E-COMMERCE involves digitally enabled commercial transactions between and

among organizations an individual. Commercial transaction involves the exchange of value

(e.g. money) across organizational or individual boundaries in return for product or services.
• E-commerce means transfer of ownership or rights to use goods or service through
electronic medium such as internet.
• According to OECD (Organisation For Economic Co-Operation And Development)-
the sale or purchase of goods or services, conducted over computer networks by
methods specifically designed for the purpose of receiving or placing order.
Evolution-
• The concept was developed in 1970 in the U.S.A.
• In the year 1991, when the internet was opened to commercial transactions, numerous
e-commerce websites came into existence like amazon. The concept started emerging
with the coming of electronic data interchange (EDI) where an order could be placed
by customer’s computer in the form of purchase order and the supplier’s computer
could receive the purchase order and process the same directly into its system.
• The development of protocols such as http, html etc. further strengthened the concept
of e-commerce.
6 basic types of e-commerce-
Business-to-business (B2B)
In a Business-to-Business E-commerce environment, companies sell their online goods to other
companies without being engaged in sales to consumers. B2B web shop usually contains
customer-specific pricing, customer-specific assortments and customer-specific discounts.
Business-to-consumer (B2C)
In a Business-to-Consumer E-commerce environment, companies sell their online goods to
consumers who are the end users of their products or services.
Consumer-to-consumer (C2C)
In a Consumer-to-Consumer E-commerce environment consumers sell their online goods to
other consumers. A well-known example is eBay, OLX.
Consumer-to-business (C2B)
In a Consumer-to-Business E-commerce environment, consumers usually post their products
or services online on which companies can post their bids. A consumer reviews the bids and
selects the company that meets his price expectations.
Examples of such practices are the sites where designers present several proposals for a
company logo and where only one of them is selected and effectively purchased.
Business-to-administration (B2A)
This model enables companies or manufacturers to sell their services or products to government
agencies by signing a long-term contract.
Consumer-to-administration (C2A)
In C2A, a customer conducts transactions directly with government agencies by providing
something of value via online means. This can be paying taxes, water, electrical bills, or
something as simple as providing feedback on a government website.
OTHER MODELS:
Affiliated model- The affiliated model refers to a partnership between a business (often an
online retailer) and affiliates (partners or marketers) who promote the business's products or
services in exchange for a commission on sales generated through their marketing efforts.
Commission-Based: Affiliates earn a commission for each sale or lead generated through
their promotional activities, such as affiliate links or banners on their websites.
Low Risk for Businesses: Companies only pay affiliates when a sale is made, minimizing
upfront advertising costs.
Diverse Marketing Channels: Affiliates can promote products through blogs, social media,
email marketing, and other online platforms.
Performance Tracking: Businesses use tracking software to monitor affiliate performance
and sales conversions.
Aggregated model- The aggregated model involves a platform that consolidates various
products or services from multiple providers, offering consumers a one-stop shopping
experience. Aggregators compile information from different sources, allowing users to
compare options and make informed purchasing decisions.
Comparison Shopping: Aggregators present multiple products or services side by side,
enabling consumers to compare prices, features, and reviews.
Wide Selection: Users can access a broad range of offerings from various suppliers, all in
one place.
User-Centric: Designed to enhance the shopping experience by providing detailed
information and helping consumers make choices.
Revenue Generation: Aggregators typically earn revenue through affiliate commissions,
advertising, or subscription fees from providers listed on their platform
ADVANTAGES DISADVANTAGES
The main advantage is its ability to reach a Following are the disadvantages:
global market without necessarily implying a Strong dependence on information and
large financial investment since this type of communication technologies (ICT)
commerce is not bound by geographical Lack of legislation that adequately regulates
limitations and therefore allows consumers the new e-commerce activities, both
to make a global choice from all potential nationally and internationally.
suppliers regardless of their locations. Market culture is averse to electronic
It allows direct interactions, shorten product commerce (customers can’t touch or try the
distribution chain and create a direct channel products)
between the producer, service provider and The user’s loss of privacy, the loss of regions
the final user. and countries cultural economic activity.
 It enables producers to offer product and Insecurity in the conduct of online business
services that suit the individual preferences transactions.
of the target market.
e-commerce allows suppliers to be closer to
their customers resulting in increased
productivity and competitiveness for
companies.
Consumers are benefitted from an
improvement quality service and virtual
stores that open 24 hours a day.
Cost reduction is another very important
advantage normally associated with e-
commerce.

EDI (ELECTRONIC DATA INTERCHANGE)

It is a structured transmission of data between organization by electronic means. It is
used to transfer electronic documents or business data from one computer system to
another computer system or from one trading partner to another without any human
intervention.
Transmission of a purchase order: How does EDI work?
1. The buyer (say, a retailer or business) wants to place an order, so they create a Purchase
Order (PO) in their system. This is just a digital list of what they want to buy, with
details like items, quantities, and prices.
2. The buyer's EDI software takes this PO and translates it from their internal format into
a standard language that both the buyer and supplier understand. Think of it like
converting a document into a commonly readable format, so there’s no
misunderstanding.
3. The EDI software then sends this standardized PO over to the supplier, quickly and
securely.
4. The supplier’s EDI software gets the order, understands the standard format, and then
converts it into their own internal format, making it ready for processing in their system.
The early adopters of EDI
In the 1960s, industries with complex logistics like airlines, shipping, and railroads were the
first to experiment with EDI to streamline their operations. These companies were managing
high volumes of transactions and needed an efficient way to share information across different
systems. Initially, they each developed their own "proprietary systems"—meaning that each
company or industry had its own way of coding and sharing data, which created problems when
different companies tried to work together.
To address the challenge of incompatible systems, a group of railroad companies formed the
Transportation Data Coordinating Committee (TDCC) in 1968. They created the first EDI
standard specifically for sharing transportation data. Over time, this standard spread to
industries like transportation and food, making it easier for these businesses to communicate
using a common language.
In 1986, to enable seamless international trade, the United Nations launched UN/EDIFACT
(United Nations Electronic Data Interchange for Administration, Commerce, and Transport).
This global standard allows businesses worldwide to transmit electronic documents in a
universally compatible format, promoting smoother international business operations.
Instruments by which e-commerce is conducted
1. Telephone- The most important instrument of electronic commerce is the telephone.
The telephone succeeded to achieve and maintain a leading role in commercial
transactions because of its widespread availability, low cost, user friendliness of the
instrument and its cheap use for local calls and declining cost of long distance and
international calls.
2. Television- Television benefits from an even more widespread distribution than the
telephone. The relatively low cost of a TV Set and subscription charges for the viewer
as well as the user friendliness of TV have contributed to its success as a means of
commerce.
3. Electronic payment and money transfer- Electronic payment and money transfer system
like automatic eller machines (ATM), credit cards, debit cards or smart cards are also
part of E commerce. These instruments typically only serve to make or receive
payments.
4. Fax- The main advantage of the fax, another of the E-commerce instruments, lies in
replacing traditional mail services with speedier document transmission. Fax machines
are usually more expensive.
MODEL LAW ON E-COMMERCE
Definition and purpose:
The Model Law on Electronic Commerce (MLEC) was created to support and streamline e-
commerce by offering a set of internationally accepted rules that national governments can
adopt. It is structured in two main parts
Part 1 enacts three key principles:
Non-Discrimination: Electronic data is treated with the same validity as paper documents,
ensuring digital transactions are not seen as inferior.
Technological Neutrality: The law does not Favor any specific technology, allowing
flexibility as technology evolves.
