The research article focuses on the legality of e-commerce and e-contracts which are ruled and protected by certain Acts and legislations in India. It deals with the essential elements and their role in sustainability. Online businesses and online contracts play a major role in almost everyone’s life these days. These concepts cover a wider area of businesses being dependent on the internet solely.
This article also shows how the Indian legal system has been working on the upliftment of the condition of e-contracts and e-commerce. They have been helping to provide better regulations and improvements in the system.
The term e-commerce was coined back within the 1960s, with the increase in the usage of electronic commerce i.e. the buying and selling of products through the transmission of knowledge, which happened through the introduction of the electronic data interchange. Fast forward fifty years and e-commerce has changed the way during which society sells goods and services. New models of business demand different organizational charters. E-contract is one of the divisions of e-business. This mode of business enables businesses to save lots of time on product design and device products consistent with the individual customer requirement, track sales, and obtain immediate feedback from the customer.
E-commerce can be stated as the business transaction for buying and selling of products and services by customers solely through an electronic medium, without using any paper documents. E-commerce has brought a paradigm shift in trading throughout the entire world. Although the Indian e-commerce sector has witnessed a powerful rate of growth within recent years, the world is still beset with some serious challenges. The Organization for Economic Cooperation and Development (OECD) has defined e-commerce as a replacement way of conducting business, qualifying it as business occurring over networks that uses non-proprietary protocols that are established through an open standard-setting process like the Internet .
E-contracts are contracts that are executed and enacted by software within the sense that they’re not concluded by face to face communications i.e. the “seller and buyer” or “supplier and consumer” don’t meet face to face to make, negotiate and execute the terms of their contract. Distance contracts may be a sort of e-contract because they’re contracts concerning goods or services concluded between a supplier and a consumer under an organized distance sale which for the aim of the contract, makes use of means of distance communications like the internet, e-mails, telephones than on up to and including when the contract is concluded.
Information Technology Act, 2000
The first-ever law enacted by the government of India on e-commerce was the Information Technology (IT) Act 2000. It had been an enactment to offer effect the UNCITRAL Model Law on Electronic Commerce, 1996.[i] The overall Assembly of the United Nations adopted a resolution on January 30, 1997, commending the Model Law on Electronic Commerce for favorable consideration by the Member States as a Model Law once they enact or revise their laws, in sight of the necessity for uniformity of the law applicable to alternatives to paper‐based methods of communication and storage of data. The main aim of the IT Act was to supply legal recognition to the transactions administered by the means of electronic data interchange and thru other electronic means of communications, commonly mentioned as electronic commerce (e-commerce) .
The Information Technology Act elaborates on data privacy, wherein, with the expansion of the web, the information of individuals is online and is susceptible to be misused. The data analysis is certain things which stand testimonial to the present concern. Huge Data analysis suggests that there are chances that the searches made by people can be put into work to persuade the alternatives of individuals analyzing their pattern of search made. Significantly, under the Act the Certification authority may be a focus around which this Act revolves as most of the provisions are concerning Regulation of Certification Authorities i.e., the appointment of a Controller of CAs, the grant of license to CAs, recognition of foreign CAs, and duties of subscribers of digital signature certificates.[ii]
It also made the offenses like hacking, damage to computer ASCII text file, publishing of data which is obscene in electronic form, breach of confidentiality and privacy, and fraudulent grant and use of digital signatures punishable. Further, it provides for civil liability i.e., Cyber contraventions and criminal violations, penalties, the establishment of the Adjudicating Authority, and therefore the Cyber Regulatory Appellate Tribunals. The related provisions of the Indian Penal Code, 1860, the Indian Evidence Act, 1872, Banker’s Book Evidence Act, 1891, and therefore the Federal Reserve Bank of India Act, 1934 were also amended to deal with the related problems with e-commerce and crimes.
