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DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

VISAKHAPATNAM, A.P., INDIA

PROJECT TITLE

COMMERCIAL TRANSACTIONS IN VIRTUAL WORD ISSUES AND CHALLENGES

SUBJECT

INFORMATION TECHNOLOGY LAW

NAME OF THE FACULTY

Dr. P SREE SUDHA

Name of the Candidate U.UPENDRA

Roll No. 2016112

Semester IX

RESEARCH METHODOLOGY
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This project is purely Doctrinal and based on primary and secondary sources such as websites,
books, journals and internet sources. The referencing style followed in this project is BLUE
BOOK 19th Edition's format of citation. This Research process deals with collecting and
analyzing information to answer questions. The Research is purely descriptive in its boundaries
of the topic
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ACKNOWLEDGEMENT

I would sincerely like to put forward my heartfelt appreciation to our respected professor, Dr
Sree Sudha madam for giving me a golden opportunity to take up this project. I have tried my
best to collect information about the project in various possible ways to depict clear picture about
the given project topic.
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CONTENTS

Introduction………………………………………………………....………05

Types of E-commerce ………………………………………………...…….06

Advantages of E-Commerce to Businesses in India…………….…………07

Different methods of online marketing …………………………….….08 - 11

Advantages of Online Marketing ……………………………….…….11 - 13

Challenges of Online Marketing ……………………………………….14 -15

Important Issues in Global E-commerce…………………………….….16 -18

Legal Validity of Electronic Transactions in India……………….……. 18 -2

Ethics in e-commerce……………………………………………….…….….21

Conclusion………………………………………………………………….…21
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INTRODUCTION

Anything that includes an internet purchase is e-commerce. This can range from online
shopping, to the distribution of paying material online, to financial transfers, such as money
movement between bank accounts. One of the main trends that took the Indian company by
surprise is the e-business. A whole new economy is being developed, which has tremendous
promise and is radically transforming the way companies are conducted. For both buyers and
sellers, it has benefits and this win-win condition is at the root of its remarkable growth.
Increased sales and a wider selection of products and services that can be accessed over the
internet make online shopping more appealing and easy consumers all over the country.

Electronic commerce is presently an essential ingredient of India’s trade facilitation policy. The
need to promote foreign trade both by structural and procedural changes has been the pillar of
India's trade and fiscal policies since 1991, when economic reforms specifically took place in
India as a part of opening up the economy with a view to integrating itself with the global
economy. As a result, a technical transition has been experienced in recent years, followed by the
mainstream use of the Internet, web technology and its applications. As part of the information
technology revolution, electronic market (e-commerce) has been widely used in international
trade. And Indian economy in particular. In this new age, e-business reflects the bleeding edge of
success as a sign of globalization, and it has transformed and is now transforming the way
business is carried out across the world. Electronic commerce has been powered by the
commercialization of the Internet to become one of the most capable inter-organizational
business process networks.
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Types of E-commerce

E-commerce/e-business may be classified at large in the following six basic types:

Business to Business (B2B)

It refers to both electronic products and distribution activities carried out between two firms,
normally between suppliers and wholesalers. The popular website that acts as a trigger for such
wholesalers and manufacturers, maybe India-mart.

Business to Consumer (B2C)

In India, separate predominant e-commerce persists in which the consumer gets a wide market to
buy products and services. Here, the website for e-commerce acts as a forum for the selling of
products directly to the end user of the goods. Flipkart, Amazon, Myntra, for example, etc.

Consumer to Consumer (C2C)

In general, for its existence, this model uses the online network of money and different social
media. The common phenomena of "OLX pe Bech de!" may be the best example of
understanding e-commerce on a consumer-level basis at the consumer level. For eg, eBay is one
global example of e-commerce of this kind.

Consumer to Business (C2B)

When the Customer provides goods or services in exchange for money. For Ex. A customer
review or the advertisement of a company by an influencer amongst his followers etc.

