தமிழ்நாடு டாக்டர் அம்பேத்கர் சட்டப் ேல்கலைக்கழகம்

The Tamil Nadu Dr.Ambedkar Law University

Assignment submitted to the SOEL for the partial fulfillment of the Internal

Assessment

Topic: E-Commerce and the Law in India

Subject Name: ELECTRONIC COMMERCE (HBC0206)

Student Name: Enitha R.

Course: BCA LLB (Hons)

Registration Number: HCA52050113

Year & Section: 1st year ‘A’ Sec

Semester: 2nd Semester

Faculty Name: Dr. S. Thirumal & Mr. K. R. Rajeev

Month and year: June 2021

Student Signature Faculty Signature

 Table of Contents
1. Abstract

2. Introduction

3. Historical development of e-commerce

4. Importance of e-commerce

5. Legal Status of E-Commerce

6. E-Commerce in India

7. Information Technology Act

8. Certification Authorities

9. Violations of the ITA

10. Case laws on E- commerce

11. Judicial Significance of E-Market Transactions

12. Legitimacy of Digital Contract

13. Case laws

14. References
 A brief study on E-Commerce and the Law in India - A Review
of India’s Information Technology Act, 2000 and 2008
Abstract

In the digital world of the twenty-first era, laptop, web, and modern communications have altered people's
lives. Ecommerce, or doing business online, will now have a significant impact on the global economy and will be
vital to future growth. Several developing countries have looked into policies to create universal rules and
regulations that would online money transfers across regional, federal, and jurisdictional boundaries. In order to
construct the appropriate legal system, national judicial practices were to be re-designed. The Indian government
established the Information Technology Act of 2000 as a signatory to the Model Law. To meet up with modern, the
United Nations Commission on International Trade and Law adopted the Model Law on E-Signature (MLES) in
2001. (UNCITRAL). As a result, India passed the Information Technology (Amendment) Act, 2008. In this essay,
we focus on key sections of the Information and Technology Acts of 2000 and 2008 in terms of contractual,
jurisprudential, data security, and regulatory issues, as well as the socioeconomic effects of e on developing
countries.

Introduction

The word 'digital economy,' sometimes known as 'e-commerce,' simply refers to the
business transactions conducted via the internet, which encompasses both business to company
and business - to - consumer exchanges. The phrase refers to agreements made digitally via the
interchange of e-mail across websites and the electronic transfer of money. It also encompasses a
wide range of additional transactions, including the usage of ATM machines (ATMS) and the
submission of different kinds of papers to government agencies. E-commerce is based on the use
of electronic communications infrastructure, primarily the internet, which have defied our rules
and do not respect territorial or jurisdiction borders. This has been shown to be a significant
advantage in conducting international commerce. E -commerce also provides various benefits
over document based commerce, such as greater pace while lowering paperwork effort and data
processing costs. These benefits have prompted more businesses to deal digitally. This progress
is aided by advances in global telecommunications, world wide Web, and this has a significant
impact on not only business activity but also many parts of our lives. Despite the fact that
businesses have been exchanging commercial data across multiple communications
infrastructure for many decades, the advent of e-commerce has transformed the mode and nature
of that interaction. E-commerce, as previously said, is most commonly connected with use of the
web to market products and services, buy things, and organize transactions and payment. The
web's rapid expansion has enabled e-commerce accessible to everyone and every firm on the
planet. It allows businesses to access users without being to have a real presence (i.e. a shop) in
many jurisdictions [1]. The purchasing and promotion of goods and services over the Web as
electronic commerce. Business to business, business to consumer, and consumer to consumer
interactions were all covered. Retail e - commerce sales, supplier buys, online billing, and
internet auctions are examples of these transactions. Electronic commerce makes use of a
number of tools, namely information exchange, transfer of funds, lines of credit, and e - mails. E-
commerce and e - marketing are terms that are frequently interchanged. The unifying
denominator is the use of Internet technologies to carry out company activities. E -commerce, on
the other hand, refers to a wider, more comprehensive strategy & related operations. It covers
supplier partner interaction, computerized procurement, customer service, data analysis, and a
variety of other corporate operations in addition to online trade.

Historical development of e-commerce

The 19th century saw the birth of the Web, which revolutionized web activity. The web's
development, and hence the internet browser, made online accessible for anybody with a modest
access the internet. Companies soon recognized the web's marketing value as digital footprint
grew. As a result, there's also a rush to bring goods and services into the burgeoning electronic
sphere, as well as to reinvent commerce [2].

