GETTING DIGITALISED: VALIDITY OF E-CONTRACTS IN INDIA

Authors:

Sudhir Yadav (KIIT School of Law, Bhubneshwar)

Elasha Saha (Army Law School, Pune)


Editor:

Yash Raj Gupta (Department of Law, CU)

INTRODUCTION With the advancement of innovation, the method of executing documents has likewise developed. With the expanding interest for present day, helpful techniques for going into restricting exchanges, electronic understandings and electronic mark have increased a great deal of energy as of late. Innovative improvements have not just changed the manners by which these exchanges are gone into, however the execution procedure has likewise upset essentially. Talking about e-contracts, there has been different case laws, wherein email between parties has additionally been acknowledged as a coupling contract, the legitimacy and enforceability of snap wrap understandings despite everything keeps on being a reason of concern. VALIDITY OF E-CONTRACTS as per CONTRACT ACT, 1872(2) Section 10 of the Contract Act lays down as to what agreements are contracts. It states: “All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.” Contracts executed electronically are also governed by the basic principles provided in the Contract Act, which mandates that a valid contract should have been entered with a free consent and for a lawful consideration between two majors. The intent of the parties is, therefore, relevant. In case of click wrap agreements also, if the terms and conditions are provided to the user (offer) and he confirms to the same by ticking on “I Agree” (acceptance), then he shall be held liable to honour the obligations under the contract. STATUTORY RECOGNITION UNDER THE INFORMATION TECHNOLOGY ACT, 2000 (IT ACT) Electronic contracts have also found statutory recognition under the Information Technology Act, 2000 ("IT Act"). Amongst other things it specifically states that a contract shall not be deemed unenforceable, solely on the ground that electronic form/means were used for communication of proposals, acceptance of proposals, revocation of proposals or acceptances, as the case may. The IT Act also recognizes "digital signatures" or "electronic signatures" and validation of the authentication of electronic records by using such digital/electronic signatures. The contents of electronic records can also be proved in evidence by the parties in accordance with the provisions of the Indian Evidence Act, 1872. Conclusion of contracts through electronic means, such as through e-mail communications (or execution of electronic contracts) have also been recognized by Indian courts from time to time. For instance, in the case of Trimex International FZE Limited, Dubai vs. Vendata Aluminum Ltd., the Hon'ble Supreme Court of India held that the contract between the parties was unconditionally accepted through e-mails and was a valid contract which satisfied the requirements of the ICA. ADMISSIBILITY E-CONTRACTS AS EVIDENCE Under the Evidence Act, 1872, an e-agreement has the same legal effect as a paper based agreement. The definition of “evidence” as provided under Section 3 of the Evidence Act includes “all documents including electronic records produced for the inspection of the court.” Section 65B(1) of the Evidence Act provides that any information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer shall be deemed to be also a document and shall be admissible in any proceedings, without further proof or production of the original, as evidence of any contents of the original or of any fact stated therein of which direct evidence would be admissible”. Further, Section 47A of the Evidence Act stipulates that when the Court has to form an opinion as to the electronic signature of any person, the opinion of the Certifying Authority which has issued the electronic Signature Certificate is a relevant fact, and Section 85B of the Evidence Act stipulates that unless the contrary is proved, the Court shall presume that- 1. the secure electronic record has not been altered since the specific point of time to which the secure status relates; 2. the secure digital signature is affixed by subscriber with the intention of signing or approving the electronic record. EXECUTION OF E-CONTRACTS The acknowledgment and guideline to E-Contracts is given by different laws, for example, Information Technology Act, 2000 and the Indian Evidence Act, 1872. The arrangements in the I.T. Act notice about the attribution, affirmation and dispatch of electronic records and made sure about electronic strategies. The IT Act perceives the essential highlights of the agreement, for example, the correspondence of the recommendations, acknowledgment of proposition, disavowal of proposition and acknowledgments, as the case might be which could be communicated either in electronic structure or by methods for an electronic record. Further, the acknowledgment of an agreement is concurred under the Indian Evidence Act, by which the expression "report" incorporates any data contained in an electronic record which is imprinted on a paper, put away, recorded or replicated in optical or attractive media created by a PC. VALIDITY OF E-CONTRACTS IN INDIA The Indian Contract 1872 has perceived the customary understandings which incorporate the oral agreements made by the free assent of the contracting parties who are skillful to contract for the legal thought with a legitimate item and are not explicitly pronounced to be void. Subsequently, there is no arrangement in this Act which precludes the enforce-ability of electronic understandings gave that the basic components of the substantial agreement must