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Contracts are an essential part of our everyday life and we enter into contracts in so many ways that sometimes we don’t even realize that we are entering into one. From our daily commute to our online transactions, everything involves entering into a contract.
With E-commerce on an unprecedented rise and the increase in our dependency on online services, the E-contracts have become an important part of our lives even if we want to enter into one or not. Many transactions now, can take place only through electronic means and that time is not far when they would totally and completely replace the physical contracts.
The contracts are generally governed by the Indian Contract Act, 1872 and it governs the making of a contract to its performance and it lays down how they can be implemented or the effect that their breach would have.
Electronic contracts or E-contracts have become necessary today due to their speed, and efficiency. Now the making of contracts takes seconds and with a digital signature, they can be entered between parties across the countries. Their speed, efficiency, and suitability make these contracts a lot easier and easy to access.
Like every other contract, requires certain ingredients to fulfill its capacity, E-contracts also require the essentials such as, a suggestion must be made, an offer must be acknowledged to the user, legal consideration is required, intention to make lawful relation with other parties, the parties’ consent to contract, consent must be unaffected and free from any coercion, undue influence, misrepresentation, fraud, and mistake. The object of the contract must be lawful, there must be a possibility of performance, and most of all, and the entire contract must be legally enforceable.
Offer, acceptance, revocation are often made through online/electronic means, according to Information Technology (IT) Act, 2000.
Now the possible ambiguity arises in the mind is, how offer and acceptance are validated in E-contracts? The solution lies in the IT Act, 2000 which recognized digital signature for validating the e- contacts but later in the IT (Amendment) Act, 2008 the new term ‘electronic signature’ replaced the earlier term ‘digital signature’. A digital signature is technology biased and is, therefore, the difficult one to put into use whereas electronic signature is unbiased as there is no specific standard for electronic signature. Mostly, in the electronic signature, either a digital image of a handwritten signature or a typed name is enough. Thus, unlike the digital signature, one can simply type his/her name or upload the image of his/her signature, to undertake any legal or important task.
In Trimex International FZE Ltd., Dubai vs. Vedanta Aluminum Ltd.; The Supreme Court held that contracts made through e-mails are completely valid and legitimate contracts, satisfying the ingredients of the Indian Contract Act. After this case, contracts made through e-mails were recognized by the courts of India.
The next challenge standing in the way of E-contracts is the determination of territorial jurisdiction as it is signed electronically, unlike physically signed contracts. Any dispute arising from E-contracts becomes an obstacle in the way of law to decide its territorial jurisdiction. Hence, E-contracts should make the mention of the laws and court governing its jurisdiction in order to resolve disputes, arising from any such contract.
In the case of PR Transport Agency vs. Union of India, the Allahabad High Court ruled that, in cases of E-contract where no mention of any jurisdiction is made, the principal place of business of the petitioner (PR Transport Agency in this case) shall be decided and supported for territorial jurisdiction for any contract communicated and accepted through electronic mail.
E- Contracts have helped the industries and other segments to grow online and to move further on the wheel of digital improvement. But there are thousands of cases pending in the courts arising out of E-contracts. Many money-feeder minds, use E- contracts to fraudulently run their temporary sites and then flee away having no particular law to punish them. Therefore, legislation covering all the aspects of E-contracts should be made. Consumer courts must also take into their arena the disputes arising from E-contracts. Some steps in this direction can help the E-contracts to grow in the long run and with the microscopic detection of the hindrances mushroomed by fraudulent folks, access to justice in these matters can be fastened.
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