Equity: Aims to ensure fairness in electronic transactions and equal treatment for all parties
involved.
It also provides general rules to ensure the legal validity of electronic data, covering essential
aspects such as:
E-contracts: Rules on the design and enforceability of electronic contracts.
Data Validity and Handling: Standards for acquiring, exposing, and sharing data as well
as guidelines for decision-making based on electronic information.
Part II addresses particular e-commerce scenarios that may require tailored rules.
Main goals:
1. Remove Legal Barriers: The MLEC helps eliminate outdated legal requirements that
might prevent electronic transactions, allowing e-commerce to operate smoothly.
2. Equal Treatment for Paper and Electronic Records: The law provides equal validity
to electronic and paper documents, enabling businesses to rely on digital
communications just as they would on paper-based ones.
3. Facilitate Paperless Transactions in International Trade: By promoting electronic
communications, MLEC encourages the adoption of paperless processes, which can
speed up and simplify international trade.
4. Rules for Contracts and Data Transfers: MLEC provides guidelines on creating and
managing electronic contracts, transferring data, and ensuring that data messages are
correctly sent and received.
History and evolution
1. The UNCITRAL Model Law on e-Commerce was adopted by the United Nations
Commission on International Trade Law in 1996 in furtherance of its mandate to
promote the harmonization and unification of international trade law, to remove
unnecessary obstacles to international trade caused by inadequacies and divergences in
the law affecting trade.
2. Over the past quarter of a century, UNCITRAL has implemented its mandate by
formulating international conventions (Hamburg Rules, on the Liability of Operators
of Transport Terminals in International Trade, International Bills of Exchange and
International Promissory Notes, and Independent Guarantees and Stand-by Letters of
Credit), model laws, the UNCITRAL Arbitration Rules, the UNCITRAL Conciliation
Rules, and legal guides.
3. In 1985, a report from the Secretariat noted that legal restrictions on the use of
computers in international trade arose as a result of the need for documents to be signed
or signed. Following this report, the Commission received a recommendation stating a
review of the legal requirements for the type of trade and transaction documents,
handwriting signing and confirmation requirements, the type of document submitted to
the government, and therefore the requirements for those documentation-related
provisions. However, little progress has been made in eliminating regulations in
national legislation that require the use of written documents and verification.
4. In 1988, the Commission proposed to consider the need to provide legal frameworks
applicable to the construction of international trade contracts through electronic means.
5. Two major reports discussed at that time, “Preliminary study of legal issues associated
with the formation of contracts by electronic means” and “Electronic data interchange,”
pointed out that inconsistencies in local laws hindered the uniformity needed for cross-
border e-commerce.
6. This push led to the drafting of the Model Law on e-Commerce, which provided a
foundation for modernizing and updating national laws. Its purpose was to help
countries standardize rules related to digital transactions, especially those involving
electronic data, digital signatures, and other technological methods of conducting
business.
Key provisions:
Article 1: sphere of application- this law applies to any kind of information in the form of data
message used in the context of commercial activities.
The term “commercial” should be given a wide interpretation so as to cover matters arising
from all relationships of a commercial nature, whether contractual or not. Relationships of a
commercial nature include, but are not limited to, the following transactions: any trade
transaction for the supply or exchange of goods or services; distribution agreement;
commercial representation or agency; factoring; leasing; construction of works; consulting;
engineering; licensing; investment; financing; banking; insurance; exploitation agreement or
concession; joint venture and other forms of industrial or business cooperation; carriage of
goods or passengers by air, sea, rail or road.
Article 3 provides guidelines on how to interpret the model law. When interpreting the law, its
international origin should be considered. This means interpreters should keep in mind that
the law is intended to function across borders, promoting uniformity so that it’s applied
consistently in different countries.
For issues not directly addressed within the law, these should be resolved based on the general
principles underlying the Model Law. This means applying the law’s core values—like non-
discrimination, technological neutrality, and equity—rather than creating entirely new rules.
Article 4: variation by agreement: Parties involved in activities such as creating, sending,
receiving, or storing data messages can alter the rules outlined in Chapter III through
mutual agreement. This means that as long as both sides agree, they can customize certain
provisions to better fit their specific needs.
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 data message.
Article 6: If the law requires information to be in writing, this requirement is considered
fulfilled if the information is in the form of a data message (like an email or digital document),
as long as the message is accessible and can be referred to later. This means that a digital
record is as valid as a physical written document, provided it can be stored and retrieved as
needed.
Certain types of documents or situations may be excluded from this rule, as specified elsewhere
in the law. This could include documents like wills or property deeds, which often require
traditional paper forms for legal validity.
Article 7 outlines the conditions under which a digital or electronic signature can fulfil legal
requirements for a signature:
• The method used must be able to identify the person signing and clearly indicate their
approval of the information within the message.
• the method used to sign must be reliable and appropriate for the purpose of the data
message.
Article 8 defines when a digital document or data message can be considered "original" for
legal purposes:
A document is deemed original if there’s a reliable assurance of its integrity from when it
was first created in its final form. This means that the content has not been altered and remains
complete since its creation, whether it started as a digital or paper document.
f the document must be presented (e.g., in court or to a regulatory body), it should be capable
of being displayed to the intended recipient. This ensures the information is accessible and
visible in a usable format.
Article 9 ensures that digital records, or data messages, are admissible as evidence and
describes how their reliability is assessed:
Digital records cannot be excluded as evidence solely because they are data messages (Clause
1a) or because they are not in their original form, provided they are the best available
evidence (Clause 1b).
When determining the evidential weight of a digital record, factors to consider include:
• Reliability of creation, storage, and communication methods.
• Integrity maintenance: How the document’s integrity was preserved.
• Identification of the originator: How reliably the author or sender of the data was
identified.
• Other relevant factors that impact the document’s trustworthiness.
Articles 16 and 17 focus on how goods are transported and the documents needed for shipping.
They highlight that you can use electronic messages (like emails or digital documents) to
manage the shipping of goods instead of relying solely on paper documents. This is important
because it makes international trade easier and more efficient, such as-
• Details such as marks, quantity, weight, and value of goods, as well as issuing receipts
and confirming loading.
• Communicating the terms of the contract and giving instructions to the carrier.
• Actions related to claiming delivery, authorizing release, and notifying loss or damage.
• Granting, acquiring, or transferring rights related to the goods.
In the landmark case Khoury v. Tomlinson, decided by the Texas Court of Appeal, the court
addressed the issue of whether an email agreement could be considered valid despite lacking a
traditional signature.
Facts of the Case:
• An agreement was made through email communication.
• The email did not have a physical signature but included the sender's name in the "from"
section.
Court's Finding:
• The court ruled that the presence of the sender's name in the "from" section of the email
was sufficient to establish the identity of the sender, in line with Article 7 of the Model
Law on Electronic Commerce. This article emphasizes that a method identifying a
person and indicating their approval is valid for meeting signature requirements.
Chwee Kin Keong and others is a case dealt with by the Singapore High Court. There was
the issue of unilateral mistake in this case as the wrong price was quoted on the seller’s website
for a product. The server of the seller automatically sent a confirmation mail when the buyers
placed an order. All the elements of the contract were established but with a mistake which
eliminated consensus ad idem. Referring to the Singapore Electronic Transactions Act based
on Model Laws, the court found that human errors, system errors, and transmission errors could
vitiate a contract.