Sustaining partnerships and completing commercial transactions that involves selling

data, services, and things via digital network infrastructures is referred to as ecommerce.
Although e-commerce is commonly used to refer to the exchanging of products and services
on the web, it can also refer to a larger business growth. Consumer to business and company to
business e-commerce, as well as internal organizational operations that support such activities,
are all part of e-commerce. E-commerce began as a convention for the transmission of business
data amongst vendors and their prospective clients, such as sales or payments.

Those roots can be traced back to the Berlin blockade and airlift of 1948-49, when a
method of purchasing the product principally via telex was in place. In the decades that followed,
many industries refined the system until the first generic guideline was issued in 1975. The
Electronic Data Interchange (EDI) standards for pcs to pcs are flexible enough to incorporate
most simple electronic commercial transactions. With the widespread use of the internet and the
development of the Global Internet in 1991 and the first client for browsing it in 1993, most E-
commerce operations migrated to the Web.

With the widespread use of smart phones and the availability of high-speed Cellular
networks, much E-commerce has shifted to smart phones, which now include ipad, notebooks,
and wearable technology like smart watches. The total number of web users has surpassed 3
billion. There are a total of 259.14 million Web and broadband subscriptions in India. This
increased Internet penetration, combined with the increasing trust of internet users to make
purchases online, has resulted in massive growth in the E-commerce field, with an expanding
customer base enrolling on E-commerce online websites purchasing items through smart devices.

As a result, it is unsurprising that India will be in a good place to progress the E-

commerce field. E-commerce, in fact, presents one of the most major implications in the retail
industry since it allows for a rapid shift from physical stores to virtual stores that may run at a
fraction of the price. E-commerce has had a significant impact on everyday living as well as how
businesses and governments work. Digital markets and web-based distribution networks are used
to do business. uge E-malls (Amazon), customer to customer bidding platforms (eBay), inter
shops (LL.Bean), and thousands of E-retailers are examples of consumer or user-oriented
markets.

Alibaba and other firms have built huge business-to-business platforms. Sites like
Facebook support a wide range of social interaction and serve as platforms for so-called social
commerce, which is fueled by the thoughts and reviews opinions of the people as electronic word
of mouth. The web is also a participatory social channel that complements and frequently
replaces traditional media. The internet's hypermedia nature, which allows for the interlinking of
multimedia information from internationally scattered sites, allows for the creation of new forms
of media goods, which are frequently supplied for free. Bloggers and multimedia collectors are
examples of new media (YouTube), Social media and customized e-paper.

Security is a big issue in E-commerce, and it comprises verification of pasties, ability to

access specific resources, communication secrecy, and data integrity guarantee. Many of these
services are provided through a public key infrastructure, a system of specialized organizations,
and computerized means for making available certificates that authorized firms and, if desired,
individuals provide interaction encryption and decryption keys, and provides strong encryption
guidelines [3].

Importance of e-commerce

E-commerce is without a dispute is among the most exciting and timely aspects of law
research in today's globe. We are entering an age of knowledge sharing and instantaneous
communication, and as a result, we are in the middle of an electronic revolution with far greater
economic consequences than the industrialization. This technological world has expressed itself
through a global scale in the shape of numerous inventions, break-through, and big jumps in
internet functioning technology. With these future ideas, people may now transcend space and
time thanks to the web's quickness.

Legal concerns are crucial in influencing the upliftment of Internet connectivity, as well
as its overall impact on the E-Government system. As the E.G. initiative's inherent management
and control mechanisms, legal issues serve as a foundation for governance infrastructure. Rapid
technological breakthroughs are taking place, with the goal of providing residents with a flawless
and visible environment. Legal difficulties, unlike socio - technical ones, have to examine the
fact that while the system gives openness throughout the initiative, it does not address the
vulnerability associated with open communications.

Governments, being the primary caretakers of sensitive data and the greatest commercial
enterprise in every country, may be subjected to unintended perforation as a result of E-
government. There, we'll look at three countries: the United States, which has a fairly stable and
superb architecture for Egovernance in places, South Africa (which I'd put in the moderate
category), and India (which is in the early stages of implementing E-government) to see where
the cyber laws are. According to a Forrester Research survey, social networks play an essential
role in pushing consumers online and encouraging them to engage with brands.