Information Technology (Amendment) Act, 2008
India incorporated the Information Technology (Amendment) Act, 2008 to offer implementation of the UNCITRAL Model Law on Electronic Signatures, 2001 in India. The IT Act of 2000 was amended to form it technology‐neutral and recognized electronic signatures over-restrictive digital signatures. The Act brought many changes like the introduction of the concept of e-signature, amendment of the definition of intermediary, etc .
Section 66A of the IT Act, 2008 states that a person shall be liable to a fine of Rs. 1,00,000 or imprisonment which can be extended to 2 years if that person commits the crime of theft of identity by using the password dishonestly or the identity. Along with this, section 84A of the IT Act lays down duty on the Central government for the promotion of e-commerce and e-governance. It shall also provide for the secure use of electronic means.[iii]
Besides, the state assumed specific powers to regulate websites to guard privacy on the one hand, and check possible misuse resulting in tax evasions on the opposite hand. It’s important to notice that this act recognized the legal validity and enforceability of the digital signature and electronic records for the primary time in India and also gave emphasis on the secure digital signatures and secure electronic records. These changes were brought to decrease the incidence of electronic forgeries and to facilitate e-commerce transactions.
The Indian Contract Act, 1872 governs all the contracts and agreements along with the online contracts or the e-contracts. The essentials of a legally binding agreement to prevail are laid down in section 10 of the Indian Contract Act:
- Offer and Acceptance
- Lawful consideration
- Free consent
- Competent parties
- Lawful object
- Intention to enter legal relations.
A contract won’t be said to be valid until the above conditions are fulfilled . In India both the Indian Contract Act, 1872, and therefore the Information Technology Act, 2000 should be complied with by a legitimate e-contract. An e-contract is legally binding on the user when he/she clicks on the “I agree” button if the above essential terms are met.
The concept of offer and acceptance is that the fundamental concept of effective communication in contract formation. About this question, e-commerce poses a serious problem. The offer and acceptance should be identified as they determine the precise time and place of the agreement, and thus which jurisdiction applies. The difficulty is immediate and therefore the traditional sort of contract is challenged because it makes it difficult to make sure that the parties act legally along with the transaction itself being legal and has also taken the required steps to respect the Contract.
The words utilized in a web offer can frequently be considered misleading, and different legal systems can affect these issues differently. Acceptance is an unqualified final agreement to the terms and conditions of the offer. Generally, it must be communicated to the offeror and therefore the parties are liberal to vary by agreement. E-mail may be a common method of acceptance in an e-commerce environment. Acceptance of a suggestion becomes effective at the instant the indication of assent by the offeree reaches the offeror. The ‘Postal Acceptance Rule’ states that if a celebration agreed to enter into a deal by post the contract shall be deemed to possess been concluded when the Offeror sends the letter of acceptance, whether the Offeree receives it or not. [iv]This rule doesn’t apply to e-commerce.
In literal terms, signature means signing with one’s name on it and agreeing to the facts mentioned. The principal function of signing a document is to verify the identity of the contracting parties and to offer consents to the contractual terms and to refuse repudiation, i.e. when an individual appends his signature, he cannot subsequently refuse that he wasn’t a contracting party. A signature isn’t essential per the Indian Contract Act, which states that a legitimate contract can also be an oral agreement between parties.
However, certain statutes have specified requirements for signature, for instance, a transfer certificate on an immovable property can’t be valid if the signature and/or thumb impression has not been attested to by the vendor to an equivalent. In another case, the Indian Copyright Act of 1957 involves the customer to sign. The IT Act is thus a physical signature for electronic signature. Competent authorities need to sign electronically following the IT Act, but electronic signatures haven’t been notified by the central government.
The Indian Stamp Act and different State legislation mandate that documents during which rights are established or transferred must be stamped. A document not properly stamped shall not be permitted as proof during a court of law, or maybe a competent authority unless it had been imposed (a fine of 10 times the quantity of the specified stamping duty). However, documents in an e-contract cannot be stamped.
The enforceability of e-contracts is questionable i.e. if written agreements that were signed and agreed are considered binding or not. While the web is merely emerging, the web contracts are usually well governed by the principles laid down in writing. Often, the user of the commercial website is requested to read and comply with the terms and conditions of activities before purchasing or receiving the service provided by the location.