Implementation of Model Law in India- India has not fully adopted the Model Law
on electronic commerce but has taken significant steps to facilitate electronic governance
and protect e-commerce consumers. The following are key measures and statutes that
contribute to the regulatory framework for e-commerce in India:
The Information Technology (Intermediaries Guidelines and Digital Media Ethics Code)
Rules, 2021 was introduced by the Government of India so as to make various
intermediaries including social media to act in a manner consistent with the international
scenario as contemplated by the UNCITRAL Model law on e-commerce. UNCITRAL
Model law has suggested a dispute redressal method.
• So, it has come up with due diligence by various intermediaries’ viz., social media
intermediary, significant social media intermediary, and online gaming
intermediary.
• The intermediary shall publish on its social media platform, the rules and
regulations, privacy policy, and user agreement either in English language or any of
the languages of the Eighth Schedule of the Constitution of India.
• The intermediary will ensure due diligence, privacy, and transparency. They will
also respect the fundamental rights promised under Articles 14, 19, and 21 of the
Constitution of India.
• The intermediary shall also provide a link for the Grievance Redressal Mechanism
by clearly writing the name of the Grievance Officer and his contact details so that
the user or the victim can reach for Grievance Redressal.
The Information Technology Act, 2000 is based on the UNCITRAL Model Law. It
commenced on October 17, 2000. It gave a sharp boost to electronic commerce in our
country. It defines “digital signature” as authentication of electronic record by a subscriber
by affixing his digital signature.
• This is the first legislation in the history of India that provides for legal validity for
electronic commerce and is based on the UNCITRAL Model Law and gives impetus
to Electronic Commerce in the territory of India.
• Electronic commerce involves the use of electronic, optical, and magnetic
alternatives to paper-based methods of communication and storage of information,
such as keeping hefty paper files, to facilitate the electronic filing of documents
with Government agencies and further to amend the Indian Penal Code,1860,
the Indian Evidence Act, 1872, the Banker’s Books Evidence Act, 1891 and
the Reserve Bank of India Act, 1934.
• The IT (Amendment) Act was amended in 2008 to increase the security, E-
commerce transactions with specific provisions for legal recognition of digital
 signatures and electronic documents. Section 43A of the IT Act holds e-commerce
companies accountable for protection of personal data.
• Online data protection- the IT act imposes legal obligations on entities operating
online to have a defined privacy policy, maintain reasonable security practices and
procedures and obtain specific consent from its website user regarding the use of
their personal data before making any disclosure.
ONLINE CONTRACTING
As per section 10 of ICA a contract is an agreement binding between two or more parties
intending to create a legal relationship, in which one makes the proposal while the other accepts
the proposal or offer and thus it becomes a promise.
An online contract, often referred to as an electronic contract or e-contract, is a legally binding
agreement created and executed over the internet. These contracts can take various forms and
are commonly used in various transactions, such as online purchases, service agreements, and
employment contracts.
Many online contracts utilize electronic signatures, which can be created using various
methods, including typed names, scanned signatures, or specialized e-signature software. In
many jurisdictions, electronic signatures are legally recognized and carry the same weight as
handwritten signatures.
Accessibility: Online contracts can be easily accessed and reviewed by all parties involved,
providing convenience and reducing the need for physical paperwork.
Speed and Efficiency: The process of drafting, negotiating, and executing online contracts
can be much faster than traditional paper contracts, allowing for quicker transactions.
Record Keeping: Online contracts can be stored digitally, making it easier to keep track of
agreements and refer back to them when necessary.
Essential elements of online contract
• Offer- there must be a lawful proposal/offer made by one party known as the proposer
and it is the starting point of a contract. By browsing and choosing the goods and
services available on the website of the seller, the consumer makes an offer to purchase
such in relation with the invitation to offer made by the seller. A proposal must be
distinguished from the invitation to offer or treat and must be made with an intention to
create legal relationship. It is revocable before the other party accepts it.
• Acceptance- the acceptance of the proposal must be unconditional and absolute and
must be communicated to the proposer or the offeror.
• Intention to create legal relationship- if there is no intention to create legal relationship
on the part of the parties to contract, there is no contract between them. The intention
of the parties is to be considered by the court from the terms of contract and surrounding
consequences. Agreements of social or domestic nature do not create legal relationship,
hence they aren’t contracts enforceable by law.
• There must be a lawful object- a contract is only enforceable by law only when it is
made for a lawful purpose. It must not defeat any provision of law and must not be
fraudulent in nature. If any competent court regards any agreement as opposed to public
policy, it is a void contract.
 • There must be a legal and lawful consideration- it is something of some value in the
eyes of law. The basic rule is that when a party to a contract promises to perform his
promise, he must get something in return for the performance of his promise. Promises
that are physically impossible cannot have real consideration.
• Capacity of parties- parties to a contract must be capable of entering into a contract. He
must attain the age of majority and must be of sound mind and not disqualified from
contracting by any law for the time being in force as per section 12 of ICA. In the old
age foundation case of mohiri bibi v dharmodas, it was held by the privy council that
an agreement by a minor is void.
• There must be free and unaffected consent- as per sec 13 of ICA, it is basically the
meeting of minds of the people. When both parties agree upon the same thing in the
same manner they are said to consent unless it is being caused by coercion, threat,
violence etc.
• Possibility of performance: the terms and conditions of agreement must be certain and
not vague and must also be capable of performance. An agreement to do an impossible
act cant be enforced as a contract.
Types of online contract
Shrink-wrap agreement- The agreement is formed when the consumer opens the packaging
of the product (often a software product) and uses it. The terms of the agreement are usually
printed on the packaging or included in the documentation enclosed within the package. The
terms typically outline the rights and limitations associated with the use of the product, such as
licensing rights, restrictions on copying or distributing the software, and disclaimers of liability.
shrink wrap agreements are usually non-negotiable. Consumers cannot alter the terms; they
either accept them by using the product or choose not to use it. Courts have generally upheld
shrink wrap agreements as legally binding, provided that the terms are clear and reasonable.
The act of opening the package is interpreted as acceptance of the terms.
Eg. When a user buys a software application that comes in a box, the license agreement printed
on the packaging becomes effective once the user breaks the seal and starts using the software.
Clickwrap agreement- a type of contract commonly used in online transactions and digital
services. This agreement requires users to actively consent to the terms and conditions before
proceeding with a transaction or accessing a service. Users must take a deliberate action, such
as clicking an “I Agree” or “Accept” button, to indicate their acceptance of the terms.
Clickwrap agreements are generally considered legally binding, as long as the terms are clearly
stated and accessible. Courts have upheld these agreements, emphasizing that users' affirmative
actions indicate their consent to the terms.
When installing software, users are often presented with an end-user license agreement
(EULA) that requires them to click "I Accept" before the installation can proceed.
A browse wrap agreement is a type of online contract that is used to establish the terms of
use for a website or digital service. Unlike clickwrap agreements, which require users to
actively accept the terms, browse wrap agreements imply acceptance through the user's
continued use of the website. Users do not have to click an "I Agree" button to accept the terms.
Instead, acceptance is implied when users navigate the site or use its features.
The terms and conditions are generally presented in a hyperlink format, allowing users to view
them by clicking on the link. However, users are not required to read or acknowledge the terms
to use the website.
The enforceability of browse wrap agreements can be more contentious than that of clickwrap
agreements. Courts may scrutinize whether users had reasonable notice of the terms and
whether they had a genuine opportunity to review them before accepting them through their
actions.