This is especially significant in view of the fact that India is Facebook's second-largest
audience after the United States. However, it is important to remember there's still a "digital
divide" in India, where the gains of the web have not yet reached non-urban areas. Mobile
phones would be extremely vital in this circumstance. There are around 914.92 million wireless
customers in India. In an industry where overall internet penetration is low, cell devices have
been and will continue to be a crucial tool for helping customers communicate. The Indian
government has approved projects to bring broadband access to small towns and villages. [4].

Legal Status of E-Commerce

Unictral E-Commerce Law

This legislation relates to any sort of information sent as a data message in the course of business
operations.

For the purposes of this law:-

Article 1 –Sphere of Application

a) “Data message” means information generated, sent, received or stored by electronic, optical or
similar means including, but not limited to, electronic data interchange (EDI) electronic mail,
telegraph, telex or telephony.

b) “Electronic data exchange (EDI)” means the electronic transfer from computer to computer of
information using an agreed standard to structure the information;

c) “Intermediary ”, with respect to a particular data message, means a person who, on behalf of
another person, sends, receives or stores that data message or provides other services with
respect to that data message;

d) “Information system” means a system for generating, sending, receiving, storing or otherwise
processing data messages.

Article:-5 Legal recognition of Data messages.

Information shall not be denied legal effect, validity or enforceability solely on the grounds that
it is in the form of a data message.

Article:-7 Signature.

i) Where the law requires a signature of a person, that requirement is met in relation to a data
message if:
a) A method is used to identify that person and to indicate that person‟s approval of the
information contained in the data message; and

b) That method is as reliable as was appropriate for the purpose for which the data message was
generated or communicated, in the light of all the circumstances, including any relevant
agreement.

ii) Paragraph (i) applies whether the requirement therein is in the form of an obligation or
whether the law simply provides consequences for the absence of signature.

iii) The provisions of this article do not apply to certain things.

Article -11. Formation and Validity of Contracts.

i) In the contract formation, unless otherwise agreed by the parties, an offer and acceptance of
any offer may be expressed by means of data messages. Where a data message is used in the
formation of a contract, that contract shall not be denied validity or enforceability on the sale
ground that a data message was used for that purpose [5].

Emphasis‟s on providing legal recognition to Contracts, electronic signatures.

Rules on attribution, acknowledgement, receipt, time of dispatch of electronic communications

Legal admissibility and evidential weight of data massages

ITA 2000 substantially incorporates UNCITRAL model Law.

European Union

• Name and location of service providers must be disclosed in advance.

• Member states have a positive commitment to enforce electronic contracts.
• The principle of "mere conduit" exempts the service provider from liability.
• Service providers are not liable for information caching and hosting.
• The requirement to draught a code of conduct (trade association) to assure compliance.

In the event of a dispute between a service provider and a service recipient, member states are
required to assist out-of-court dispute resolution.

United Kingdom

The UK E-commerce Regulations of 2002 transpose the directive's major requirements.

Breaking June's fake bemires 4 increasing consumer confidence is the focus.
Persons who advertise goods/services online, sell/services online, transfer or store electronic
data, or to provide connection to a communication network are all subject to regulations.
Obligation to provide data to a customer by an online platform prouder mist.

Imitation of the liability of service providers for illegal information they unknowingly carry or
maintain. Government regulation or licencing is required.

E-Commerce in India

E-commerce in India is governed by the Information Technology Act of 2000. It

identifies all e - mail communications, as well as material in an electronic format with digital
signatures. The controller certifies the electronic. It also accepts electronic applications and
approvals for niceness, permits, and other papers related to government departments.
Furthermore, it makes downloading, copying, extracting, and damaging digital files and data
illegal.

• E-commerce shops are a type of on-line store that is governed by the Shops and Establishments
Act of 1953 (each Indian state has its own Act).

• Labor issues are covered by the Industrial Disputes Act of 1947, which includes E-commerce
internet sites under the phrase "industry."

• Central sales tax (CST) and value added tax (VAT) are the two tax registrations required for
selling products and services on E-commerce websites (VAT)

• A legally binding contract- When you access a site, you are bound by its terms of service, also
known as an end user license agreement. This is the site's user contract. The word refers to the
terms of a consumer's contract with the business. The requirements and fundamentals of the
Contract Act of 1872 must be met by the terms of usage.