The e-commerce though different in its digital presence from a brick and mortar business entity faces its own set of benefits and drawbacks. The legislation of the IT Act, 2000 was made to make a cyber regulatory framework following the model laws passed in UNCITRAL. These e-commercial transactions pose various problems of the character of security, jurisdiction, taxation, etc. on a global scale. the benefits and drawbacks of e-commerce are the facets of the system which has got to be understood while handling the e-commerce system.
Ethics, as discussed towards the top of the article, plays an important role in establishing the entity’s image within the market. The IT laws of India have gone an extended way since the IT Act was introduced in 2000. However, many aspects of an e-contract, especially, the wants of signature and stamping, remain uncertain and confused. The present trend of demonetizing and digitalization seems a necessity, and that we sincerely hope that the govt would take appropriate action therein regard, to eradicate all uncertainties about the validity of e-contracts.
- What do you mean by e-commerce and e-contract?
E-commerce can be stated as the business transaction for buying and selling of products and services by customers solely through an electronic medium, without using any paper documents and E-contracts are contracts that are executed and enacted by software within the sense that they’re not concluded by face to face communications i.e. the “seller and buyer” or “supplier and consumer” don’t meet face to face to make, negotiate and execute the terms of their contract.
- What are the types of e-commerce and e-contracts?
The types of e-commerce are Business to business (B2B), Business to customer (B2C), Consumer to consumer (C2C), Consumer to Business (C2B), Business to administration (B2A) & Consumer to administration (C2A).
The types of e-contracts are: Shrink-wrap agreements, Click or web-wrap agreements & Browse-wrap agreements.
- What are the acts that govern and administer e-contracts and e-commerce?
The acts that are mainly concerned and govern these are the Indian Contract Act, 1872, Information Technology Act, 2000 & Information Technology (Amendment) Act, 2008. The related provisions of the Indian Penal Code, 1860, the Indian Evidence Act, 1872, Banker’s Book Evidence Act, 1891, and therefore the Federal Reserve Bank of India Act, 1934 were also amended to deal with the related problems with e-commerce and crimes.
- Are the essentials of an e-contract the same as those of a normal contract?
Yes, the essentials are the same for both types of contracts. The essentials have been mentioned in Section 10 of the Indian Contract Act, 1872. It states that all agreements are contract if they are formed by the free consent of competent parties with legal consideration and a lawful object.
- What is the aim of the Information Technology Act?
The main aim of the IT Act is to supply legal recognition to the transactions administered by the means of electronic data interchange and thru other electronic means of communications, commonly mentioned as electronic commerce (e-commerce). It also aims in making sure that the contracts made online are legally binding too.
- All Answers Ltd. (November 2018). E-commerce and E Contracts. Retrieved from https://www.lawteacher.net/free-law-essays/commercial-law/e-commerce-and-e-contracts-commercial-law-essay.php?vref=1
- Information Technology Act, 2000
- Information Technology (Amendment) Acct, 2008
- Indian Contract Act, 1872.
- [i] Mariya Paliwala; An overview of e-commerce under cyberlaw; 28th September 2020; https://blog.ipleaders.in/an-overview-on-e-commerce/
- [ii] Georgina Pereira E-commerce and E-contracts: Overview and analysis; 28th September 2020; https://www.legalbites.in/e-commerce-e-contract/
- [iii] B&B Associates; Article on E-commerce laws in India; 28th September 2020; https://bnblegal.com/article/article-e-commerce-laws-india/#:~:text=Provisions%20Regulating%20Privacy%20in%20E,electronic%20records%20and%20Electronic%20Signatures.&text=It%20also%20has%20to%20provide%20for%20secures%20use%20of%20electronic%20mean.
- [iv] Daisy Roy; All that you must know about e-contracts; 28th September 2020; https://blog.ipleaders.in/all-that-you-should-know-about-e-contracts/