Business to Administration (B2A)

This category of e-commerce relates to the services and products provided to the Public
Administration by corporations. For example: the small organization that provides IT help to the
local administrative bodyConsumer to Administration (C2A)

This heading includes all the transaction whereby there is a payment made electronically towards
the public administration such as taxes, health appointment.
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Advantages of E-Commerce to Businesses in India:

“There is a growing awareness among companies in India of the opportunities that e-commerce
provides. The critical aspect that will result in the rapid adoption of net commerce is the ease of
Internet access. Secure and reliable payment systems and the need to invent and popularize
technologies such as mobile commerce are fundamental. E-commerce provides a new place for
connecting with consumers and conducting transactions. Virtual stores operate 24 hours a day, 7
days a week. Many virtual retailers represent a single company while others, such as Top Online
Shopping (toponlineshopping.com), represent a association of companies.”1

Global Trade:

E-business is one of the major factors in the globalization of business. Other factors include
decreases in trade barriers, globalization of capital markets. Indian e-business has grown at a
compounded annual growth rate of 30% since FY09, and is expected to be $18 billion (around
Rs 1,116,00 crore) opportunity by FY15.

Virtual Businesses: As a result of e-business, business firms now have the ability to become
virtual businesses. Virtual business uses electronic means to transact business as opposed to the
traditional means of face-to-face transaction.

Lower search costs:

The Internet ibrings ilow isearch icosts iand ihigh iprice lucidity.iE-business ihas iproved ito ibe
highly icost ieffective ifor ibusiness iconcerns as it cuts down the icost iof imarketing,
iprocessing, inventory imanagement, icustomer icare etc. It ialso ireduces ithe iload iof
iinfrastructure required for iconducting ibusiness.

Greater Economic Efficiency

We have achieved greater economic efficiency (lower cost) and more rapid exchange (high
speed, accelerated, or real-time interaction) with the help of electronic business. Key drivers in
Indian e-commerce are:

1. “Increasing broadband Internet (growing at 20%[ MoM) and 3G penetration.

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E-Business: Issues & Challenges in Indian Perspective Bhavya Malhotra
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2. Rising living standards and a growing, upwardly mobile middle class with high disposable
incomes.

3. Availability of much wider product range compared to what is available at brick-and-mortar

retailers.

4. Busy lifestyles, urban traffic congestion and lack of time for offline shopping.

5. Lower prices compared to brick-and-mortar retail driven by disintermediation and reduced

inventory and real estate costs.

6. Increased usage of online classified sites, with more consumer buying and selling second-hand
goods.

7. Evolution of the online marketplace model with sites like eBay, Flipkart, Snapdeal.”

The evolution of e business has come a full circle with marketplace models taking center stage
again

Different methods of online marketing

Online marketing which is also called internet marketing and e-marketing includes several
methods and techniques which are introduced briefly as follows:

Online Advertising

The most known technique of online marketing is online advertising. In this method virtual space
is used to put marketing messages on websites to attract internet users. Just similar to methods
offline marketing and other types of online marketing, the major objective of online advertising
is to increase sales and build brand awareness.

Online advertising involves iusing iof iinternet ifor idisplaying ipromotional imessages ion ithe
computer screens and irefers ito ideliberate imessages iplaced ion ithird-party iwebsites search
engines and directories available through iInternet iaccess iOnline iadvertising isimilar ito iTV
ads uses the ielement iof iinterruption. iBut iit uses iit iin ia imuch imore icreative. iContrary ito
TV advertisement, online iadvertisement idoes inot iforce ithe irecipient ito ipay iattention ito the
promotional ipeace, ibut iit itries ito ipersuade ior iattract iito ido iso, ibecause iinstead iof
coming in iintervals iit iis iplaced ialong ior iamong iother non-marketing contents. The now
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empowered internet recipient still has the power to ignore the advertisement and it is totally up to
her/him to click or not.

Online advertising, sometimes called display advertising, uses different methods to display a
marketing message online. Needless to say that with the progress of technology, new iways iof
practicing ithe iart iof ionline iadvertisement iis ideveloped. In iaddition ito iimages, ipictures,
logos ietc, iother idifferent imethods inow iused iin ithis ifield iincluding iinterstitial ibanners,
pop-ups iand ipop-unders, imap iadverts, ifloating iadvert, ibanner iadvert i