• Privacy: According to section 72 A of the Information Technology Act Amendment 2008, it is

illegal for an E-commerce website to reveal personal information to another company without
the authorization of the member. It should take the required procedures to protect sensitive data's
integrity.

Information Technology Act

In the year 2000, the Information Technology Act was passed.

The ITA's goals are to:

(1) Recognize the legal validity of electronic transactions utilized in e-commerce;

(2) Encourage the expansion of e-government; and

(3) Change criminal, evidentiary, and financial laws as a result of the legal recognition of
electronic payments.
 The ITA's drafters ostensibly gave attention to the United Nations model legislation on
electronic trade. Six exclusions are included in the ITA, which is a flaw that is exacerbated by
the ITA's first-generation e-signature requirements. A statutory requirement for; a writing [7]; a
filing with a government entity, if the department allows it [8]; retention [9]; or publishing [10]
may be satisfied by an electronic version. A legal obligation for verification or signing may be
satisfied by an electronic format verified with an electronic signatures [11].

Certification Authorities

The ITA differentiates between safe and insecure e-records and digital signatures, stating
that a security method must've been implemented to a „secure' online database. To be considered
a "secure" digital certificate, a security measure agreed upon by all parties must verify that at the
time of connection, the digital certificate was i) distinctive to the user; (ii) recognised the client;
and (iii) was still under the consumer's control and attached to the electronic form so that if the
electronic document was changed, the digital signature would be changed as well.[12]

The controller of certificate authorities is in charge of regulating certification authorities

[13] as well as investigating any claimed ITA [15] infractions [14]. No person or institution may
serve as a certifying authority unless the controller has granted them a license [16]. An
application for a certifying authority license must be able to demonstrate that they have the
following: i) expertise, capabilities, and skills; (ii) personnel; (iii) capitalization; and (iv)
physical assets, such as computer hardware and an appropriate workplace [17]. The controller
has the right to suspend or withdraw a certifying authority's license for good reason [18].

Violations of the ITA

The controller designates adjudicating authorities to examine and adjudicate possible

violations of the abovementioned rules, as well as deciding where each can reign supreme. The
officer will make a choice on the issue after all parties have had a chance to present their
arguments at a hearing [19]. The officer will consider the perpetrator's "unfair advantage," the
amount of loss incurred as a result of the wrongful conduct, and the amount of times the offender
did the acts [20]. On a case-by-case basis, fines will be levied or rewards will be issued. The
government will specify the qualifications for adjudicatory officers, which will encompass both
information technology and law knowledge. The officer will have both criminal and civil cases
jurisdiction [21]. The Indian government has the authority to establish one or more cyber-
regulatory appellate courts and to define the "matters and places" that fall under their purview
[22].
Case laws on E- commerce

Hill v Gateway 2000, Inc, 105f 3d 1147 (7thgir, 1997) facts –

The elements of the lawsuit are based on the current state of clauses of box contracts. Mr.
and Mrs. Hill have placed an order for a Gateway 2000 computer system. Including the bundle of
service contracts that came with the computer system, there was an implied contract that barred
plaintiffs from pursuing any action against the defense outside of the arbitration court. Hill was
disappointed with the purchase and launched a federal lawsuit against the company. The district
court turned down Gateway's request to honor the arbitration clause, noting that the record did
not support a conclusion of a valid arbitral proceedings or that hill had had proper notice of the
arbitration agreement. The argument in this scenario is the same as in the “shrink wrap license”
cases. Shrink wrap licensing agreements usually include a notification of the contract on the
product labels, as well as the full terms of the contract inside the containers, and limit access to
the goods unless the contract is expressly accepted. In such circumstances, the agreement doesn't
really develop at the date of acquisition; rather, it forms when the consumer expresses
acceptance, such as by refusing to return the items within a stipulated time frame.

People V Lipsitz 663 N.Y.S 2nd 468 (N.Y. sup ct. June 23 1997 in this case a New York
court held that the defendant was subject is personal jurisdiction and liable for violating New
York consumer protection laws, even though the defendant conducted its magazine subscription
business globally over the intermit [23].

Judicial Significance of E-Market Transactions

Click wrap, browse wrap, and shrink-wrap contracts are some of the most frequent types
of e-contracts. By just we (or browsing) the page, a browse wrap contract is meant to tie the
commercial contract. Shrink wrap contracts, while not directly related to e - commerce sites, are
appropriate in the case of e-commerce categorized according to the type of items linked with
shrink wrap contracts, which are only applicable after opening the box where the product is
packaged.

