NATIONAL UNIVERSITY OF STUDY AND RESEARCH IN LAW, RANCHI

RESEARCH PAPER

ON

'' E - CONTRACTS "

SUBMITTED TO SUBMITTED BY
MS. SANCHITA TIWARI ADITI BHAWSAR

TEACHING ASSISTANT IIND SEMESTER

(LAW) ROLL NO. 728

This paper deals with E-Contracts in the field of Law of Contracts. The aim of this research
paper is to analyze the use of E-Contracts and its types, its issues and challenges ,cases involved
with it and the role of E- Contracts in India and its enforceability.

INTRODUCTION

WHAT0ARE0E-CONTRACTS?

According0to0Sir0William0Anson:0A0contract0is0a0legally0binding0agreement0between0two
or0more0persons0by0which0rights0are0acquired0by0one0or0more0acts0or0forbearance0on0the
part0of0the0other0or0others.0E-contract0is0any0kind0of0contract0formed0in0the0course0of0e-
commerce0by0the0interaction0of0two0or0more0individuals0using0electronic0means,0such0as
email,0the0interaction0of0an0individual0with0an0electronic0agent,0such0as0a0computer0progr
am,0or0the0interaction0of0at0least0two0electronic0agents0that0are0programmed0to0recognizet
the0existence0of0a0contract.0E-
Contract0is0an0aid0to0drafting0and0negotiating0successful0contracts0for0consumer0and
business0ecommerce0and0related0services.0It0is0designed0to0assist0people0in0formulating0a
nd0implementing0commercial0contracts0policies0within0e-
businesses.0It0contains0model0contracts0for0the0sale0of0products0and0supply0of0digital0pro
ducts0and0services0to0both0consumers0and0businesses.

Econtracts are conceptually very similar to traditional (paper based) commercial

TYPES0OF0E-0CONTRACTS:0

 Electronic0mail0or0E-0mail.
 Website0contracts.
 Online/Click0to0Agree0Contracts.

Law0governing0e-contract0:-

Section0(11)0of0information0technology0Act,02000

An0electronic0record0shall0be0attributed0to0the0originator—
(a)0if0it0was0sent0by0the0originator0himself;

(b)0by0a0person0who0had0the0authority0to0act0on0behalf0of0the0originator0in0respect0of
that0electronic0record;0or

(c)0by0an0information0system0programmed0by0or0on0behalf0of0the0originator0to0operate
automatically.

Section(12)0of0information0technology0Act,02000

Acknowledgement0of0receipt-

(1)0Where0the0originator0has0not0agreed0with0the0addressee0that0the0acknowledgment0of
receipt0of0electronic0record0be0given0in0a0particular0form0or0by0a0particular0method,0an
acknowledgment0may0be0given0by—

(a)0any0communication0by0the0addressee,0automated0or0otherwise;0or

(b)0any0conduct0of0the0addressee,0sufficient0to0indicate0to0the0originator0that0the
electronic0record0has0been0received.

(2)0Where0the0originator0has0stipulated0that0the0electronic0record0shall0be0binding0only
on0receipt0of0an0acknowledgment0of0such0electronic0record0by0him,0then0unless
acknowledgment0has0been0so0received,0the0electronic0record0shall0be0deemed0to0have
been0never0sent0by0the0originator.

(3)0Where0the0originator0has0not0stipulated0that0the0electronic0record0shall0be0binding
only0on0receipt0of0such0acknowledgment,0and0the0acknowledgment0has0not0been0received
by0the0originator0within0the0time0specified0or0agreed0or,0if0no0time0has0been0specified0or
agreed0to0within0a0reasonable0time,0then0the0originator0may0give0notice0to0the
addressee0stating0that0no0acknowledgment0has0been0received0by0him0and0specifying0a
reasonable0time0by0which0the0acknowledgment0must0be0received0by0him0and0if0no
acknowledgment0is0received0within0the0aforesaid0time0limit0he0may0after0giving0notice0to
the0addressee,0treat0the0electronic0record0as0though0it0has0never0been0sent.

Section0(13)0of0the0information0technology0act0:-

0Time0and0place0of0dispatch0and0receipt0of0electronic0record.-

(1)0Save0as0otherwise0agreed0to0between0the0originator0and0the0addressee,0the0dispatch0of
an0electronic0record0occurs0when0it0enters0a0computer0resource0outside0the0control0of0]
the0originator.