Email-marketing

“E-mail marketing, using e-mail for sending promotional messages to internet users, has been
considered one of the more effective methods of online marketing. Several researchers have shed
light upon privileges of conducting online marketing this way. In this regard Peppers and
Rodgers among its benefits point to high response rate and low costs of email marketing and
believe that this advantage is rapidly turning email marketing into an invaluable too.Despite
these benefits email marketing suffers from deficiencies. One these problems are that online
customers can easily ignore the received advertisements and even some email clients would
decide to put them in the spam folder. So, some measures should be taken to overcome the
possibility of ignoring promotional emails on the part of customers. One of the solutions is to not
solely rely on email marketing. Marketers should employ different channels and methods of
marketing to increase the chance of success. Another measure to transcend problems of email-
marketing is permission email marketing. Permission marketing has been coined by Godin In
this method recipients are asked for their permission to receive marketing messages from the
commercial marketers. So, unless the recipients have not expressed their consent, they will not
send commercial emails.”2

Search Engine Optimization (SEP)

Nowadays it is hardly possible to imagine a business which has not its own website. But having a
well-designed website does not necessary result in an ideal number of visits. In order for this
goal to be accomplished another type of online marketing, called SEM should be adopted. In

2
Wreden, N. (1999), "Mapping the Frontiers on Email Marketing", Harvard Management Communication Letter, 9
January.
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fact, one of major methods of conducting online marketing is search engine optimization, which
is also called search engine marketing. Davis (2006) defines it in this way:

“SEO - short for Search Engine Optimization - is the art, craft, and science of driving web traffic
to web sites web traffic is food, drink, and oxygen – in short, life itself – to any web-based
business. The importance of search engine optimization lies in the fact that customers most of
the time use engines as a major gate to get around in the internet. So, some marketing techniques
have been developed to enhance the rank of intended business websites in the search engine
results. The purpose of SEO strategies is to place a given website among highly listed entries
returned by search engines which in its turn produces more traffic. So, Web site owners,
webmasters and online marketers want search engines to send traffic to their site. Therefore, they
need to make sure that their sites are relevant and important in both the eyes of the search
engines and the users.”

Social Media Marketing

Social media has changed every aspect of our life dramatically. In fact it has become "the
method of statement in the 21't century, enabling us to express our belief, ideas and manner in an
absolute new way ". Beyond changing our way of conducting social life, social media provides
world of marketing with unprecedented opportunities and "also have a huge impact on
corporation, where they have realized that without a correct plan and social media strategy they
have no chance to stand out in the rapidly changing digital freedom

“Social media especially is promising for small businesses because increases their competitive
edge. This new rewarding type of marketing, social media marketing, can be easily defined as a
term used to describe the process of boosting website traffic, or brand awareness, through the use
of social media networking sites…most social media marketing programs usually revolve around
creating unique content that attracts attention and encourages the viewer to share it with their
friends and contacts on social networks. Your business message spreads from one user to another
and impacts with the user in a stronger way because it appears to originate from a trusted source,
as opposed to the brand, business or company itself as is apparent from the above citation the key
element of social media marketing is involving user of social networks. If users / readers come
across a right and relevant content the likelihood of sharing it with other people in their social
networks increases. So, if a marketing body succeeds in making social media users share its
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promotional content with people in their network it that means that it has gained support from a
trusted source and possibly will be regarded highly by the recipient. Clearly a promotional
content shared by a close friend has much more impact than content directed from the part a
marketing party. The impact of contents shared by social network members is high due to the
fact they are originally kind of a word of mouth circulating on the online environment.”3

Advantages of Online Marketing

Empowering effect

One of advantages of online marketing is related with its enabling effect especially on small
businesses since "internet can extent market reach and operational efficiency of small and
medium enterprises (SMEs)"

In fact internet creates a kind of democratized environment in which marketing has been
restructured in such a way that even small businesses are given a good chance to promote and
brand their products on a much more larger scale It should be, therefore, stressed that "internet
has created unprecedented opportunities for small businesses to engage in national and
international marketing campaigns which could have been unaffordable due to the huge amount
of resources required" Email marketing, bogging, launching web-sites, etc are among easily
affordable inter-fostered channels than can provide small business with the ability to survive and
compete. 4

Elimination of geographic barriers

One of the key advantages of online marketing is that it removes all geographical limitation from
the practice of buying and selling. So internet allows an unlimited global reach) at on
outstandingly lower cost. Due to massive cost of traditional media, global reach was once the
exclusionary realm of huge multinational corporation, but ithe iadvent iof icost-effective iinternet
itechnologies ihas enabled smaller ibusinesses ito ienjoy ithis ikind iof ireach. iOvercoming ithe
igeographic barriers, marketers iare inow iable ito ipresent iproducts and services ito idifferent

