This article is written by Ashrit Goyal, from Symbiosis Law School, Noida. This article deals with the topic of e-contracts.
Table of Contents
Introduction
You see if you would have asked any man in 1860 about how far their verbal agreements would have come in the 21st century, probably no one in their sane minds would have mentioned the E-contracts. The rollercoaster of contract laws and its iterations began with the 1750s with the Industrial revolution using the now extinct writ of assumpsit, and slowly made its way into acts and codes such as the French and English Civil Code, The Indian Contract Act, 1872 and then into international conventions such as the Hague-Visby rules and the UN convention on Contracts for the International sales of goods etc.
But when the foundations of contracts started to settle, an earthquake by the name of ‘Internet’ started to rumble and when people realized that thanks to internet communication, they could buy and sell, or exchange and interchange various things, ideas and data online. The need for the agreements to be enforced arose thanks to the maxim of “pacta sunt servanda”, which means agreements must be kept, this unorthodox method of paperless business started to come about, and lawyers started asking themselves, “What of getting it in writing? What are signatures? What are the originals? How would courts deal with electronic evidence? What of the originality in documents? Another issue was that the internet by itself tends to blur the lines between boundaries of all sorts be it boundaries of states, countries or continents which made the authentication of a contract due to the location an even major concern. Thus, the internet made things simpler and convenient for the parties yet, painful and bamboozling for the lawyers and the pedantic people of our world.
Explanation as per statute
Now before we proceed further, I know that there is one question which immediately arises, how does the law recognize it? How is it enforced? Hence, we shall now arrive at how it is explained and executed via the statutes, norms etc. Now technically The Indian Contract Act, 1872 doesn’t include the scope of E-agreements but the courts, have accepted these ‘clickwrap agreements’ under various judgements such as the SC’s judgement on Trimex International FZE vs. Vedanta Aluminium Limited, India, where the SC held that if crucial terms of a contract had been discussed over email, such emails constituted to be a valid contract even though they were not electronically signed and registered. These contracts follow the same method of contracts wherein they need an offer, acceptance, two or more separate parties, agreement in the same sense, intension, consideration etc. But where it differs is in that the electronic contracts must also have:
- Must be authentic;
- Should be non-changeable after it is signed;
- Confidential;
- And that the contract should have valid signs and date of commencement.
Even if some of these elements are not there it can still be disputed in a court.
In order to understand the electronic contracts vis-à-vis the traditional contracts, you could take the example of an online marketplace. An offer is made when the product is advertised on a webpage. This is called an offer. When you go to the buy page, before you make the order you need to accept their terms. This is called acceptance. Here it needs to be made sure that it is an actual person accepting the terms and not a bot.
E-commerce as well can be used as a synonym with the e-contracts’ which makes the electronic contracts come under a wider umbrella-making its legality easier to understand. This is where the IT act of 2001 comes in which makes us the twelfth country to have what is essentially a very detailed legislation for ecommerce. It includes addressing the authenticity of an evidence, how receipts are acknowledged, changes to the old mail understanding and digital signatures. Digital signatures work cryptographically where a Public Key Infrastructure (PKI) is used which encrypts and decrypts the data to identify the signature of the user. Coming back to the topic, some of the areas that the IT act strives to improve are in making b2b (business to business) and b2c (business to consumer) transactions possible, to make e-government transactions possible amongst others. The primary issue with the IT act so far has been that the government’s procurement of new hardware for the same has been slow and the reorientation of their systems and procedures is a work in progress. Thus, similar to the government engaging in E-commerce and E-contracts is slow their legislation in this regard can also be called lacklustre as it is left up to the courts to decide it on a case to case basis after applying the archaic principles and precedents.
Article 1: ‘Electronic contracting cases 2009-2010
Firstly, to supplement this topic’s nature we shall be reviewing this article which examines some of the E-contracting cases of 2009-2010 mostly in the US.
The article correctly mentions how the law on ‘click wrap agreements’ has grown up possibly due to more and more precedents setting in. In one case there was a click-based agreement of ‘I accept’ which had a connected forum selection clause in favour of the defendant. The plaintiff here poses the argument that with just the option of I agree it gives unequal bargaining powers to the defendant and that the terms were unconscionable. Now this is interesting because in a traditional case of contracts this could be arguable on the grounds of undue influence and whatnot but here, the court essentially says that ‘it is fairly typical in the online industry’ and that the forum selection clause is fairly visible. Thus, this case shows the present nature of E-contracts where you can either walk away or accept the terms as it is. In another similar case the user had to scroll through all the contract’s terms before clicking on, I agree. Both of these cases are very similar to the case of Caveat Emptor, where the buyer must be aware and in the second case, the court even made an analogy that the person who scrolls down the terms without reading them is like a person going to the last page of a contract without reading the terms, thus making the clauses still valid.
