Technological advancements have removed communication barriers, allowing people to share information instantly worldwide. This progress is primarily driven by the expansion of the e-commerce industry, which has transformed business transactions, offering unprecedented convenience and accessibility to millions of consumers in India. Despite its many benefits, e-commerce introduces unique legal challenges, especially regarding the creation and enforcement of contracts. This article will delve into the fundamentals of e-contracts, their various types, the laws governing them, and the legal issues and challenges they pose in India.

Essentials of E-Contrats

In the case of paper-based contracts, certain essential elements must be fulfilled, similarly, in e-contracts, there are important elements that are required for its formation. These essential elements are listed as follows:

• Offer 
• Acceptance
• Lawful consideration
• Lawful object
• Competent Party
• Intention to form a legal relationship
• Free consent

Types of E-Contracts

Browse Wrap Agreements:

A browser wrap agreement is a type of agreement that is intended to be binding on the party using the website. The rules and regulations are available to clients at any place on the page in the form of a hyperlink on the website, and by continuing to use the website, users are considered to have agreed to the terms. 

Shrink Wrap Agreements

These are commonly used in the sale of software or other products. Shrink Wrap agreements are typically present on the plastic or in the documentation surrounding the digital goods and are only accessible after the shrink wrap seal is broken. By opening the package or using the product, the user is deemed to have accepted the terms and conditions outlined in the agreement. 

Click Wrap Agreements

Click wrap agreements are prevalent in online transactions and are often used when users are required to indicate their acceptance of the terms and conditions actively. The users are presented with a dialogue box or a checkbox with the terms and conditions displayed, and they must click a button or check the box to proceed with the transaction. Click wrap agreements are generally considered enforceable, as they require users to take affirmative action to indicate their consent.

E-Contracts and Indian Law

In India, there are no specific laws solely dedicated to regulating e-contracts, but several existing laws govern them collectively, as outlined below.

The Indian Contract Act, 1872 encompasses all the rules pertaining to contracts, including the essential elements required for a legal contract. This Act recognizes the validity and enforceability of e-contracts, as long as they meet the necessary criteria of a valid contract. Any standard contract, whether paperless or in electronic form, that complies with the Indian Contract Act qualifies as an e-contract.

The Information Technology Act, 2000 is another critical piece of legislation that specifically addresses electronic contracts and e-commerce transactions in India. It provides legal recognition and validity to electronic records and digital signatures, equating them with their paper-based counterparts. The Act ensures that electronic contracts are not denied enforceability solely due to their electronic nature. It confirms that electronically formed contracts are legally valid and binding, provided they meet the criteria of a valid contract as defined by the Indian Contract Act. Section 10A of the Information Technology Act, which deals with the ‘validity of contracts formed through electronic means,’ states: “Where in a contract formation, the communication of proposals, the acceptance of proposals, the revocation of proposals and acceptances, as the case may be, are expressed in electronic form or by means of electronic records, such contract shall not be deemed unenforceable solely because such electronic form or means was used for that purpose.”

The Indian Evidence Act, 1872 supports the acceptance of electronic contracts as evidence. Sections 65A and 65B of the Act provide special provisions for considering electronic records as evidence.

Additionally, several other laws and regulations influence the regulation of e-contracts, including the Consumer Protection Act, 2019, Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, Payment and Settlement Systems Act, 2007, Goods and Services Tax (GST) Act, 2017, Competition Act, 2002, and the Digital Personal Data Protection (DPDP) Act, 2023.

Issues and Challenges of E-commerce Contract

• Valid and Enforceable Contracts

• Traditional contracts use physical signatures and document exchanges.
• E-commerce contracts lack this physical element.
• The Information Technology Act of 2000 recognizes electronic contracts, but ensuring their validity and enforceability remains challenging.
• Offer and Acceptance

• In e-commerce, offer and acceptance can be tricky.
• Terms and conditions are presented through click-wrap or browse-wrap agreements.
• Problems arise when consumers don’t fully review or understand these terms.
• Indian courts debate whether such agreements are binding and enforceable.
• Online Consumer Protection

• Protecting consumers is crucial in e-commerce.
• The Consumer Protection Act, 2019 provides safeguards for consumers.
• Enforcing these protections is tough due to digital transactions, jurisdiction issues, and international e-commerce platforms.
• Consent and Authentication

• Verifying authenticity and consent in e-commerce contracts is vital.
• Electronic signatures need validation, and identities must be verified.
• Ensuring that parties agree to the contract terms can be complex.
• Jurisdictional Challenges

• Deciding the jurisdiction for e-commerce disputes is a major issue.
• Transactions often involve parties from different states or countries.
• Determining the appropriate court or forum for disputes is difficult, complicating the enforcement of contractual rights.
• Data Privacy and Security

• E-commerce transactions involve handling large amounts of personal data.
• Protecting this data from unauthorized access is crucial.
• India’s Personal Data Protection Bill aims to regulate data protection.
• Implementing and enforcing strong data privacy and security measures is an ongoing challenge.
• Electronic Communication and Evidence

• E-commerce relies on electronic communication.
• Issues arise regarding the admissibility and evidentiary value of electronic records and communications in legal proceedings.
• Counterfeit Products and Intellectual Property

• E-commerce platforms often sell counterfeit products, violating intellectual property rights.
• Ensuring the authenticity of goods sold online is challenging.
• E-commerce intermediaries must take steps to prevent the sale of counterfeit products, but practical implementation is difficult.

Conclusion

E-commerce has revolutionized business practices in India, introducing numerous legal challenges in contract formation and enforcement. Overcoming these challenges is essential for building trust, protecting consumer rights, and creating a favorable business environment. Lawmakers, regulators, and e-commerce platforms must adopt proactive measures to establish robust legal frameworks that tackle the unique complexities of e-commerce transactions. Effectively addressing these issues will enable India to fully realize the potential of e-commerce while ensuring the protection of all stakeholders’ interests.

Khushboo Handa (trainee)