3
ONLINE MARKETING: CHALLENGES AND OPPORTUNITIES Soheila Bostanshirin
4
Jobber, D. (2001) Principles and Practice of Marketing, England, McGraw-Hill
12

igroups iof costumers across ithe iuniverse iwith ithe isimple icondition ithat ithey ihave iaccess
ito iinternet5

24 hours / seven days availability

Internet now ican iprovide icustomers iwith itimely iinformation idue ito iits iavailability i24
hours a iday, i7 idays ia iweek iSo, idue to the establishment iof ionline ishops, icustomers iare
now able to iacquire iinformation iand ishop ionline any time iof iday ior inight ithey iwish iand
prefer. So there remain no time limitations in this regard because online businesses have no
special closing and opening times. People may visit physical markets after searching internet or
the other way round they can surf internet for competitive prices after visiting physical stores.
Besides ithat, there is ino idoubt ithat ionline ipurchase iis imore iconvenient isince ithere iis ino
ineed ito igo iout iof home, ivisiting idifferent istores iand itake ithe iburden iof icomparing
idifferent iproducts iand prices. iThe ibuyers ican ido itheir ishopping imuch imore ieffectively
ifrom ithe icomfort iof itheir homes. iNeedless ito isay ia ilot iof itime iand ienergy iis isaved
ithis iway.6

Cost-effectivity

It goes without saying that, compared with traditional advertising media channels, which are
very resource consuming, online marketing via internet is clearly cost-effective and can
accomplished its objectives at a fraction of the cost For iinstance iit iis iobvious ithat ithe icost
iof ilaunching ian ad online iis ifar iless ithan iplacing ian adin a magazine or ion ia billboard.
iThe icost iof establishing ione's ivirtual ipresence, inetworking with iother iinstitutions iand
icommunication with consumers iis isignificantly ilow. Consequentially iinternet imarketing
ienables ithe companies ito isave itheir iresources, ian aspect which is highly appreciated by
companies since the online marketing campaigns dont require massive investment.7

Trackability

5
Allen, E. and Fjermestad, J. (2001) E-commerce marketing strategies: an integrated framework and case analysis,
Logistics Information Management, Vol. 14(1/2):14 – 23.
6
Sheth, J., N. & Sharma, A. (2005) "International electronic marketing: opportunities and issues", International
Marketing Review, [Online]. 22(6).
7
Paul, P. (1996) Marketing on the Internet, Journal of Consumer Marketing, Vol. 13(4): 27 – 39
13

Another aspect of the online marketing is its possibility of tracking. In ifact ithe itrack-ability iof
Internet iMarketing iis one iof iits greatest iassets iInternet ienables imeasurement iof ieverything
taking iplace ion iit.So, ithe number of clicks ithat ia iparticular ipromotional ipiece ireceives
iand amount of website traffic is easily measured. In this way the marketer is enabled to track the
visitors to her/his website and understand their behavior. Internet also allows the companies to
find out whether their campaigns are working or not, what kind of customers are interested in
their products, from where? The iability ito itrack online icustomers iincreases idramatically idue
ito the ifact ithat i"internet iconstitutes ithe imost iaccountable imedia iever. iWeb isite ilog
isoftware and ireal-time iprofiling itrack ithe inumber of users iwho iview ieach ipage, ilocation
iof previously ivisited ipages, idate iof iview, itime iof iview, iduration iof iviewing, ilinks
ifollowed, and iso ion

Personalization

“Personalization refers to tailoring products and services to customers' preferences based on their
online, registered purchase history. In fact since electronic interaction with customers allows the
gathering of detailed information on the needs of each individual customer, firms can
automatically tailor products and services to those individual needs This process results in
offering customized products to customers. In this way customers are sent personalized messages
which produces much greater impact compared with impersonalized, generic messages send
indiscriminately to mailbox of customers. Personalization results in formation of sustainable
relationship with customers;)personalization is about building customer loyalty by building a
meaningful one-to-one relationship; by understanding the needs of each individual and helping
satisfy a goal that efficiently and knowledgeably addresses each individual ‘s need in a given
context. Based on metrics internet helps marketer to gather, customer, for instance, can be
greeted with targeted offers whenever they visit website.”8