Courts may be less likely to enforce browse wrap agreements if it can be demonstrated that
users did not have adequate notice of the terms or if the terms are deemed unfair or overly
burdensome. Users may not be aware of the terms they are agreeing to, leading to potential
disputes if they later challenge the enforceability of the agreement.
the UNCITRAL Model Law on Electronic Commerce (1996) provides a comprehensive
framework for the use of electronic communications in the formation and performance of
contracts.
Parties and Rules of communication
Article 2 of MLEC- Definitions:
c) “Originator” of a data message means a person by whom, or on whose behalf, the data
message purports to have been sent or generated prior to storage, if any, but it does not
include a person acting as an intermediary with respect to that data message;
d) “Addressee” of a data message means a person who is intended by the originator to
receive the data message, but does not include a person acting as an intermediary with
respect to that data message;
e) “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;
Communication of data messages:
Article 11: Offer and acceptance of offer, when communicated in the form of data messages,
cannot be denied legal validity and enforceability solely on the grounds that they are in the
form of data messages. Thus, the formation of a valid contract was made possible through the
means of data messages
Article 12: Acknowledgement in the form of receipt of data messages has also been granted
legal validity.
Article 13: The data message is attributed to the originator if it is sent by him or by a person
authorized by him
Article 14 outlines the rules regarding how the acknowledgment of receipt of a data message
If no specific form or method for acknowledgment has been agreed upon, the acknowledgment
can be given in any of the following ways:
• (a) Any form of communication from the addressee, whether automated or manual.
 • (b) Any action or conduct by the addressee that sufficiently indicates to the originator
that the data message has been received.
If the originator has specified that the data message is conditional upon receiving an
acknowledgment, the message is considered as not sent until the acknowledgment is received.
If the acknowledgment is not received and was not conditional on it:
• (a) The originator can notify the addressee that the acknowledgment has not been
received and specify a reasonable time frame in which it should be received.
• (b) If the acknowledgment is still not received within the specified time, the originator
may treat the data message as if it was never sent or pursue any other legal rights
available.
If the originator receives an acknowledgment from the addressee, it is presumed that the data
message was received. However, this does not guarantee that the content of the received
message matches what was originally sent.
Article 15: Time and place of dispatch and receipt of data messages
the dispatch of a data message occurs when it enters an information system outside the control
of the originator or of the person who sent the data message on behalf of the originator.
Unless otherwise agreed, the time and receipt of a data message is determined as follows
(a) if the addressee has designated an information system for the purpose of receiving data
messages, receipt occurs:
(i) at the time when the data message enters the designated information system; or
(ii) if the data message is sent to an information system of the addressee that is not the
designated information system, at the time when the data message is retrieved by the addressee;
(b) if the addressee has not designated an information system, receipt occurs when the data
message enters an information system of the addressee.
Unless otherwise agreed between the originator and the addressee, a data message is deemed
to be dispatched at the place where the originator has its place of business, and is deemed to be
received at the place where the addressee has its place of business. For the purposes of this
paragraph:
(a) if the originator or the addressee has more than one place of business, the place of business
is that which has the closest relationship to the underlying transaction or, where there is no
underlying transaction, the principal place of business;
(b) if the originator or the addressee does not have a place of business, reference is to be made
to its habitual residence.
Definition under IT Act
2(1)(b) "addressee" means a person who is intended by the originator to receive the electronic
record but does not include any intermediary;
2(1)(w) "intermediary" with respect to any particular electronic message means any person
who on behalf of another person receives, stores or transmits that message or provides any
service with respect to that message;
2(1)(za) "originator" means a person who sends, generates, stores or transmits any electronic
message or causes any electronic message to be sent, generated, stored or transmitted to any
other person but does not include an intermediary;
Chapter 1V of the IT Act deals with attribution, acknowledgement and dispatch of electronic
records
11. Attribution of electronic records. An electronic record shall be attributed to the
originator—
a) if it was sent by the originator himself;
b) by a person who had the authority to act on behalf of the originator in respect of that
electronic record; or
c) by an information system programmed by or on behalf of the originator to operate
automatically.
12. Acknowledgment of receipt.
(1) Where the originator has not agreed with the addressee that the acknowledgment of receipt
of electronic record be given in a particular form or by a particular method, an acknowledgment
may be given by—
(a) any communication by the addressee, automated or otherwise; or
(b) any conduct of the addressee, sufficient to indicate to the originator that the electronic
record has been received.
(2) Where the originator has stipulated that the electronic record shall be binding only on
receipt of an acknowledgment of such electronic record by him, then unless acknowledgment
has been so received, the electronic record shall be deemed to have been never sent by the
originator.
(3) Where the originator has not stipulated that the electronic record shall be binding only on
receipt of such acknowledgment, and the acknowledgment has not been received by the
originator within the time specified or agreed or, if no time has been specified or agreed to
within a reasonable time, then the originator may give notice to the addressee stating that no
acknowledgment has been received by him and specifying a reasonable time by which the
acknowledgment must be received by him and if no acknowledgment is received within the
aforesaid time limit he may after giving notice to the addressee, treat the electronic record as
though it has never been sent.
13. Time and place of despatch and receipt of electronic record.
(1) Save as otherwise agreed to between the originator and the addressee, the dispatch of an
electronic record occurs when it enters a computer resource outside the control of the originator.
(2) Save as otherwise agreed between the originator and the addressee, the time of receipt of
an electronic record shall be determined as follows, namely: —
(a) if the addressee has designated a computer resource for the purpose of receiving electronic
records, —
(i) receipt occurs at the time when the electronic, record enters the designated computer
resource; or
(ii) if the electronic record is sent to a computer resource of the addressee that is not the
designated computer resource, receipt occurs at the time when the electronic record is retrieved
by the addressee;
(b) if the addressee has not designated a computer resource along with specified timings, if
any, receipt occurs when the electronic record enters the computer resource of the addressee.
(3) Save as otherwise agreed to between the originator and the addressee, an electronic record
is deemed to be dispatched at the place where the originator has his place of business, and is
deemed to be received at the place where the addressee has his place of business.
(4) The provisions of sub-section (2) shall apply notwithstanding that the place where the
computer resource is located may be different from the place where the electronic record is
deemed to have been received under sub-section (3).
(5) For the purposes of this section, —
a) if the originator or the addressee has more than one place of business, the principal
place of business, shall be the place of business;
b) if the originator or the addressee does not have a place of business, his usual place of
residence shall be deemed to be the place of business;
c) "Usual place of residence", in relation to a body corporate, means the place where it is
registered.
Validity of online contract: Section 10A of IT Act essentially says that a contract made online
or using electronic methods (like emails, texts, or other digital records) is just as legally valid
as one made in person or on paper.
It clarifies that if people make offers, accept offers, or even take back offers electronically, the
contract won’t be considered invalid just because it happened digitally. So, using electronic
communication to form a contract is perfectly legitimate.
Evidentiary value of online contract:
Even if the IT Act, 2000 has legalized electronic contracts there is no definite provision
mentioned in the act. The evidentiary value of electronic records has been given recognition
and can be understood in the light of various sections of IEA.
SECTION 65B: Admissibility of electronic records: any information contained in an electronic
record which is printed on a paper, stored, recorded or copied in optical or magnetic media
produced by a computer (hereinafter referred to as the computer output) shall be deemed to be
also a document, if the conditions mentioned in this section are satisfied in relation to the
information and computer in question and shall be admissible in any proceedings, without
further proof or production of the original, as evidence or any contents of the original or of any
fact stated therein of which direct evidence would be admissible.