(2)0Save0as0otherwise0agreed0between0the0originator0and0the0addressee,0the0time0of
receipt0of0an0electronic0record0shall0be0determined0as0follows,0namely0:—
(a)0if0the0addressee0has0designated0a0computer0resource0for0the0purpose0of0receiving
electronic0records,—

(i)0Receipt0occurs0at0the0time0when0the0electronic,0record0enters0the0designated0Computer
0resource;0or

(ii)0If0the0electronic0record0is0sent0to0a0computer0resource0of0the0addressee0that0is0not
the0designated0computer0resource,0receipt0occurs0at0the0time0when0the0electronic0record
is0retrieved0by0the0addressee;

(b)0If0the0addressee0has0not0designated0a0computer0resource0along0with0specified0timings,
0if0any,0receipt0occurs0when0the0electronic0record0enters0the0computer0resource0of0the
addressee.

(3)0Save0as0otherwise0agreed0to0between0the0originator0and0the0addressee,0an0electronic
record0is0deemed0to0be0dispatched0at0the0place0where0the0originator0has0his0place0of
business,0and0is0deemed0to0be0received0at0the0place0where0the0addressee0has0his0place
of0business.

(4)0The0provisions0of0subsection0(2)0shall0apply0notwithstanding0that0the0place0where0the
computer0resource0is
located0may0be0different0from0the0place0where0the0electronic0record0is0deemed0to0have
been0received0under0sub-section0(3).

(5)0For0the0purposes0of0this0section,0—

(a)0If0the0originator0or0the0addressee0has0more0than0one0place0of0business,0the0principal0
place0of0business,0shall0be0the0place0of0business;

(b)0If0the0originator0or0the0addressee0does0not0have0a0place0of0business,0his0usual0place0
of0residence0shall0be0deemed0to0be0the0place0of0business;

(c)0“usual0place0of0residence”,0in0relation0to0a0body0corporate,0means0the0place0where0it
0is0registered.

ISSUES0AND0CHALLENGES0OF0E-CONTRACTS:

Online0transactions0are0contracts0attracting0principle0of0uberrimae0faith0(i.e.0good0faith)0in
which0the0contracting0parties0are0not0dealing0at0arm‘s0length0but0one0party0is0entirely
dependent0upon0the0information0supplied0by0the0other0party0on0the0basis0of0which0alone0
the0willingness0to0contract0is0expressed0(by0the0consumer).0The0chances0of0a0flawed
consent0due0to0misrepresentation,0false0and0misleading0information0in0the0form0of
advertisements,ingenuine0products,0internal0defects0in0the0products0etc.0are0increased
manifold0in0case0of0etransactions.0Such0flawed0consent0may0be0a0result0of0mistake0or
misrepresentation,0or0in0some0cases,0fraud,0and0there0being0no0meeting0of0minds,0and
thus,0the0contract,0should0be0allowed0to0beavoided0under0the0ICA.
INSTANCES0OF0PROBLEMS0OF0CONSUMERS0IN0ELECTRONIC0CONTRACTING

The0traditional0principles0of0contract0law0clearly0specify0as0to0who0is0incapacitated0from0
entering0into0a0contract.0The0difficulty0in0online0transaction0is0that0the0competence0of
one0party0entering0into0the0contract0is0almost0unknown0to0the0other0party.0Some
instances0of0problems0faced0by0the0consumers0in0India0over0contracts0entered0online0are0
as0under:

1.0The0online0ecommerce0portal0flipkart.com0accepted0the0orders,0and0then0cancelled
them0after0an0extended0period0of0waiting0citing0the0reason0as―product0not0in0stock‖0
despite0the0website0still0flashing0the0product0as0available.1070The0complainant0continues:
―In0one0particular0case,0they0cancelled0a0friend‘s0order0for0the0Canon085mm0f/1.80lens0
because0he0placed0it0one0day0before0the0infamous030%0price0hike0in0Canon0lenses.0
Flipkart0promptly0cancelled0his0order0(because0the0difference0between0the0old0and0new00
price0was0Rs.08,000)0and0told0him0the0lens0was0out0of0stock,0while0their0website
continued0to0advertise0the0lens0as0available,0at0the0new0price.0It0was0evident0they0did
not0want0to0honor0his0order,0despite0it0being0placed0in0timely0fashion0before0the0price00
hike.