Challenges of Online Marketing

Problem of integrity

8
Riecken, D. (2000) Personalized views of personalization, Communications of the ACM, vol. 43( 8): 26–28
14

Integrated marketing has been a central theme of the profession. On the other hand one of major
problems with marketing campaigns is that they employ several offline and online promotions
channels such as press, brochure, catalogue, TV, cell phone, e-mail, internet, social media etc,
while lack a comprehensive, harmonizing marketing framework. Each item is used in isolation
and accomplished is ia idifferent itask inot ias ia icomponent iof ian iintegrated icampaign
iaimed iat realization iof ispecified iand iparticular iobjectives. iThis ideficiency ican ibe
icompensated ifor by itaking ia iholistic iapproach iwhich synchronizes different itraditional iand
iinternet iage modes iof imarketing icommunication ias moments iof ian iintegrated istructure.
iWith irespect o virtual, ionline icomponent of ian integrated marketing iwhat iis ialso iworth
inoting iis ithat like offline imarketing, all aspects iof ionline marketing iare iinextricably
ilinked- iand iin imany cases iinterdependent.Therefore inone of the element imarketing ishould
istand iin iisolation. The website will inever ibe ivisited iif ithere iare ino links ito iit, iviral
imarketing irequires email or social media iwebsites ito icommunicate the imessage iand isearch
iengines iare iuseless without websites to ilink ito iit. So it is that in iany iinternet imarketing
istrategy iall components must dovetail together

Lack of face-to-face contact

Lack of personal contact is another deficiency of online marketing which has been addressed in
online marketing research and literature Internet transactions involve no embodied, personal
interaction and that is why some customers consider electronic modes of providing customer
service impersonal and enjoy ithe iexperience iof ishopping iin ia ibricks iand imortar, iphysical
store. They prefer to talk to store ipersonnel iin ia iface-to-face manner, itouch ithe irelated
product with their hands, and isocialize with other icustomers. Virtual marketplace icannot
provide for this function of ioffline ishopping iand ilacks ipersonal iinteraction. To ibe imore
specific ior ithe types of products ithat rely heavily on building personal relationship between
buyers and sellers such as the selling of life insurance, and the type of products that requires
physical examination, Internet marketing maybe less appropriate

Security and Privacy Information privacy is among major topics to be taken into consideration in
today‘s evolving electronic world. It is clear enough that nowadays customers' data can easily be
shared with other companies without asking for their permission. Moreover their more crucial
personal data such as usernames and passwords are not immune from hackers Another irelated
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problem iis ispas iand ipop-up iadds iwhich considered iby imajority iof ionline icustomers ian
instance iof iintrusion iof iprivacy i. These securities and iprivacy iissues iare iamong ichallenges
in ithe iway iof ionline imarketing. Effective internet imarketing, itherefore, idepends ion
resolving the irelated iproblems iin ithis iregard. ipoint ito ithe irole ican ibe iplayed iby
marketing curriculum iand isuggest i

"that students should be exposed to this topic in varied courses and in varying degrees of
coverage The major dimension with respect to privacy is the choice or consent. This dimension
has its roots in this belief that consumers whose data have been collected by the respective
company should have control over the ways in which their information is used. Especially they
also should be granted the right to have control over how their personal information is used
beyond the purpose for which it was collected"

Lack of trust

Closely related with the problem of security and privacy is the issue of lack of trust on the part of
customers which has been recognized a great challenge on the way of online marketing growth.
And it is the reason why online trust is growing in importance as a topic of study and its
influence on internet marketing strategies is increasing define trust in virtual environment as
follows: “online trust includes consumer perceptions of how the site would deliver on
expectations, how believable the site's information is, and how much confidence the site
commands. Today despite the rapid growth of online transactions several people still mistrust
electronic methods of paying and still have doubt whether the purchased items will be delivered
or not. On the other hand, prevalence of online fraught has made customers hold negative or
doubtful attitudes towards online transactions.”

