ROLE OF CYBER LAW

JURISPENDENCE OF CYBER LAW

➢ The philosophy of law, or legal theory

4. Harassment and Stalking:

ADVANTAGES OF CYBER LAW:

LIMITATIONS OF CYBER LAW

accurate manner. There is a possibility to consolidate the technological advancements in the

CYBER SPACE – MEANING

The core feature of cyberspace is an extremely interactive virtual environment for an

HISTORY OF CYBER SPACE

EMERGING TRENDS AND CHALLENGES IN CYBER LAW

A. CHALLENGES IN MOBILE LAWS

B. LEGAL ISSUES OF CYBER SECURITY

C. CLOUD COMPUTING & LAW

D. SOCIAL MEDIA & LEGAL PROBLEMS

1. CHALLENGES IN MOBILE LAWS

2. LEGAL ISSUES OF CYBER SECURITY

3. CLOUD COMPUTING AND LAW

4. SOCIAL MEDIA AND LEGAL PROBLEMS

1.3 HISTORY OF INTERNET AND WORLD WIDE WEB

Electronic commerce, commonly known as e-commerce or e-comm, is the buying and

E-commerce can be divided into:

• E-tailing or "virtual storefronts" on Web sites with online catalogs, sometimesgathered

• Increasing broadband Internet and 3G penetration.

developing countries) are:

• Cash on Delivery as a preferred payment method. India has a vibrant cash

• Direct Imports constitute a large component of online sales. Demand for

When Was Online Shopping Invented?

In 1968, ARPA (Advanced Research Projects Agency) commissioned the world’s

The Origins of e-Commerce

➢ Easy Product Comparison

TYPES OF E-COMMERCE MODELS

This is Business to Business transactions. Here the companies are doing

Quikr etc follow this model.

This is the reverse of B2C, it is a consumer to business. So the consumer provides a

• At times, e-commerce can feel impersonal. So it lacks the warmth of an

SECURITY ISSUES IN E-COMMERCE

• privacy – information exchanged must be kept from unauthorized parties

IMPORTANT ISSUES IN E-COMMERCE

1. Legal aspects of e-commerce: As discussed earlier, the e-commerce model

1.5 CONTRACT ASPECTS IN CYBER LAW

Essential Elements of a Contract

1. Agreement: The primary element that creates a contract between parties is an