E-Contracts in the

Indian Contract Act,

1872
-Dr.Parul Sinha
Assistant Professor, School of law , Bennett
University
MEANING AND DEFINITION OF E-
CONTRACTS
Electronic commerce enables businesses and consumers to enter into contracts with each other for the purchase of
goods and services via computer networks whether or not the parties are situated in the same jurisdiction.
General contracts i.e. paper based contracts where parties meet and sit together, enter in the negotiation process and
finally sign the contracts have been slowly replaced by electronically formed contracts i.e., electronic contracts.
Electronic contracts may be said as ‘legally enforceable promises or set of promises that are concluded using
electronic medium’.
The automated process of entering into contracts via the parties, computers, whether networked or through electronic
messaging.
The UNICITRAL Model Law on Electronic states that a contract can be made by exchanging data messages and
when a data massage is used in the formation of contract, the validity of such contract should not be denied.
Types of E-Contract
• Click Wrap Agreements.
• Browse Wrap Agreements.
• Shrink Wrap Agreements.

Rudder v. Microsoft Corporation

An online “click-wrap” agreement was agreed upon without scrolling down through all pages of its terms
and conditions before providing an access to the services. The court held that the Member Agreement
was enforceable stating that scrolling through several pages was similar to having to turn through several
pages of a paper contract and failure to do so would create chaos in the marketplace.
Formation of E-Contract
• Offer and Acceptance Rule
• Section 10 of the Indian Contract Act, 1872- The provisions of Information Technology Act, 2000 to be read
along with the provisions of general contract in order to determine the time of electronic contract formation.
Additional Legal Principles
a. Electronic Offer
b. Electronic Acceptance
c. Lawful Consideration
d. Lawful Object
e. Consent and f. Capacity of the parties
Electronic Offer
Whether an e- commerce website is deemed to make an offer or a mere invitation to treat ?
Via Websites :
• Via Non interactive Website
• Via Interactive Website
• Via Automated Interactive Websites
Via Email:
Communications can be transmitted fast enough in comparison to paper based communication i.e., the period of time
between e-mail communications that are being sent can be few seconds or even fractions of a second.
Amazon Terms and Conditions:
https://www.amazon.in/gp/help/customer/display.html?nodeId=GLSBYFE9MGKKQXXM
 Electronic Acceptance
Communication of an Electronic Acceptance :
• Acceptance by sending an e-mail.
• Acceptance via website.
Q. Whether an acknowledgement of receipt amounts to an acceptance?
Section 12 of Information Technology Act, 2000.
Q. Whether postal rule will be applicable to e-mail communication ?
Section 4 of Indian Contract Act, 1872.
Section 13 of the Information Technology Act, 2000.
Non -Instantaneous Communication: If communication is non-instantaneous, the contract is formed as
per Section 4 of Indian Contract Act: The communication of an acceptance is complete,—as against the
proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor; as
against the acceptor, when it comes to the knowledge of the proposer.
Instantaneous Communication :If communication is instantaneous, the contract is formed when
acceptance is received by the offeror.
Entores Ltd. v. Miles Far East Corporation (1955) held that in instant communications, the contract is
formed when acceptance is received, not when it is sent. Bhagvan Das v. Girdharilal Kedia (1996) The
contract is formed at the location where acceptance is received by the offeror.
If we assume that the postal acceptance rule does not apply to electronic communications and that
acceptance is effective when communicated to an offeror, there is a deliberation about when
communication actually occur.
For example, if the acceptance is sent by email, the communication of email is comprised in two ways ;
the time when the message is downloaded in the recipient’s computer; or the time when the message is
received by the recipient’s internet service provider.
• Acceptance via website:
the rule applies to contract over telephone would apply with equal vigour to contracts concluded over the
internet. Contracts would be concluded where the acceptance is communicated, received and understood.
Validity of E-Contract
Section 10 A of Information Technology Act, 2000
Trimex International FZE Ltd. v. Vedanta Aluminium Ltd. (2010)
The Supreme Court held that a contract formed via email is legally binding if offer and acceptance are
clearly established. Reinforced that contracts executed via electronic communication are valid without a
physically signed document.
Place of Contract Formation
‘Where’ the electronic contract was actually concluded?
The residence of the defendant may well include either his place of physical residence or the place where the website servier is located.
• Section 20 of Civil Procedure Code.
• Section 13 (3) of the IT Act, 2000.
P.R. Transport Agency v. Union of India AIR 2006 All 23
where Uttar Pradesh High Court determined “whether the place where the contract is complete by receipt of communication of acceptance by electronic
mail is a place where part of cause of action ‘arises. The Court observed that “With reference to contracts made by telephone, telex or fax, the contract is
complete when and where the acceptance is received. However, this principle can apply only where the transmitting terminal and the receiving terminal
are at fixed points. In case of e-mail, the data (in this case acceptance) can be transmitted from anywhere by the e-mail account holder. It goes to the
memory of a server which may be located anywhere and can be retrieved by the addressee account holder from anywhere in the world.

A.B.C. Laminart Pvt. Ltd. and Anr. v. A. P. Agencies, Salem, AIR 1989 SC 123
Where Supreme Court made an observation that “cause of action arises at (a) where the contract is performed or is to be performed or (b) where money
under the contract is either payable or paid or (c) where repudiation of the contract is received, if any.”
Challenges in E contracts:
In disputes arising out of electronic contracts, the foremost question is whether particular court has territorial
jurisdiction to adjudicate the dispute.
However, in e-commerce transactions, it is difficult to assess the exact business location of the defendant or where
the cause of action actually arises. Here it is important to determine the two major questions; firstly, when the
consumer is able to access the defendant’s website from his place of residence or from anywhere in the country,
whether that place can be considered as defendant’s place of business ?
Secondly, when the consumer is able to enter into online transactions by placing an order and making payment for
the goods and services such as booking air tickets, hotel tickets or movie tickets, can the cause of action be said to
arise at that place.