2.0In0another0instance,0the0author0had0ordered0a0‗rakhsha0bandhan0set‘0from
fernsandpetals.com.0The0website0clearly0and0specifically0with0pictures0mentioned0the0items
that0were0included0in0the0set.0The0main0attraction0was0a0traditional0storage0box0that0000
came0along0with0the0rakhi.0The0payment0was0made0online0before0the0delivery0of0the
product0as0the0website0did0not0offer0‗cash0on0delivery‘0option0of0payment.0The0received
product0was0nonconforming0to0the0promised0items0as0the0traditional0box0was0missing
The0author0wrote0to0the0website0and0was0promised0a0replacement0soon.0The0product0was
delivered0again0without0any0further0payment0and0there0was0no0request0for0return0of0the
first0delivered0product.0To0the0surprise0of0the0author,0the0new0product0was0again0missing
the0traditional0box,0and0upon0writing0again,0the0website0emailed0the0screenshot0showing0
‗in0transit‘0delivery0status0for0the0first0product.0By0this0time,0the0festival0for0which0the0
product0had0been0ordered0was0well0over!.00In0yet0another0instance,0websites0upon
cancelling0the0order0provide0the0option0to0the0consumer0for0keeping0the0already0paid
amount0in0the0‗wallet0of0the0website,0i.e.,0it0is0kept0as0credit0in0the0account0of0the
company0from0the0consumer.0The0money0is0not0refunded0and0the0consumer0is0forced0to0
buy0from0the0same0website0again.
CASES0INVOLVED0WITH0E-0CONTRACTS:

1. In0the0case0of0Mehta0v0J0Pereira0Fernandez0S.A100

Facts0of0the0case:-

There0was0an0appeal0against0a0District0Court0judgment0which0awarded0the0plaintiff
company0JPF0a0sum0of0nearly0£25.The0amount0was0awarded0on0the0grounds0that0the
defendant0Mehta0had0personally0guaranteed0the0amount.0Mehta0appealed0on0the0grounds
that0the0alleged0guarantee0was0not0enforceable0since0it0did0not0comply0with0the
requirements0of0the0Statute0of0Frauds.

The0alleged0guarantee0arose0from0an0email0sent0by0Mehta0to0JPF’s0solicitors.0The0email0
was0in0the0following0terms:

“I0would0be0grateful0if0you0could0kindly0consider0the0following.0If0the0hearing0of0the
Petition0can0be0adjourned0for0a0period0of070days0subject0to0the0following:

A0Personal0Guarantee0to0be0given0in0the0amount0of0£25,0in0favour0of0your0client0–
together0with0a0list0of0my0personal0assets0provided0to0you0by0my0solicitor.”

The0email0was0unsigned0but0the0headers0indicated0that0it0was0from0Nelmehta@aol.com.0
This0email0address0also0appeared0on0other,0signed,0emails0sent0to0JPF’s0solicitors.0Mehta
acknowledged0that0the0email0had0been0sent,0with0his0authority,0by0an0employee.

JPF’s0solicitors0telephoned0Mr0Mehta0and0accepted0the0proposal.0Although0they0also0sent
him0a0written0agreement,0this0was0never0signed0by0Mr0Mehta.

Judgement:-

The0court0of0chancery0held0that0the0offer0sent0through0an0unsigned0email0communication
is0not0sufficient0and0the0email0address0of0the0defendant0cannot0be0deemed0as0hisb
signature.

2. In0the0case0of0Corinthian0Pharmaceutical0Systems0Inc.0v.0Lederle0Laboratories2

An0“order0tracking0number”0issued0by0an0automated0telephone0ordering0system0was
found0to0be0merely0an0acknowledgment0of0the0order,0rather0than0an0acceptance0which
formed0a0binding0contract.0Applying0the0same0reasoning0to0common0electronic0commerce
practices,0this0could0mean0that0a0computer0generated0message0acknowledging0receipt0of
an0electronic0order0may0not0be0sufficient0to0create0a0binding0contract.0The0purpose0of
the0message0may0be0solely0to0confirm0receipt0of0the0order.0It0does0not0necessarily
signify0acceptance.