(a) the computer output containing the information was produced by the computer during the
period over which the computer was used regularly to store or process information for the
purposes of any activities regularly carried on over that period by the person having lawful
control over the use of the computer;

(b) during the said period, information of the kind contained in the electronic record or of the
kind from which the information so contained is derived was regularly fed into the computer
in the ordinary course of the said activities;
(c) throughout the material part of the said period, the computer was operating properly or, if
not, then in respect of any period in which it was not operating properly or was out of operation
during that part of the period, was not such as to affect the electronic record or the accuracy of
its contents; and
(d) the information contained in the electronic record reproduces or is derived from such
information fed into the computer in the ordinary course of the said activities.
Section 85A, 85B, 88A, 90A, 85C of the IEA deal with the presumption as to electronic record.
Sec 85A has been inserted later to confirm the validity of electronic contracts. It says that any
electronic record in the form of electronic agreement is concluded and gets recognition the
moment a digital signature is affixed to such record.
Remedies for breach of online contract
Sections 73 and 74 of the Indian Contract Act, 1872, provide guidelines for claiming damages
(or financial compensation) when a contract is breached.
73.Compensation for loss or damage caused by breach of contract.—When a contract has
been broken, the party who suffers by such breach is entitled to receive, from the party who
has broken the contract, compensation for any loss or damage caused to him thereby, which
naturally arose in the usual course of things from such breach, or which the parties knew, when
they made the contract, to be likely to result from the breach of it. Such compensation is not to
be given for any remote and indirect loss or damage sustained by reason of the breach.
74. Compensation for breach of contract where penalty stipulated for.—1 [When a contract
has been broken, if a sum is named in the contract as the amount to be paid in case of such
breach, or if the contract contains any other stipulation by way of penalty, the party complaining
of the breach is entitled, whether or not actual damage or loss is proved to have been caused
thereby, to receive from the party who has broken the contract reasonable compensation not
exceeding the amount so named or, as the case may be, the penalty stipulated for.
75.Party rightfully rescinding contract, entitled to compensation.—A person who rightfully
rescinds a contract is entitled to compensation for any damage which he has sustained through
the non-fulfilment of the contract.
Whether standard-form online contracts are unconscionable
In the United States, courts sometimes invalidate specific terms in contracts if they find them
to be unfair or "unconscionable"—meaning overly one-sided or unreasonable.
In Comb v. PayPal, Inc., for example, the California court struck down a term in PayPal's user
agreement that required users to settle disputes through arbitration (a private dispute resolution
method). The court found that this arbitration requirement was too expensive for users, given
the relatively small sums often involved in PayPal transactions, making it impractical for
customers to seek justice.
The court also took issue with PayPal’s rule that required disputes to be handled in Santa Clara
County, California, where PayPal is headquartered. Additionally, PayPal’s policy of holding
customer funds until disputes were resolved was seen as giving the company excessive control
over customers' money during the dispute process. Due to these factors, the court deemed
PayPal's dispute resolution terms unfair and denied PayPal's request to force users into
arbitration,
In Bragg v. Linden Research, a U.S. court found an online site's arbitration clause
unenforceable due to it being both procedurally and substantively unconscionable. The
plaintiff, who owned virtual property in an online virtual world, sued the operators after his
property was removed and his account was frozen. Linden Research, the operator, tried to
enforce an arbitration clause in the user agreement to resolve the dispute outside of court.
However, the court identified several issues with this clause: it was buried within a set of non-
negotiable terms, lacked mutual benefits for both parties, involved high arbitration costs, and
required the case to be handled in a specific location, all of which heavily favored Linden
Research over users. These elements led the court to conclude that the clause was unfairly one-
sided and denied the motion to compel arbitration.
In India, the concept of unconscionable contracts, especially in the context of online
agreements, is less developed in jurisprudence. However, Indian laws, such as the Indian
Contract Act, do address situations where contracts arise from unequal bargaining positions,
allowing courts to intervene. Indian courts consider contracts unconscionable when the terms
are contrary to public policy, which remains undefined but broadly allows courts to invalidate
terms that they view as unfair or exploitative. Additionally, if a contract is seen as arising under
undue influence—where one party holds a dominant position—the burden of proof falls on the
dominant party to show that the contract was fair. Thus, while online contracts in India are still
developing in terms of specific rules for unconscionability, courts have the flexibility to assess
and void terms opposed to public policy.
Under Section 16(3) of the Indian Contract Act, when one party holds a dominant position and
the contract appears unfair or exploitative, the burden shifts to the dominant party to prove that
the contract was free from undue influence. Section 23 further establishes that any agreement
with an unlawful consideration or objective is void if it contradicts public policy.
In LIC India v. Consumer Education & Research Center, the Supreme Court of India
emphasized the role of public purpose in assessing contract terms. The case involved an
insurance policy from the Life Insurance Corporation of India (LIC) that restricted benefits to
government employees only. The court declared this restriction void under Article 14 of the
Constitution, which ensures equality before the law. It observed that in “dotted line” or
standard-form contracts, weaker parties typically lack the bargaining power to negotiate terms.
Their only options are to accept unfair terms as-is or forgo the service altogether, leaving them
at a disadvantage.
 JURISDICTION ISSUE IN E-COMMERCE
Introduction: s it has already been established, with the advent of e-commerce transactions,
there is plenty of scope for confusion regarding the jurisdiction of courts. This varies with the
nature of good in question, as well as place where the suit is filed. In India, civil matters
intertwined with aspects of e-commerce are traditionally governed by Sections 15-19 of the
CPC. At times, the issue(s) gets intermingled with complications due to the nature of business,
wherein a specific territory cannot be ascertained to settle a jurisdictional dispute. It is pertinent
to mention that this legal vacuum has not gone unrecognised by the courts. To fill this gap in
the current absence of a decisive law, courts have employed several tests to determine
jurisdiction in e-commerce matters.

Banyan Tree Holding (P) Ltd. Versus A. Murali Krishna Reddy & Anr.
Background:
The Plaintiff claims that it is part of a group of companies involved in the hospitality business.
Since 1994 it adopted and used the word mark ‘Banyan Tree’ and also the banyan tree device.
It is claimed that on the account of the extensive and continuous use by the Plaintiff of the said
mark and device in relation to its business, they have acquired secondary meaning The Plaintiff
maintains the websites www.banyantree.com and www.banayantreespa.com since 1996. The
said websites are accessible in India. It is not in dispute that the Plaintiff does not hold a
registration for the said mark and device in India. Its application for registration is stated to be
pending. In October 2007, the Plaintiff learnt that the Defendants had initiated work on a
project under the name ‘Banyan Tree Retreat’. The Plaintiff has averred that the word mark
and the device adopted by the Defendants in relation to their retreat is deceptively similar to
that of the Plaintiff. The Plaintiff states that the Defendants have advertised their project on
their website www.makprojects.com/banyantree. The Plaintiff alleges that the use of the said
mark and device by the Defendants was dishonest and was an attempt to encash on the
reputation and goodwill of the Plaintiff and was calculated to cause confusion and deception
among the public by passing off the services of the Defendants as that of the Plaintiff.
Accordingly, the present suit was filed by the Plaintiff for an injunction to restrain the
Defendants from the use of the said mark and device.
Statement of jurisdiction- the plaintiff claimed that this Court has the territorial jurisdiction
under Section 20 of the Code of Civil Procedure, 1908 (CPC) to entertain the suit. According
to the Plaintiff the Defendants solicit business through use of the impugned mark “BANYAN
TREE RETREAT” and the Banyan device in Delhi. It is stated that “the Defendants have
presence in Delhi through their website http : //www.makprojects.com/banyantree.htm which
is accessible in Delhi.” Further, the Plaintiff submits that the services of the Defendants are
being offered to the customers in Delhi “also because of the ubiquity, universality and utility
of the features of the Internet and the World Wide Web and hence the cause of action has arisen
within the jurisdiction of this Court.”