So much imore iclearly iremains ito ibe idone ito ibuild iup ithe itrust iand iconvince ithe
customers that iinteractions iwhich itake iplace iin ithe ivirtual iworld iare ias ireal iand ihonest
ias ithose happen iin ithe ireal, ioffline iworld. iNo idoubt, iit iis ian iongoing, ilong iprocess iand
ineeds more time ito irealize. iIt ishould ibe istressed ithat iunless ithis itrust ihas inot ibeen
ibuilt, internet marketing icannot ibe itaken iadvantage ifrom ito iits ifullest ipotential. iSo, iit iis
iimperative ifor those iin icharge iof ionline imarketing ito iunderstand ithe ireality iof inew
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ivirtual iworld. iOne of ithe iprominent irealities iof ithis inew iworld iis ithat i"today itrust iand
icustomer ipower ihave partnered.9

Important Issues in Global E-commerce

Although E-commerce is something which brings so many advantages and utility it comes with
its own set of technical difficulties and consequences. E-commerce being a Global phenomenon,
its issues also have global characteristics. Few of the important issues in global e-commerce can
be understood as below:

1. “Legal aspects of e-commerce: As discussed earlier, the e-commerce model legislation

has been accepted by the UNCITRAL, but whenever an international model code is
formulated it is accompanied with its own safeguards to the individual state sovereignty
wherein the Municipal Legislation keeping the model laws as standards may deviate in
accordance to its own municipal laws.

2. E-security: the security of the end-users has always been a matter of grave concern
globally since the internet has netted two ends of the globe now it is easier for a
person(hacker) to sit in his remote physical location and cause the data or financial
breach of the Victims.

3. Jurisdiction: the Internet is open to the globe and hence the jurisdiction of the cases has
been given to all the courts.

4. Contracts and Liability: the E-contracts made in the cyber-world have been given legal
recognition and the liabilities are also enforceable but the same becomes a mammoth task
when parties belong to two different nations and have not made a clause regarding the
application of specific law.

5. Taxation: Various facets of taxation such as tax collection, collection of sales tax,

determination of taxpayer’s residence, determination of the origin of income, jurisdiction

9
Bart, et al (2005) "Are the Drivers and Role of Online Trust the Same for All Web Sites and Consumers?, A Large-
Scale Exploratory Empirical Study", Journal of Marketing, 69 (4), 133–52.
17

are inherently a difficult task in the plane of taxation, but on integration with the fact of
expansion of the market to the present scale of globe the calculation of the Taxes
becomes additionally difficult, wherein various nations apply various tax evaluation
methods in accordance to their own legislations.

6. Copyrights: Global e-commerce is like an ever-expanding universe of sellers and buyers

and products, it becomes difficult to keep a tap at the copyright violation in such a huge
number to deal with.”

The Information Technology Act, 2000 and Objectives

The Information Technology Act, 2000 was enacted in the backdrop of the Global recognition of
the need for the exposition of the cyber regulatory framework.

“UNCITRAL (United Nations Commission International Trade Law) in the year 1996
adopted the model law on e-commerce to bring uniformity amongst the countries of the globe
regarding Cyber regulation. The Information Technology Act elaborates on Data privacy,
wherein, with the growth of the Internet, the data of people are online and is vulnerable to be
misused. The big data analysis is something which stands testimonial to this concern. Big Data
analysis suggests that the searches made by people can be used to persuade the choices of people
analyzing their pattern of search made.”10

Through defining cybercafe, the new information technology law has provided a stronger
institution to capture the perpetration of cyber phishing, which used to be executed by such Cafe
earlier, but now after the warning, the personal id has to be sent to the shopkeeper to monitor the
attacker and create deterrent. By allowing an investigator to prosecute a cyber crime, the Act has
expanded the cyber investigation resource by multiples. Only a commissioner was previously
permitted to prosecute cybercrimes, but now the auditor can still investigate a cyber crime
following the reform.

The iLegislation ifundamentally iaimed:

