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This article is written by Gopavaram Ramya Teja, pursuing a Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from LawSikho.

Introduction

In recent times, with the advancement of technology the internet has revolutionised the way humans communicate and exchange information around the world. The information is transferred more widely and instantly irrespective of geographical location and time, this is where e-commerce and e-contracts have come into existence.

In India, e-contracts are now booming due to growing economic commercial business. In this regard, the rise in technology and the internet has led to the acceptance of these contracts. In present times each and every transition over the internet is governed in the form of e-contracts. Privacy is the basic fundamental right of every human but it is being violated in numerous ways. One such way is through online contracts. Online privacy is linked with e-contracts. This article aims to understand e-contracts and analyse the online privacy issues related to e-contracts.

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Definition of e-contracts

E-Contracts are the contracts that are formed between two parties through negotiations via electronic means. They are the legal documents that are created and signed digitally in a paperless approach that do not require any paper, ink, printer for creating copies of the agreement, which are also known as online contracts or digital contracts. E-Contracts save time and money by eliminating physical meetings to sign an agreement. It also provides an opportunity for the seller to reach millions of consumers irrespective of time and also without the involvement of any brokers or middlemen. For instance, the bipartite contract entered by the customer and the sellers in Amazon.in, Flipkart.com, or Myntra.com for the sale of products on the website.

Essentials of e-contracts

The essentials of e-contracts remain the same as those of paper-based contracts. For a contract to be valid, it must contain all the following elements:

  1. An offer requirement should be made.
  2. The offer has been acknowledged.
  3. There has to be a lawful consideration.
  4. There has to be an intention to create legal relations.
  5. The parties to the contract must be lawfully competent to enter into it.
  6. Free consent, the contract must be free and void of coercion, misrepresentation, undue influence, or fraud.
  7. The object of the contract must be lawful in order to be valid.
  8. There must be certainty and the possibility of legal performance.

Formation of e-contracts

Processes available for forming e-contracts include:

1. E-mail  

Where an offer and acceptance can be exchanged either by e-mail or it can be collected with fax, paper documents, and telephonic discussions. The e-mail contracts are considered to be valid and are enforceable when the terms and conditions of the contract are agreed upon by both the parties on the acceptance of an issued offer, where there is an intention to create a legally binding contract and a vital element of consideration as agreed by the parties. For example, in the case of Trimex International FZE Limited, Dubai v. Vedanta Aluminium Ltd., the parties have completely agreed to the terms of the contract via email, where the supreme court upheld the validity of this contract on its observations and stated, “once the contract is concluded orally or in writing, the mere fact that a formal contract has to be prepared and initiated by the parties would not affect either the acceptance of the contract entered into or implementation thereof, even if the formal contract has never been initiated.”

2. Website forms  

Where the sellers can offer goods or services through their websites and the goods or services can be directly delivered; such as software, and e-tickets or delivered later such as clothes and accessories. These types of agreements are entered into when the customers order certain goods or services by filling in and submitting an on-screen order form and the seller accepts such orders. For example, orders made by customers on Amazon or Flipkart for purchase of clothes and accessories, or booking of e-tickets on airindia.in or irctc.co.in.

3. Online agreements  

Where the users may require to make an online agreement to be eligible to avail services. There are three types of online agreements;

a. Click-wrap contracts: these contracts are enforced by clicking on ‘I Accept/ I Agree’ while installing software or signing up for an email account. 

In the case of Hotmail Corporation v. Van $ Money Pie Inc, et al, the validity of the click-wrap agreements was first considered, when the court held that “the defendant is bound by terms of the license as he clicked on the box containing ‘I Agree’ thereby indicating his assent to be bound.”

b. Browse-wrap contracts: these contracts are enforced wherein the terms and conditions are provided through a hyperlink and are predetermined.

When we click the download button to install any app on the Playstore, knowingly or unknowingly we give consent that we are bound by the terms and conditions of the application.

In the case of Specht v. Netscape, the court held that “A consumer’s click on the download button doesn’t communicate assent to contractual terms if the offer didn’t make clear to the consumer that by clicking on the download button would signify assent to those terms.”

c. Shrink-wrap contracts: these contracts refer to licensee agreements that are wrapped with the software where a customer or consumer cannot read the terms of the agreement until the package is accepted and paid. An example of such an agreement is the End User License Agreement (EULA).

In a US case, ProCD. Inc. v. Zeidenburg, the court held that “the purchaser after reading the terms of the license featured outside the wrap license opens the cover that is coupled with the fact that he accepts the whole terms of the license that appears on the screen by a Keystroke, constitutes the acceptance of the terms by conduct.” Therefore it is confirmed that the shrink-wrap agreements are valid contracts and enforceable against the software purchaser.

Online privacy issues related to e-contracts

Contracts have become a common part of our day-to-day lives that most of us don’t even realize that we have entered into one such contract. When we use online platforms such as Facebook, Instagram, Netflix, or other platforms, knowingly or unknowingly we enter into online agreements by providing our personal information, signing up on these platforms by creating an account, and clicking on ‘I agree’ to certain provided terms and conditions.