Minimum contact test: This concept comes from a famous U.S. Supreme Court case called
International Shoe Co. v. Washington. It helps determine if a court has the right to make
legal decisions (jurisdiction) over someone who is not a resident of that state. The test is based
on the idea that a person or company can be held accountable in a state if they have enough
connections or "contacts" with that state.
Types of Contacts: These contacts could include:
• Physical Presence: If a person or company is physically located in the state.
• Contracts: If they have signed agreements or contracts that relate to the state.
• Stream of Commerce: If they are actively selling products or services to people in that
state, even if they don’t have a physical presence there.
Purposeful availment as a test
Among the early decisions, is one of the U.S. Supreme Court in International Shoe Co. v.
Washington 326 U.S. 340 (1945) where a two-part test for determining jurisdiction of the
forum court over a defendant not residing or carrying on business within its jurisdiction was
evolved. It was held that in such instance the Plaintiff had to show that the defendant has
sufficient “minimum contacts” in the forum state. In other words, the defendant must have
purposefully directed its activities towards the forum state or otherwise “purposefully availed”
of the privilege of conducting activities in the forum state
In Burger King Corp v. Rudzewicz 471 U.S. 462 (1985), the appellant having its principal
office in miami, entered into a franchise agreement with the defendant who thereto opened a
restaurant in Michigan. Due to default in payment, the plaintiff terminated the contract and
ordered defendant to vacate the premises. When the defendant refused, the Plaintiff sued him
in Miami.
• the Supreme Court held that the defendant did not have to be physically present within
the jurisdiction of the forum court and that the forum court may exercise jurisdiction
over a non-resident “where an alleged injury arises out of or relates to actions by the
Defendant himself that are “purposefully directed towards residents of the forum State.
• It was held that “purposeful availment” would not result from “random” or “fortuitous’
contacts by the defendant in the forum state requires the plaintiff to show that such
contracts resulted from the “actions by the defendant himself that created a substantial
connection with the forum State.”
• He must have engaged in “significant activities” within the forum state or have created
“continuing obligations” between himself and residents of the forum state. It was held
on facts that the 20 year relationship that the defendant had with the Plaintiff “reinforced
his deliberate affiliation with the forum state and the reasonable foreseeability of
litigation there.”
• the mere placement of a product into the stream of commerce” was not an act
“purposefully directed towards the forum State” and would not result in a “substantial
connection” between the defendant and the forum state necessary for a finding of
minimum contacts.
• it was not required that a Defendant be physically present within, or have physical
contacts with, the forum, provided that his efforts ‘are purposefully directed’ toward
forum residents”
• In Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 890 (6th Cir. 2002) the
Court of Appeals held that the purposeful availment requirement is satisfied “if the web
site is interactive to a degree that reveals specifically intended interaction with residents
of the state”. It observed that “the level of contact with a state that occurs simply from
 the fact of a website's availability on the Internet is therefore an attenuated contact that
falls short of purposeful availment.”
The ‘zippo’ sliding scale test came up in Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp.
1119 (W.D.Pa.1997) wherein the court then noted “a three pronged test has emerged for
determining whether the exercise of specific personal jurisdiction over a non-resident
defendant is appropriate : (1) the defendant must have sufficient “minimum contacts” with the
forum state, (2) the claim asserted against the defendant must arise out of those contacts, and
(3) the exercise of jurisdiction must be reasonable.”
The court in Zippo classified websites as (i) passive, (ii) interactive and (iii) integral to the
defendant's business. On facts it was found that the Defendant's website was an interactive one.
Accordingly, it was held that the court had jurisdiction to try the suit.
People Solutions v. People Solutions 2000 WL 1030619 (N.D. Tex., 2000), the court refused
to assert jurisdiction since the Plaintiff failed to show that Defendant had sold its products or
contracted for services with any person in the forum state through the website.
The effect test
The difficulty experienced with the application of the Zippo sliding scale test, has paved way
for the application of the ‘effects’ test. in which the forum court will exercise jurisdiction if it
is shown that effects of the Defendant's website are felt in the forum state. In other words, it
must have resulted in some harm or injury to the Plaintiff within the territory of the forum state.
Since some effect of a website is bound to be felt in several jurisdictions given the nature of
the internet, courts have adopted a ‘tighter’ version of the ‘effects’ test, which is intentional
targeting- “something more than effects, but less than physical presence.”
The “effects” test was first evolved in Calder v. Jones, 465 U.S. 783 (1984). The case involved
a woman named Jones who lived in California. She sued the National Enquirer for publishing
a false and harmful article about her. Even though the Enquirer and the people who wrote the
article were based in Florida, the article was published in California and hurt her reputation
there.
On facts it was held that the author and editor “expressly aimed” their tortuous actions at
California and that “they knew” that the article would have a devastating impact on the
respondent and that they should have reasonably anticipated that the brunt of that injury would
be reasonably felt by the defendant in the State in which she lived and worked.
for the purposes of Section 20 (c) CPC, in order to show that some part of the cause of action
has arisen in the forum state by the use of the internet by the Defendant, the Plaintiff will have
to show prima facie that the said website, whether euphemistically termed as “passive plus” or
“interactive” was specifically targeted at viewers in the forum state for commercial
transactions. The Plaintiff would have to plead this and produce material to prima facie show
that some commercial transaction using the website was entered into by the Defendant with a
user of its website within the forum state and that the specific targeting of the forum state by
the Defendant resulted in an injury or harm to the Plaintiff within the forum state. A mere
hosting of a website which can be accessible from anyone from within the jurisdiction of the
court is not sufficient for this purpose. Also, a mere posting of an advertisement by the
Defendant depicting its mark on a passive website which does not enable the Defendant to
enter into any commercial transaction with the viewer in the forum state cannot satisfy the
requirement of giving rise to a cause of action in the forum state. Even an interactive website,
which is not shown to be specifically targeted at viewers in the forum state for commercial
transactions, will not result in the court of the forum state having jurisdiction.
Forum convenience test- Another test that can be used to decide jurisdiction in e-commerce
matters is the forum convenience test. This is a test derived from the general doctrine of forum
non conveniens which pertains to all civil matters. The general principle is that a court can
recognise that a select forum is inconvenient for the parties involved in a suit and can, in
accordance with that recognition, send the case to a more appropriate court. This change is to
be made in the interests of all the parties and intent of reaching end of justice.
Kusum Ingots & Alloys Ltd. v. Union of India.- art of cause of action arising in a certain
territorial jurisdiction cannot compel the relevant court to decide the case conclusively. Instead,
they can choose to exercise this principle to concede and confer jurisdiction. In light of this, it
is reasonable to infer that this principle can be applied to e-commerce matters, when
appropriate, as well.
Position in India
With the advent of the internet and e-commerce, Indian courts as well as courts around the
world are having a difficult time in deciding the place where a person can sue, or which courts
shall have the requisite jurisdiction. This becomes increasingly complicated because e-
commerce is not like the traditional business transaction. It involves various intermediaries
before the final product reaches the beneficiary. When there are more people involved, things
get even more complicated as far as exact jurisdiction, and the power of courts are concerned.