10
https://blog.ipleaders.in/an-overview-on-e-commerce/
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 To irant ilegal irecognition ito iE-commerce iwhich iis ithe itransactions icarried iout
ibyielectronic idata iinterchangeiand other imeans iof ielectronic imeans iof
icommunication
 To recognize ito ikeep ithe ibooks iof iaccounts iby ithe ibankers iin ielectronic iform:
ithe ibooks iof iaccounts imaintained iby ithe ibankers ihave ialways ibeen ia isource
iof ievidence iand ialso isubjected to scrutiny whereby imaking ithe ibanks
ianswerable.
 To iamend ithe iIndian iPenal iCode, iIndian iEvidence iAct, ithe iBanker’s iBook
iEvidence iAct iand ithe iReserve iBank iof iIndia iAct, ithe iInformation iTechnology
iAct ihas irecognized ithe ie-evidence iin ia icourt iof ilaw-making iaccess ito ijustice
ieasier iand imaking ithe iIndian ilegal isystem idynamics iwith itime.
 To recognize idocuments ifiled iwith ithe igovernment: ithe ie-Governance ihas ibeen
ia igreat iboon ito ithe isociety iin igeneral ias ithe iresources iare iat ieasier iaccess
ivia ithe iinternet iand ialso ieffectively ireduces ithe ineed iof imiddle iman iand
ihence icutting ithe ineed iof icorruption.
 To irecognize iElectronic idata istorage: ithe igovernment irecognizes ithe iDigi
ilocker iwherein ithe icitizens ican iaccess itheir iimportant idocuments isuch ias
ivoter iid, iPAN icard, iDriving iLicense ietc. iAnother inews iin ihype iwas ithe
idemand imade iby ithe igovernment itowards ithe iinternet iservice iproviders ito
isave ithe idata iin iIndia.
 To irecognize iElectronic ifund itransfer ibetween ibanks iand ifinancial iinstitution:
ithe iadvent iof ie-banking ihas iinfused ia inever iseen ibefore ipace iin ithe ibanking
isector. iIt imay inot ibe iwrong ito isuggest ithat ithe iadvent iof inet ibanking ihas
ialmost ibrought ithe ibank iat ithe ipalm iof ithe iaccount iholder.
 To recognize ithe iauthenticity iof idigital isignature ifor iauthentication iof iany
iinformation ior imatter irequiring iauthentication iunder ilaw. i i

Legal Validity of Electronic Transactions in India

There are various legal issues relating to formation and validity of electronic transactions such as
online contracts and enforcement issues which are dealt hereinafter.

(A)Formation of an E-Contract:
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The most icommon iforms iof ie-contracts iare iclick iwrap, ibrowse iwrap iand ishrink- iwrap
contracts. The iterms iand iconditions iin isuch icontracts iare imade iavailable ito ithe
contracting party iin ia iform ithat iis iconsiderably idifferent ifrom ithe istandard ipaper
icontracts. iIn iclick wrap icontract, ithe iparty's iaffirmative iacceptance iis itaken iby imeans iof
ichecking ion ian i'I accept' itab iwith ithe iscroll ibox ithat iallows iaccepting iparty to view ithe
iterms iand conditions.

In case of browse wrap agreement, the mere use (or browse) of the website makes the terms
binding on the contracting party.

In case of Shink wrap agreement the contracting party can read the terms and conditions only
after opening the box within which the product (commonly a license) is packed. Such
agreements are relevant in the context of e-commerce mostly because of the kind of goods
associate with shrink-wrap agreements.

B) Online Contracts Validity:

The Indian Contract Act, 1872 governs all the e-contracts in India which inter alia mandate
certain pre-requisites for a valid contract such as free consent and a lawful consideration. The
question which needs to be examined is how the requirements of Indian Contract Act would be
fulfilled in relation to e-contracts. Further, the Information Technology Act, 2000 ('IT Act')
provides fortification of the validity of e-contracts.

As per Indian Contract Act, 1872 some of the important requirements of a valid contract are as
follows:

(i) “The contract should be entered with the free consent of the parties;

(ii) There should be lawful consideration for the contract;

(iii) The parties should be competent to contract;

(iv) The object of the contract should be lawful.”

The terms iand iconditions iassociated iwith ie-commerce iplatform iare iof iutmost iimportance
in ensuring iand ideciding ithat ie-commerce itransaction imeet iwith irequirements iof ia ivalid
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contract. Unless iexpressly iprohibited iclick iwrap iagreements iwould ibe ienforceable iand
valid if ithe irequirements iof ivalid icontract ias iper iIndian iContract iAct, i1872 iare ifulfilled.

There is ino irequirement iunder ithe iIndian iContract iAct ito ihave iwritten icontracts
iphysically signed. iHowever, ispecific statues ido contain isignature irequirements. iFurther, ithe
ivery nature iof ie-commerce iis ithat iit iis ipractically iimpossible ito icheck ithe iage iof
ianyone iwho is itransacting ionline iand iwhich ipose iproblems iand iliabilities ifor ie-
commerce iplatforms because the position iunder iIndian iLaw iis ithat ithe iminor iis inot
icompetent ito ienter iinto contract iand isuch ia icontract ientered iis inot ienforceable iagainst
ithe iminor.