1. Privacy concerns with Facebook

For years, Facebook had faced numerous privacy concerns. There are instances that arose from the company’s revenue model that involved selling information about users which led to violation of privacy.

In 2018, Cambridge Analytica, a British political consulting firm was exposed by a sting operation where it collected private data of around fifty million users of Facebook from friend lists of Facebook users to create psychometric profiles to be used by personalized political apps, campaigns, ads. It also used fake news to swing elections around the world. With regard to this Facebook had received many warnings about its data security policies but Facebook didn’t take any preventive steps to curb these.

2. Privacy concerns with Instagram

Instagram has provided three arbitrary terms and conditions which violate the user’s privacy, these include;

  • Instagram has sole copyright over the content and photographs that are posted on its platform. It means the prima facie account is of the user but the copyright over the account is of Instagram.
  • Instagram has the right to disclose the personal information provided by the users to third parties.
  • Class action suit cannot be filed against Instagram, which means a suit cannot be filed against Instagram collectively.

3. Privacy concerns with Netflix

Netflix contains two arbitrary and unreasonable policies that violate the information of the users, which are;

  • Netflix can change its terms and conditions anytime without letting its users know, where it can even disclose the personal data of the users without informing them.
  • It can also disclose personal information to third parties without the consent of the users.

Indian laws governing e-contracts

1. Indian Contract Act, 1872

The Indian Contract Act, 1872 regulates the contracts in India. Like ordinary contracts, the e-contracts are also primarily governed by the codified provisions of the Indian Contract Act. An e-contract to be legally enforceable should fulfill all the essential requirements of the provisions that are provided under the Act. 

2. Information Technology Act, 2000

E-Contracts have also found statutory recognition under the Information Technology Act, 2000. According to Section 3 of the Act, the verification of e-contracts is affirmed by fixing the ‘e-signature; or ‘digital signature’ of both the parties on them. Section 4 of the IT Act, 2000 provides lawful acknowledgement of the e-records, where the information is related as a hardcopy or printed structure and is made accessible to the client for further reference. Section 65 to Section 71 of the IT Act provides for punishments related to cybercrimes in India.

India has legalised the validity of e-contracts under Section 10-A of the IT Act, 2000. In regard to this, the IT Act excludes certain e-transactions from the documents which are negotiable instruments, power of attorney, trust deed, will, sale deed, or conveyance deed with regard to immovable property.

3. Indian Evidence Act

Section 65 of the Indian Evidence Act, 1872 provides that the court should recognize the e-documents produced for the formation of the contract. In the case of Societies Fes Products Nestle S.A & Anr v. Essar Industries & Ors., admission of e-contracts in Delhi High Court paved way for the immediate introduction of Section 65A and Section 65B in the Indian Evidence Act, 1872, where according to Section 65 the content of electronic records can be proved by parties in accordance with section 65B of the Act.

In the case of State of Delhi v. Mohd. Afzal and Ors., the Delhi High Court held that “electronic records are admissible as evidence.” In the State of Punjab and Ors. v. Amritsar Beverages Ltd. and Ors., the supreme court in this case observed that “Section 63 of the Indian Evidence Act makes media like paper, optical or magnetic forms admissible in courts. Section 65-B of the Indian Evidence Act also provides that the information contained in the form of an electronic record is admissible in court without procuring the original document. Therefore, the admissibility of the same is subject to various conditions that are prescribed under Section 65-B of the Evidence Act.

Remedies for breach of e-contracts

There is no specific rule in case of any breach of e-contract, so in order to seek appropriate remedy for such breach the remedies for breach of contract provided in the Indian Contract Act can be followed. The Contract Act mainly talks about two remedies for breach of contracts such as damages and quantum meruit. Section 73 and Section 74 of the Indian Contract Act provide rules regarding the remedy for damages by breach of contract. There are few other remedies available as provided in the Specific Relief Act such as specific performance of contract and Injunction restraining the other party from making the breach of contract.

Conclusion

There is a strong need to protect the privacy of the users from the arbitrariness of online applications as we have seen in the case of Cambridge Analytica, where these firms have been cautiously compromising the privacy of their users. It is necessary to understand that privacy is a delicate issue that leads to numerous problems if shared or exposed through every means. As known, the right to privacy is a fundamental right enshrined in Article 21 of the Indian Constitution which cannot be waived by any means.

In the landmark judgment of R. Rajagopal v. Union of India, the court held that “the right to privacy is covered under the ambit of ‘Right To Personal Liberty’ guaranteed under the Constitution of India. It is further recognised that the right to privacy can be both an actionable claim and also a fundamental right.” In recent times there have been more cases of violation of online privacy where the personal data collected by these online platforms has been misused by sharing it with other parties for their advantage. It is crucial that the government acts as a regulator in order to come up with more stringent laws for the protection of the privacy of the users.

References

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