In Kiran Singh v. Chaman Paswan, the court held that any decision passed by courts without
having a proper jurisdiction to adjudicate the suit would end up as a nullity. A defect in
jurisdiction can be of anything – meaning territorial, pecuniary, or even subject-matter.
Therefore, if the court does not have proper jurisdiction, then it loses all its power to decide a
case. Even if both parties consent to a particular court’s jurisdiction, the law will strike down
the authority of the court, in such a case.
Casio (I) Co. Ltd. v. Ashita Tele Systems (P) Ltd.: In this case, the court decided that because
the plaintiff could access the internet from a certain location, the court in that area had the right
to handle the case.
This judgment was problematic for several reasons:
• It seemed unfair to the defendants (the parties being accused or sued) because it
suggested that any court could take on a case simply because someone could access a
website from anywhere.
• If this reasoning were followed today, it would mean that any court could claim
jurisdiction over any online transaction, which doesn't make sense since websites can
be accessed globally.

Dhodha House v. S.K. Maingi-In this case, the court clarified the meaning of the term
“carrying business”. A mere presence of an agent at a particular place, say X, does not
 mean that the firm carries out its business at the place X. For example: Amazon has
various agents across the country which deliver its packages to many places. Just
because its agents deliver packages to various places it cannot be said that Amazon
carries out its business from all those places. One would have to look at that branch of
Amazon which regularly receives orders and initiates the transactions. This place does
not have to be the head branch necessarily. Amazon can be sued even those places where
there are sub-branches. However, it should be shown that the specific branch does in
fact carry out substantial business of Amazon.
(India TV) Independent News Service Pvt. Limited v. India Broadcast Live Llc And
Ors., 2007 (35) PTC 177 (Del.). This Court holds that jurisdiction of the forum court does not
get attracted merely on the basis of interactivity of the website which is accessible in the forum
state. The degree of the interactivity apart, the nature of the activity permissible and whether it
results in a commercial transaction has to be examined.
For the ‘effects’ test to apply, the Plaintiff must necessarily plead and show prima facie that
the specific targeting of the forum state by the Defendant resulted in an injury or harm to the
Plaintiff within the forum state.
Secondly, to show that an injurious effect has been felt by the Plaintiff it would have to be
shown that viewers in the forum state were specifically targeted. Therefore the ‘effects’ test
would have to be applied in conjunction with the “sliding scale” test to determine if the forum
court has jurisdiction to try a suit concerning internet-based disputes.
DIGITAL SIGNATURE/ELECTRONIC SIGNATURE
Digital signature is a type of electronic signature that offers more security than a traditional
electronic signature. When you sign a document with a digital signature, the signature links a
fingerprint of the document to your identity. Then that information is permanently embedded
into the document, and the document will show if someone comes in and tries to tamper with
it after you’ve signed it.
Provisions:
21(p) IT Act 2000- authentication of any electronic record by a subscriber by means of an
electronic method or procedure in accordance with the provisions of section 3.
2(1)(zc) "private key" means the key of a key pair used to create a digital signature;
2(1)(zd) "public key" means the key of a key pair used to verify a digital signature and listed
in the Digital Signature Certificate;
Section 3 deals with authentication of electronic records: Any authorized user (or "subscriber")
can authenticate an electronic record by adding their digital signature to it. This digital
signature acts like a secure seal that verifies the sender's identity and the document's
authenticity.
• Authentication happens using a process involving asymmetric cryptography (where
two separate keys are used for security) and a hash function (a specialized algorithm).
This process transforms the original electronic record into a secure, unique version,
which cannot be easily reversed or changed.
 • Hash function: A hash function converts a data sequence (bits) into a shorter, unique
output known as a “hash result.” Each time the same record is processed with this
algorithm, it produces the same hash. However:
o It is nearly impossible to recreate the original data from the hash.
o It’s extremely unlikely that two different records will produce the same hash.
• Each subscriber has a unique public and private key pair that work together to ensure
security and privacy.
Section 5: legal recognition of digital signatures: If any law requires a document or information
to be signed by a person, this requirement can be met using a digital signature, as long as the
digital signature complies with methods set by the Central Government. The term “signed”
includes both traditional handwritten signatures and digital ones.
A "signature" means any identifying mark that verifies the signer’s identity, whether it’s a
digital signature or a handwritten one.
Section 10: . Power to make rules by Central Government in respect of digital signature. The
Central Government may, for the purposes of this Act, by rules, prescribe—
(a) the type of digital signature;
(b) the manner and format in which the digital signature shall be affixed;
(c) the manner or procedure which facilitates identification of the person affixing the digital
signature;
(d) control processes and procedures to ensure adequate integrity, security and confidentiality
of electronic records or payments; and
(e) any other matter which is necessary to give legal effect to digital signatures.
Anyone digitally signing a document needs a digital certificate.
Section 17: the central govt. is empowered to appoint controller of certifying authorities, such
no. of deputy controllers and assistant controllers as it deems fit.
Section 18: functions of controller:
(a) exercising supervision over the activities of the Certifying Authorities; (b)
certifying public keys of the Certifying Authorities; (c) laying down the
standards to be maintained by the Certifying Authorities; (d) specifying the
qualifications and experience which employees of the Certifying Authorities
should possess; (e) specifying the conditions subject to which the Certifying
Authorities shall conduct their business;
Section 19: the controller may with the previous approval of the central govt. and by
notification in the official gazette, recognise any foreign certifying authority as a certifying
authority for the purpose of this act.
Section 21: any person may make an application, to the controller, for the license to issue DSC.
No licence shall be issued unless the applicant fulfils such requirements with respect to
qualification, expertise, manpower, financial resources and other infrastructure facilities, which
are necessary to issue DSC as may be prescribed by CG. License so granted shall not be
transferable and heritable and be valid for such prescribed as prescribed by CG.
Under section 35 of the IT Act, 2000, Any person who wishes to get a Digital Signature
Certificate may file an application to the certifying authority for issuance of the Electronic
Certificate along with the submission of the required amount of fees not exceeding Rs. 25,000,
including a statement of certification practice or stating such particulars as prescribed.
After reviewing the application and relevant statements, the CA can either issue the DSC or
reject the application, with reasons documented in writing. A certificate will only be issued if:
• The applicant possesses the private key corresponding to the public key they intend to
certify.
• The applicant’s private key is suitable for creating a digital signature.
• The public key in the certificate can verify the digital signatures made by the private
key.
If the CA plans to reject the application, the applicant must be given a fair chance to present
their case against the rejection.
How does digital signature works?
• Public key infrastructure generates two keys through a mathematical algorithm—a
private key (kept secret by the signer) and a public key (shared with others).
• When a signer, like Jane, signs a document, her private key creates a "hash" of the
document (a small, unique data set representing the document's content). The private
key encrypts this hash, forming the digital signature, which also includes a timestamp.
• When the recipient (the buyer) receives the document, they also receive Jane's public
key. They use this public key to decrypt the digital signature. If the decrypted data
matches the original hash, it confirms the document hasn’t been altered, and that Jane’s
signature is valid.
Electronic signature
an electronic signature means authentication of an electronic record by a subscriber by means
of electronic techniques.
The major feature of an electronic signature is thus the intention to sign the document or the
contract. The other notable aspect that makes an electronic signature different from a digital
signature is that an electronic signature can be verbal, a simple click of the box or any
electronically signed authorization.
An electronic signature primarily indicates the signer's intent to sign a document, making it
useful in contracts and agreements between two parties. When both parties use electronic
signatures to show commitment, these signatures become legally binding, provided that the
intent to agree is clear.