In India, every instrument under which rights are created or transferred needs to be stamped and
stamping of the instrument further depends on specific stamp duty legislations enacted by
different states in India.

(C) Standard Form of Online Contracts are Unconscionable

In India there is no well-developed jurisprudence on the question of whether standard form of

online agreements are unconscionable. Though, the courts iof iIndia ias iper iIndian iLaws
previously idealt iwith iinstances iwhere icontract iterms iincluding istandard iform icontracts
were negotiated ibetween iparties iin iunequal ibargaining ipositions. Certain iprovisions iof
iContract Act ideal iwith iunconscionable icontracts isuch ias when ithe iconsideration iin ithe
icontract ior object iof ithe icontract iis iopposed ito ipublic ipolicy. iIn isuch icases ithe icontract
iitself icannot be ivalid.

The courts can put the burden on the person in the leading position to prove that the contract was
not induced by the undue influence.

In the case of LIC India Vs. Consumer Education & Research Center 11 the Hon'ble Apex
Court of India interpreted an insurance policy issued by Life insurance corporation of India by
bringing in certain elements of public purpose. The court noted that

" in dotted line contracts there would be no occasion for weaker party to bargain as to assume
to have equal bargaining power. He has either to accept or leave the service or goods in terms

11
1995 SCC 5 482
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of the dotted line contract. His option would be either to accept the unreasonable or unfair terms
or forgo the service forever."

It is highly important to have a well thought out terms which form online contracts in order to
make sure that sufficient opportunity is provided to the customers to familiarize themselves with
the terms thereof. Besides the above there are also various other legal, tax and regulatory issues
more specifically Security Issues, Consumer Protection Issues, Intellectual Property Issues,
Content Regulation, Intermediary Liability, Jurisdictional Issues and issues relating to taxation
which need to be taken in mind while dealing with e-commerce transactions.

Ethics in e-commerce

Ethics is always a crucial component of any field. Ethics in e-commerce is very important, since
a business entity's dishonest or authoritarian actions will ruin the market equilibrium. The basic
ideals of the organization and its guiding principles are very important for the management of a
new enterprise and form part of the ethics of the company. The Company's ethical and legal duty
to protect the privacy of the customer's data and invest in the encryption of the same to save it
from hackers. The Corporations' Ethical Obligation also requires not making a false comment
about their goods, i.e. they do not promise customers stars only to obtain customer loyalty.12

Conclusion

The E-commerce though different in its digital presence from a brick-and-mortar business entity
faces its own set of advantages and disadvantages. The legislation of the Information Technology
Act, 2000 was made so as to make a cyber regulatory framework in accordance to the model
laws passed in UNCITRAL. There are several forms of e-commerce depending on the
individuals between which the exchange exists. Such e-commercial transactions face numerous
global problems pertaining to the existence of protection, jurisdiction, taxation, etc. The positives
and pitfalls of e-commerce are the aspects of the scheme that must be grasped when dealing with
the e-commerce system. Ethics plays a key role in determining the reputation of the entity in the
market, as mentioned at the conclusion of the essay

Not only is the rise of the e-commerce sector reflective of the growing transparency of the
population, but it has also brought to the fore the challenges posed by the country's legal system.
12
https://www.ecommercetimes.com/story/86253.html
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In fact, since the introduction of the IT Act, the legal framework has continuously sought to be
revised to resolve certain problems resulting from the use of the internet. Therefore, the need for
an opportunity for e-commerce firms to thrive in this field was a thorough understanding of the
regulatory regime and the potential challenges that an e-commerce company will face along with
successful risk control strategies.

BIBILIOGRAPHY

ARTICLES

1. E-Business: Issues & Challenges in Indian Perspective Bhavya Malhotra

2. Wreden, N. (1999), "Mapping the Frontiers on Email Marketing", Harvard Management

Communication Letter

3. ONLINE MARKETING: CHALLENGES AND OPPORTUNITIES Soheila Bostanshirin

4. Jobber, D. (2001) Principles and Practice of Marketing, England, McGraw-Hill

5. Allen, E. and Fjermestad, J. (2001) E-commerce marketing strategies: an integrated

framework and case analysis, Logistics Information Management

Websites

www.unece.org

www.blog.ipleaders.in

www.mondaq.com/

www.nishithdesai.com/f

www.legalbites.in