1
[2006]EWHC813(Ch)
2
724 F. Supp. 605, 1989 U.S. Dist. 13058
3. In0the0case0of0Rudder0v.0Microsoft0Corporation30

The0plaintiffs0commenced0a0class0action0lawsuit0alleging0breach0by0Microsoft0of0certain0
payment0related0terms0of0Microsoft’s0MSN0Member0Agreement.0The0Member0Agreement
was0an0on-
line0“click0wrap”0agreement0that0required0each0prospective0member0to0scroll0down
through0several0pages0of0terms0and0conditions0and0then0indicate0their0agreement0to0the
terms0by0clicking0an0“I0Agree”0button0before0being0provided0with0access0to0the0services.
Although0the0plaintiffs0wished0to0rely0on0several0terms0of0the0Member0Agreement,0in
bringing0the0action0the0plaintiff’s0disputed0the0choice0of0law0and0forum0selection0clauses
that0the0defendant0Microsoft0sought0to0enforce.00The0plaintiffs0asserted0that0because0not0
all0of0the00Member0Agreement0was0visible0at0one0time0they0did0not0receive0adequate
notice0of0such0provisions0and0that0as0a0consequence0they0were0not0enforceable.00The0
court0determined0that0the0Member0Agreement0was0enforceable0stating0that0scrolling
through0several0pages0was0akin0to0having0to0turn0through0several0pages0of0a0multipage
paper0contract0and0to0not0uphold0the0agreement0“would0lead0to0chaos0in0the0marketplace,
render0ineffectual0electronic0commerce0and0undermine0the0integrity0of0any0agreement
entered0into0through0this0medium”

4. In0the0case0of0J.K.0Enterprises0V.0State0of0Madhya0Pradesh0and0Ors.4

According0to0the0plaintiff0he0made0an0offer0to0the0defendant,0for0the0purchase0of0Tendu0
Leave0of0lot0No.010950at0the0rate0of0Rs.030/per0standard0bag.0It0is0the0stand0of0the
plaintiff0that0he0was0never0informed0that0his0offer0has0been0accepted.

He0made0the0offer0on011-1-19930and0when0he0did0not0get0the0acceptance0till03-3-
1993,0and0thus0by0a0fax0message0sent0on03-3-19930he0withdrew0his0offer.

In0the0return0filed0on0behalf0of0defendant0it0has0been0stated0that0the0offer0of0the
plaintiff0dt.11-1-
19930was0accepted0and0communication0under0registered0cover0on0the0address0disclosedby
the0plaintiff0itself,0was0sent0by0letter0dt.012-2-
1993,0which0was0returned0as0the0address0was0incomplete.

Defendant0further0stated0in0their0return0that0the0alleged0fax0message0dt.03-30------------
19930withdrawing0the0offer0was0not0received0by0the0defendant0as0it0was0sent0on0then
wrong0fax0no.

Thus,0according0to0the0above0mentioned0facts0the0court0held0that0as0the0communication
of0acceptance0of0the0offer0made0by0the0plaintiff0was0never0made0by0the0defendant0and
as0the0defendant0failed0to0communicate0his0acceptance0within0the0given0time0period0the0
offeror00can0withdraw0his0offer.

3
[1999]OJNo3778
4
AIR1997MP68
LEGAL0PHASES0OF0A0CONTRACTING0PROCESS

Besides0the0business0relevant0phases0there0are0also0legal0phases0according0to0the0contract
steps0foreseen0in0the0contract0law.0We0will0also0find0four0phases0with0legal0influences
on0the0process(Gisler,01999).

Information0Phase0-0Contract0Conception

Intention0Phase0-0Contract0Preparation

Agreement0Phase0-0Contract0Negotiation

Settlement0Phase0-0Contract0Fulfillment

 Contract0Conception

The0process0starts0with0the0necessary0information0about0the0market0in0general.0Therefore0
the0contract0parties0use0information0provided0to0them0by0suppliers.0This0phase0is0based
on0information0that0are0not0an0invitation0to0treat0or0an0offer.0Because0this0information
will0not0legally0bind0their0originator0this0phase0does0not0have0any0legal0consequences0for
the0following0contract0phases.

 Contract0Preparation

This0phase0starts0the0real0contracting0process0that0will0have0legal0consequences0for0the
contract0parties.0At0the0begin0of0this0phase0a0document0class0called0“invitation0to0treat”
is0created.0The0invitation0to0treat0does0not0legally0bind0the0originator.0He0can0revoke0his
declaration0of0will0at0any0time.0Therewith0the0legislator0created0an0instrument0that0is
suitable0for0a0contract0preparation0where0you0want0to0find0out0the0existing0possibilities0in
a0market0by0gambling0a0little0bit.0The0difference0between0an0invitation0to0treat0and0the0
normal0information0in0the0phase0of0contract0conception0is0that0the0invitation0to0treat0is
already0focussed0on0a0more0or0less0defined0transaction0the0contract0parties0wants0to
generate0while0during0the0contract0conception0generic0information0about0markets,
enterprises0or0products0are0generated0without0the0goal0to0create0a0transaction.
 Contract0Negotiation

The0contract0negotiation0starts0with0an0offer.0This0is0the0first0legally0binding0document
in0the0process.0The0offeror0has0to0settle0the0contract0as0described0in0his0offer0if0the
offeree0accepts0it.0This0would0be0the0shortest0way0of0a0contract0negotiation0and0happens
mostly0with0consumer0goods0as0for0example0food,0books0and0so0on.0But0contracting
about0investment0goods0the0buyer0very0often0generates0a0counter0offer.0This0happens
already0when0the0offeree0asks0for0discount.