Another key aspect of electronic signatures is that they help in verifying a document by
identifying the parties involved. However, unlike digital signatures, electronic signatures may
lack a digital certificate, which can sometimes make verification challenging.
Electronic signatures also serve as the final step in executing an agreement. In contracts, both
parties typically sign to confirm their acceptance of specific duties, and electronic signatures
are often preferred for this due to their convenience and ease of use.
The downfall of electronic signature is that they aren’t regulated like digital signatures are.
Neither they have secure coding unlike digital signature. Essentially, electronic signatures are
an image placed on the document, but they can’t show if someone tampers with the document
after it is signed.

3A. Electronic signature. - a subscriber may authenticate any electronic record by such
electronic signature or electronic authentication technique which--
(a) is considered reliable; and
(b) may be specified in the Second Schedule.
(2) For the purposes of this section any electronic signature or electronic authentication
technique shall be considered reliable if--
(a) the signature creation data or the authentication data are, within the context in which they
are used, linked to the signatory or, as the case may be, the authenticator and to no other person;
(b) the signature creation data or the authentication data were, at the time of signing, under the
control of the signatory or, as the case may be, the authenticator and of no other person;
(c) any alteration to the electronic signature made after affixing such signature is detectable;
(d) any alteration to the information made after its authentication by electronic signature is
detectable; and
(e) it fulfils such other conditions which may be prescribed.

Digital signature Electronic signature

This is like a lock on a document. If the Open to tampering.
document changes after the signature is
applied, it will show up as an invalidated
signature
Secure. Hashes can’t be easily undone and Not based on standards and tend to use
encryption using a digital certificate is highly proprietary methods so are intrinsically less
secure. secure.
 Hard to deny (non-repudiation). A digital Much harder to verify
signature is associated with an individual’s
private key of a digital certificate. This
identifies them as being the signatory, as it is
unique.
Nearly always time stamped. This is very Can have a time and data associated with the
useful in a court of law to tie a person to a signature but it is held separate to the
signature at a specific day and time. signature itself so is open to abuse.
Can hold logs of events, showing when each Audit logs are not easily applied to electronic
signature was applied. in certain cases, it can signatures.
even send out alerts if the log is tampered
with.
The digital certificates representing the If details of the person placing an electronic
individual signatories give details of the signature on a device/document are required,
person signing the document, such as full they have to be placed separately to the
name, email address, company name-they signature and are not held with the signature
are tied to the document signature through itself, therefore are more open to abuse.
the certificate.

E-governance
E-payment- E-commerce sites use electronic payment, where electronic payment refers to
paperless monetary transactions. Electronic payment has revolutionized the business
processing by reducing the paperwork, transaction costs, and labor cost. Being user friendly
and less time-consuming than manual processing, it helps business organization to expand its
market reach/expansion.
What are the benefits of using electronic payment methods?
▪ Convenience: Electronic payment methods offer users the ease of conducting
transactions anytime and anywhere, reducing the reliance on physical cash or checks.
▪ Speed: Payments made through electronic systems are processed instantly, enabling
swift and immediate fund transfers, enhancing business operations and customer
satisfaction.
▪ Security: Robust encryption and authentication mechanisms in electronic payment
systems protect financial data, reducing the risk of fraud and unauthorized access.
▪ Cost-Effectiveness: Electronic payments often entail lower processing fees than
traditional payment methods, leading to cost savings for businesses and consumers.
▪ Enhanced Record-Keeping: Digital payment systems maintain detailed transaction
records, facilitating better financial tracking and reporting for businesses and
individuals.
Types of electronic payments
• credit and debit cards- widely accepted for online and in-store purchases; offers
convenience security and easy tracking of expenses.
 • Mobile payment apps- allows quick payment using smartphone/mobile devices and
enables contactless payments.
• Digital wallets- stores payment information securely for easy and fast transaction.
• Peer to peer payment apps- allows individuals to send money directly to friends or
family and simplifies splitting bills.
• ACH (automated clearing house) is a network that processes large volumes of financial
transactions in batches, allowing funds to be transferred between banks. The network
is managed by Nacha (formerly known as NACHA – the National Automated Clearing
House Association), which sets rules for ACH transactions to ensure security and
reliability. ACH transactions are often cheaper than other methods, like wire transfers
or credit card payments, making them ideal for recurring or high-volume transactions.
• Bank transfers (EFT)- EFT, or Electronic Funds Transfer, is the digital transfer of
money between bank accounts without the need for paper checks or physical cash. EFT
enables seamless and secure payments that can be made anytime, often without the
payer and payee needing to meet in person.
Disadvantages and Risks of Electronic Payment
▪ Security Risks: Despite strong security measures, electronic payment systems are
vulnerable to hacking, data breaches, and identity theft, potentially exposing customers’
sensitive information.
▪ Technical Glitches: System failures or technical glitches in electronic payment
platforms can disrupt transactions and cause inconvenience to both businesses and
customers.
▪ Dependency on Technology: Electronic payment systems heavily rely on technology
and the internet. Any disruption in network connectivity or power outage can disrupt
payment services.
▪ Fraud and Scams: Cybercriminals continuously develop new methods to exploit
vulnerabilities in electronic payment systems, leading to fraudulent activities that can
harm businesses and individuals.
E-BANKING
E-banking, also known as electronic banking or online banking, allows customers to
perform banking transactions via the internet or a bank’s mobile app. It enables a wide range
of financial activities, such as transferring money, paying bills, checking account balances,
applying for loans, and managing investments, without the need to visit a physical bank branch.
Advantages of E-Banking
1. Convenience- Customers can access their accounts and conduct transactions 24/7, from
anywhere with an internet connection, without needing to visit a bank branch.
2. Time-Saving: Transactions can be completed instantly, allowing customers to save
time on tasks like bill payments, funds transfers, and account inquiries.
3. Cost-Effective: E-banking reduces the costs associated with handling paper
transactions, which often translates to lower fees for customers.
 4. Quick and Easy Access to Information: Customers can view their account balances,
transaction history, and bank statements instantly, making financial management easier.
5. Enhanced Security: E-banking uses advanced security features, such as encryption,
multi-factor authentication, and secure login protocols, to protect user data.
Disadvantages of E-Banking
1. Security Risks: Despite security measures, e-banking is susceptible to cyber threats
like hacking, phishing, and identity theft, which could lead to loss of funds or personal
information.
2. Technical Issues: Online banking services may be temporarily unavailable due to
server issues, software glitches, or maintenance, which can disrupt access to accounts.
3. Lack of Personal Interaction: E-banking removes face-to-face interactions, which can
be a drawback for customers who prefer personalized assistance or need guidance for
complex services.
4. Dependence on Internet and Technology: E-banking requires internet access and a
compatible device, which can be limiting for those without reliable connectivity or
digital literacy.
5. Limited Cash Deposits: Most e-banking platforms don’t support cash transactions, so
customers still need to visit a physical branch or ATM for cash deposits.
TYPES:
1. Online Banking: This involves accessing bank accounts and conducting transactions via a
bank’s website through a computer or mobile device.
2. Mobile Banking: A subset of online banking that specifically uses mobile apps designed for
smartphones and tablets.
3. ATM Services: Automated Teller Machines (ATMs) allow customers to perform basic
banking transactions without visiting a bank branch.
4. Telephone Banking: Customers can manage their accounts and conduct transactions over
the phone, either through automated systems or by speaking with customer service
representatives.
5. E-Wallets: Digital wallets allow customers to store payment information securely and make
payments via their mobile devices or computers.