Legitimacy of Digital Contract

Any activity, including an e-commerce payment, hinges on the existence of a legal

contract. E-commerce, along with all other agreements in India, is governed by the country's
basic contract rules. i.e., the Indian Contract Act, 1872; it is worth noting, however, that the
Information Technology Act, 2000 strengthens the legality of e-contracts. Unless clearly banned
by law, e-contracts such as click-wrap contracts are executable and lawful if they meet the
prerequisites of a signed agreement as defined by the Indian Contract Act. As a result, the terms
and conditions associated with an e-commerce site are critical in determining and ensuing that
ecommerce transactions meet with the requirements of a valid contract.
 It does not appear to be much legislation in India on the question of whether legal binding
internet agreements are unsustainable. However, Indian laws and courts have dealt with
situations where in terms of the agreement were negotiated between entities with uneven
bargaining power. Certain clauses of the Indian Contract Act deal with unjustifiable contracts,
such as when the contract's consideration or goal is against public policy, in which case the
contract cannot be valid. In the event of an unreasonable contract, the courts may place the
burden of proof on the person in the dominant position to determine that the agreement was not
influenced by disproportionate power. The Indian Contract Act does not define the expression
„public policy‟ or what is meant by being „opposed to public policy.‟ However this section
allows the court to hold clauses opposed to public policy void [24].

The burden of proof that an agreement was not triggered by undue pressure rests entirely
on the person of authority to rule the roost and will of another, according to section 16(3) of the
contract act. If a person in authority to control the will of some other enters into an agreement
with him, and the exchange appears, on the face of it or on proof presented as evidence, to be
unjustifiable, the person in a position to challenge the will of another bears the burden of proving
that. According to Section 23 of the Contract Act, an attention or part of a contract is illegal if it:
1) is prohibited by law, or 2) is of such a nature that, if permitted, would defeat the provisions of
any law; or 3) is dishonest, or 4) involves or implies injury to another's person or property, or 5)
the court considers it to be immoral or contrary to public policy.

Case laws:

In the case of LIC of India V. Consumer education & research center [25]. The Supreme
Court of India construed a life insurance issued by the Life Insurance Corporation of India (LIC
of India) by include some components of public benefit. Under Article 14 of the Indian
Constitution, the court found some term terms in the policy unlawful, including those limiting
the coverage's benefits to persons employed by the government. “In dotted agreements, there
would be no necessity for a losing party to bargain as to presume greater bargaining power,” the
court said. In terms of the dotted line agreement, he should either refuse the good or service.
Either he accepts the unreasonable or unjust terms or he refuses to use the service in the future.”

The court concluded in Lily White V.R.Munnuswami [26] that a restriction of legal
liability placed on the reverse of a laundry bill that limited the laundry's responsibility to 50% of
the selling price of the products in the form of failure was against policy making and hence void.
By analyzing various judicial & technological issues I find India is advantageous location for e-
commerce. India, as the world's most populous and technologically advanced country, has a
promising future for e-commerce. The Indian government's attempts in the shape of Digital India
to encourage digital platforms to India's most distant areas. India is now a possibly the best
nation (technically and legally) to encourage e-commerce.
References

1. The low of E- commerce: E- contracts, E-business by Dr. Abdullah M. Alghamdi- Published

my Author house, Bloomigton. 1-4.
2. www.referenceforbusiness.com
3. www.britannica.com
4. www.nishith deasi.com
5. UNCITRAL model law on electronic commerce with guide to enactment – available at
www.unictral.org/pdf/english/texts/electcom/05-89450- Ebook.pdf
6. Law relating to e- commerce: international and national scenario with special reference to
India Dr. Jyoti Rattan. (IJSSEI) Volume//01//Issue//02//August 2015 Dr. Jyoti
Rattan(www.isij.in) Page6- 7
7. ITA, section 1(4)
8. ITA, section 4
9. ITA, section 6(1)
10. ITA, section 7(1)
11. ITA, section 3
12. ITA, Section 14
13. ITA, section 15
14. ITA, section 18
15. ITA, section 29
16. ITA, section 28(1)
17. ITA, section 21
18. ITA, section 21
19. ITA, section 45
20. ITA, section 46
21. ITA, section 47
22. ITA, section 46
23. www.legalindia.com
24. www.ivca.in/reports/2015
25. 1995 AIR1811
26. AIR1966 Mad 13