be available in such understandings. The free assent is considered as the primary attribute of the legitimate agreement. By and large, there is no degree for arrangement on E-contracts. The choice of "live with or without it" exchange is consistently accessible to the client. There are different situations where the Indian Courts have managed legitimacy of the e-agreements, for example, exchange of the particulars of the agreement. On account of LIC India versus Buyer Education and Research Center, the Supreme Court had held that "In line contracts there would be no event for a more fragile gathering to deal as to expect to have equivalent haggling power. He has either to acknowledge or leave the administration or products as far as the specked line contract. His choice would be either to acknowledge the nonsensical or out of line terms or swear off the administration for eternity." JURISDICTION OF COURTS UNDER E-CONTRACT Given the nature of e-contracts, one question which often comes to fore is – which court would have territorial jurisdiction to try disputes arising out of such e-contracts? The Code of Civil Procedure, 1908 ("CPC") prescribes the manner of determining the jurisdiction of civil courts in India, based on two fundamental principles: · the place of residence of the defendant; and · the place where the cause of action arises. Subject to the above, while the parties remain free to determine the choice of courts to adjudicate their disputes, they can choose only such court(s) which is/are not barred from exercising jurisdiction, i.e. parties cannot confer jurisdiction upon a court which does not have jurisdiction to entertain their case.         The jurisdictional issues of e-contracts have, however, been addressed to an extent under the IT Act. Section 13 of the IT Act governs the provisions relating to time and place of dispatch and receipt of an electronic record, and addresses the issue of deemed jurisdiction in electronic contracts, as under: 1) Save as otherwise agreed to between the originator and the addressee, the despatch of an electronic record occurs when it enters a computer resource outside the control of the originator. 2)  Save as otherwise agreed between the originator and the addressee, the time of receipt of an electronic record shall be determined as follows, namely: · if the addressee has designated a computer resource for the purpose of receiving electronic records, ·  receipt occurs at the time when the electronic record enters the designated computer resource or ·  if the electronic record is sent to a computer resource of the addressee that is not the designated computer resource, receipt occurs at the time when the electronic record is retrieved by the addressee ·  if the addressee has not designated a computer resource along with specified timings, if any, receipt occurs when the electronic record enters the computer resource of the addressee. 3)   Save as otherwise agreed to between the originator and the addressee, an electronic record is deemed to be dispatched at the place where the originator has his place of business, and is deemed to be received at the place where the addressee has his place of business. 4) The provisions of subsection (2) shall apply notwithstanding that the place where the computer resource is located may be different from the place where the electronic record is deemed to have been received under subsection (3). 5)  For the purposes of this section: · if the originator or the addressee has more than one place of business, the principal place of business, shall be the place of business ·   if the originator or the addressee does not have a place of business, his usual place of residence shall be deemed to be the place of business ·  "usual place of residence", in relation to a body corporate, means the place where it is registered." CONCLUSION On perusing the national laws, it very well may be said that e-understandings are substantial and enforceable in the courts, nonetheless, since the hazard related with e-marks are high, for high stake exchange, parties despite everything demand wet marks on physical understandings. The common legislative and judicial intent seems, by all accounts, to be evident that any legitimately substantial acts that are conventionally performed would keep on being substantial regardless of whether performed electronically or carefully, as long as such electronic/advanced execution comprises of the considerable number of characteristics of lawfully substantial agreement, as might be endorsed under the relevant laws. That said, determination of territorial jurisdiction for e-contracts becomes complicated in the absence of geographical or national boundaries for execution and implementation of such contracts. While, the IT Act and judicial interpretations related to contracts in general, have to a certain extent clarified the jurisdictional aspect of e-contracts, in view of the aforesaid discussions, it is generally advisable to clearly specify both jurisdictional and governing law provisions in the e-contracts, to avoid future conflicts on jurisdictional or choice of law issues. 


SOURCES

1. https://www.mondaq.com/india/contracts-and-commercial-law/544404/e-contracts--legal-validity-and-jurisdiction

2. https://acadpubl.eu/hub/2018

3. Trimex International FZE Limited, Dubai vs. Vendata Aluminum Ltd., AP No. 10 of 2009

4. LIC India versus Buyer Education and Research Center, 1995 SCC (5) 482

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8. E-contracts and its Validity in India - India Law Offices

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