In other cases of browse-wrap agreements the court stressed that the terms are conspicuous if a normal person is able to clearly notice them thus taking into active consideration. Thus, it makes into consideration both the traditional and Electronic standard forms that there must be a clear communication of the terms of the contract and a clear opportunity to subsequently refuse them.
Thus, the line between the traditional and electronic contracts is slowly fading out and it should not be treated like an alien.
Article 2: ‘The Proposed UNCITRAL Convention on Electronic Contracts’[6]
The United Nations commission on International Trade Law in the 80’s intended to conventionalize the various regimes to the new practices, particularly in the case of electronic evidence. As a favourable scenario it is better to legalize an international convention than make a national law for each country. Thus, the Model Law on electronic commerce has still had patchy implementation at best.
Its biggest stride perhaps can be called the attempt to improve issues of forum selection and place of arbitration resolution in international cases, both government and private. It is still limited in terms of its legality in its nations, but some of its principle drafts nonetheless include: The Signs, the place of business, location of the parties, time and place of sending and most importantly cases of automated transactions.
This journal article hence states that it can help in the smoothening of relations between the two countries and help the countries which really need this type of legislation in order to embrace the future of contracts.
Book Review: Law and the “Sharing Economy”: Regulating Online Market Platforms[8]
Chapter X: The Legal framework for Digital Platform Work: The French Experience
The digitization of the economy in this century has been incessant and unstoppable and the law relentlessly seeks to govern this mad new world. And in this new world there are more and more quirky ways through which this generation contributes to the society via businesses, social work etc as a form of labour. Now the question which this chapter raises is how does one quantify this work? Earlier it was done via result orientation and via activity which it denotes and regulated by the contract. It is said that it’s not the activity which mattered but how you did it. This is further worsened by collaborative work platforms. Thus to solve it various legislations by the bigger guns like European Union and through labour and IT collaborations in the Electronic contract field.
Conclusion
Ever since the digitization started, the internet came about and entire organizations went paperless, this journey from the traditional to electronic contracts has been quite the rollercoaster hasn’t it? But through these sources of literature, it is pretty safe to say that we have matured quite a bit in this regard. If not through the conventional laws and legislations even then on a case by case basis our courts through the precedential law perhaps, have been the greatest revolutionizers. These precedents have regulated the click wrap, the shrink wrap, the browse wrap agreements, the elimination of alienation of electronic contracts and bringing it on par with the apparently archaic laws of the contract act. Through the attempts to regularize such as the IT act in India, the UNCITRAL act by the United Nations and attempts at legislation for example the United Computer Information Transaction Act (UCITA) in the USA, the internet culture is truly being embraced. One could also state that movements like ‘The Digital India’ launched by the government of India program is also an attempt to bring e-governance into the country, all of which endeavours to bring the legal issues associated with electronic contracts to a halt.
Thus, even though the laws on E-contracts are not covered in a blanket manner but the precedents continue to evolve and mature and hopefully by our next generation we shall be embracing the true nature of paperless transactions, contracts, commerce and everything else that the wonders of technology might bring.
References
The following sources were cited in the making of this assignment:
- Jstor.org
- LegalservicesIndia
- blog.ipleaders.in
- Westlaw India
- www.researchgate.net
- savvysme.com.au
- lawyersclubindia.com
Endnotes
[1] Gregory, John (2003). The proposed UNCITRAL Convention on Electronic Contracts. Vol. 59, New York: American Bar Association pp 313.
[2] Online Click wrap agreements: http://www.legalserviceindia.com/legal/article-369-online-click-wrap-agreements-an-analysis.htm
[3] Katherine Hawes (Director of education and training at Digital Age lawyers) in her article on legal issues in E-contracts at savvysme.com.au
[4] It is because in the WTO’s work programme on E-commerce it is mentioned that E-commerce is the production, distribution, marketing, sale or delivery of goods and services by electronic means and is therefore, covered by the concept of ‘electronic commerce’
[5] Moringiello, J., & Reynolds, W. (2010). Electronic Contracting Cases 2009–2010. The Business Lawyer, 66(1), 175-181. Retrieved from http://www.jstor.org/stable/25758531
[6] Gregory, J. (2003). The Proposed UNCITRAL Convention on Electronic Contracts. The Business Lawyer, 59(1), 313-343. Retrieved from http://www.jstor.org/stable/40688198
[7] The Proposed UNICTRAL Convention on Electronic Contracts. pp 329-332
[8] Escande-Varniol, M. (2018). The Legal Framework for Digital Platform Work: The French Experience. In Tremblay-Huet S. (Author) & McKee D., Makela F., & Scassa T. (Eds.), Law and the “Sharing Economy”: Regulating Online Market Platforms (pp. 321-356). University of Ottawa Press. Retrieved from http://www.jstor.org/stable/j.ctv5vdczv
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