 Contract0Fulfillment

After0one0party0accepts0the0offer0or0the0counter0offer0of0the0other0party0this0last
declaration0of0will0turns0to0a0contract.0Both0parties0have0obligations.0Most0common
phase0is0the0obligation0of0the0seller0to0deliver0a0product0and0the0obligation0of0the0buyer
to0pay0for0it.0This0exchange0of0goods0happens0during0the0phase0of0contract0fulfillment.0
The0buyer0mostly0gets0a0receipt0for0the0amount0he0paid0for0the0product.0Such0a0receipt0
is0the0last0document0produced0during0the0process.0Not0very0common0are0receipts0for0the
seller0that0confirms0that0he0fulfilled0his0obligations0of0the0contract.0We0suggest0that0for0
Secure0Electronic0Contracts0also0a0receipt0for0the0vendor0is0created.0This0has0mainly2
reasons.0The0argument0that0the0customer0would0not0have0paid0if0the0vendor0would0not
have0delivered0will0not0be0applicable0because0the0exchange0of0the0good0and0the0payment
happens0synchronous.0At0this0point0of0time0the0customer0was0not0able0to0know0if0the
ordered0product0was0correctly0delivered.0Second0reason0is0that0electronically0produced
goods0can0be0destroyed0after0the0use.0So0the0vendor0has0no0way0to0proof0that0the
product0was0delivered0to0the0customer0because0the0authorities0will0not0be0able0to0find0a0
product0in0a0legal0procedure.0We0already0mentioned0the0possibilities0of0counter0offers
and0counter0invitation0to0treat.0In0consequence0of0this0fact0several0documents0of0the
same0document0class0can0be0produced0during0the0process0.0The0only0fixed0relation0is0the
one0between0the0number0of0obligations0and0the0number0of0receipts.0For0each0obligation
that0arises0out0of0the0contract0there0must0be0a0receipt0after0the0fulfillment0of0this
obligation.

CONCLUSION:0

Today0with0the0recent0advancement0in0the0areas0of0computer0technology,
telecommunications0technology,0software0and0information0technology0have0resulted0in
changing0the0standard0of0living0of0people0in0an0unimaginable0way.0The0communication0is
no0more0restricted0due0to0the0constraints0of0geography0and0time.0Information0is
transmitted0and0received0widely0and0more0rapidly0than0ever0before.0And0this0is0where
the0electronic0commerce0offers0the0flexibility0to0business0environment0in0terms0of0place,0
time,0space,0distance,0and0payment.0With0the0growth0of0ecommerce,0there0is0a0rapid
advancement0in0the0use0of0e-contracts.
Econtracts0are0well0suited0to0facilitate0the0re0engineering0of0business0processes0occurring0
at0many0firms0involving0a0composite0of0technologies,0processes,0and0business0strategies
that0aids0the0instant0exchange0of0information.0The0econtracts0have0their0own0merits0and0
demerits.0On0the0one0hand0they0reduce0costs,0saves0time,0fasten0customer0response0and
improve0service0quality0by0reducing0paper0work,0thus0increasing0automation.0And0on0the0
other0hand0the0law0governing0econtract0lacks0certain0provisions0like..There0is0nothing0to0
determine0the0intention0of0the0parties0to0enter0into0a0legally0enforceable0contract.

With0this,0Ecommerce0is0expected0to0improve0the0productivity0and0competitiveness0of
participating0businesses0by0providing0unprecedented0access0to0an0online0global0market
place0with0millions0of0customers0and0thousands0of0products0and0services.

BIBLIOGRAPHY

1. R0K0Singh,0Law0Relating0to0Electronic0Contracts,02015.
2. Bakshi0P.M0&0Suri0R.K,0Cyber0and0E-
commerce0Laws,0Bharat0Publishing0House,0edn01,02002.
3. Ryder0D.Rodney,0Guide0to0Cyber0Laws,0Wadhwa0&0Co.0Publishers,0edn.1,02001