PROJECT REPORT ON:
Types of E- Contracts
SUBJECT: INFORMATION TECHNOLOGY LAWS
Submitted by:
Aditi Baluja
186/20
Section:D
Bcom. LLB.(Hons.)
UILS, PU.
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ACKNOWLEDGEMENT
I would like to express my gratitude toward my teacher, Anju Choudhary maam, for her
valuable guidance and nonstop support during this project. As well as, I am grateful to our
Director Ma’am for providing me with the beautiful opportunity to work on this Project.
I am deeply appreciative of maam's patience and willingness to provide feedback, answer my
queries, and offer constructive suggestions that enriched the content and clarity of this
project. Their mentorship has not only enhanced my knowledge but also inspired a profound
appreciation for the nuances of labour law.
I would also like to extend my thanks to my educational institution for providing the platform
and resources necessary for the successful completion of this project.
I would also like to thank my parents and friends for encouraging me during the course of
this project. I got in touch with more of practical and real life approach while making this
project.
So thankyou for giving me this wonderful opportunity on the project
“ Types of E- CONTRACTS ”
ADITI BALUJA - 186/20
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Table of Contents
CONTENTS PAGE NUMBER
Introduction 4
E contract under IT Act 5
E contract under Evidence Act 6
Types of E Contracts 6-8
Validity of E Contracts 9-10
Admissibility of E Contracts 10
Judicial Decisions 11
Conclusion 12
Bibliography 13-14
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Introduction
We live in a cyber era, significant progress has been made in bringing the legal framework up
to speed with new technology and the resulting transactions via E-Contracts.Conceptually
speaking the E-Contracts are similar to paper-based contracts. It can be argued that the legal
framework related to E-Contracts in India is still in its infancy when compared to other
nations.
The term "Contract" is defined under Section 2 (h) of the Indian Contract Act, 1872
(hereinafter referred to as "the Act"). According to Section 2(h) of the Act, an agreement
enforceable by law is a contract. Also, as per Section 2 (i) of the Act a contract which ceases
to be enforceable by law becomes void when it ceases to be enforceable. A contract could be
written formally or informally or could be entirely verbal or in writing. Important sections
(Section 10 of the Act) to considered in order to constitute a valid contract are as follows:
● Offer and acceptance is described under Section 2(a) and (b) respectively
● Lawful consideration is explained under Section 23 and Section 25,
● Condition to be competent for parties is stated under Section 11, and
● Section 14 of the Act deals with free consent and factors that would deem a contract
invalid.
Considering the situation of society due to the pandemic, an e-contract is one of the easiest
options to enter into a contract. With recent advancements in computer technology,
telecommunications technology, software, and information technology, people's standard of
living has been transformed in unfathomable ways. Communication is no longer limited due
to geographical and temporal restrictions. More information is transmitted and received than
ever before. This is where electronic commerce provides flexibility to the business
environment in terms of location, time, space, distance, and money.
All essential elements of contract law apply equally to contracts established electronically or
orally. People often question how old and conventional contract law concepts apply to new
and innovative types of technology, which creates a dilemma. However, the basics and
features of e-contracts remain the same as those of paper-based contracts as of nowadays.
While the fundamentals of a paper-based contract apply to e-contracts, the techniques for
concluding the e-contract are derived from Indian Contract Law and are nearly identical to
paper-based contracts. E-commerce refers to the purchasing and selling of information,
products, and services through computer networks. It is a method of conducting business
online, typically over the Internet. It is the instrument that leads to 'enterprise integration!'
Therefore, with the expansion of e-commerce comes to a significant increase in the usage of
e-contracts. E-contracting is a subset of e-business. It is comparable to traditional business in
that products and services are exchanged for a certain amount of money. The only difference
is that the contract is executed using a digital method of communication such as the internet.
An electronic contract (e-contract) is a legally binding agreement created and signed
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digitally. Unlike traditional contracts, which rely on physical documentation and ink
signatures, e-contracts are formed using electronic communication methods such as emails,
digital platforms, and blockchain technology.
E-contracts facilitate rapid and efficient business transactions, particularly in the e-commerce
and fintech sectors. They eliminate paperwork, reduce costs, and enhance contract
management. Industries such as banking, healthcare, logistics, and IT services extensively
use e-contracts.
The transition from traditional contracts to digital agreements has been driven by:
● Technological advancements (e.g., blockchain and AI-driven smart contracts)
● Rise of global e-commerce (e.g., Amazon, Flipkart)
● Government initiatives (e.g., Digital India, Aadhaar-based eKYC)
E-Contracts under Information and Technology Act, 2000
Section 10A of the Information Technology Act, 2000 (hereinafter referred to as "IT Act")
deals with the validity of contracts formed through electronic means and states that the
contract is legal if the contract creation, communication, and revocation of
proposal/acceptance are all represented in electronic form or through electronic records. An
e-contract will not be deemed unenforceable merely because it was created in an electronic
format or through the use of electronic means. Signatures of contract parties are necessary to
demonstrate acceptance of the terms and conditions for any contract to be legitimate.
An electronic signature is used in the case of an e-contract.
Adding further, Section 4 of the IT Act grants legal recognition to electronic records, stating
that if any legislation requires information or matter to be in a written or printed form, such
need is deemed met if the information or matter is available and accessible in an electronic
Form.
As per the second schedule of the IT Act, the documents that cannot be executed in
electronic or digital form and must be executed in physical form in order to be legal and
enforceable in a court of law are as follows:
• Negotiable instruments except for cheques;
• Trusts;
• Power of Attorney;
• Will or Testament;
• A sale or conveyance deed of immovable property or any interest in such a party.
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E-Contracts under the Evidence Act, 1872
An e-contract has the same legal impact as a paper-based agreement under the Evidence Act
of 1872 (hereinafter referred to as "the Evidence Act"). It should be emphasized that the term
"evidence" has an encompassing definition under Section 3 of the Evidence Act, which
includes any papers, including electronic data, presented for the Court's examination as
documentary evidence.
Section 67A of the Evidence Act applies to loan and financing papers when, in addition to a
secure electronic signature, proof of the subscriber's electronic signature must be proven,
which can be done by the subscriber's own testimony.
Types of E- Contracts
E-contracts can be classified based on their nature and execution:
Click-Wrap Agreements
● Require users to click "I Agree" before using a service.
● Common in software installations, mobile apps, and e-commerce websites.
● Example: Agreeing to Terms of Service before using Google or Facebook.
Browse-Wrap Agreements
● Users implicitly accept the terms by continuing to use a website.
● Terms of Service and Privacy Policies are typically included.
● Legal Issue: Courts often reject browse-wrap agreements due to lack of explicit
consent.
Shrink-Wrap Agreements
● Found in pre-packaged software where opening the package implies agreement.
● Example: Software CDs/DVDs with license terms inside the package.
E-Mail Contracts
● Contracts formed via email exchanges where acceptance is explicitly communicated.
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● Example: Business negotiations via email where final terms are agreed upon.
Smart Contracts
● Self-executing contracts with terms coded on a blockchain.
● No human intervention required; execution is automated upon meeting conditions.
● Example: Ethereum-based contracts for cryptocurrency transactions.
E-contracts and their types are discussed in detail as under:
1. Shrink-wrap agreements
Typically, shrink wrap contracts are a licencing agreement for software purchases. In
the event of shrink-wrap agreements, the terms and conditions for access to such
software goods should be enforced by the person purchasing it, with the start of the
software product's packaging. Tightening-up agreements are just the agreements that
consumers accept, such as Nokia pc-suite, at time of installing the software on a
CD-ROM. Additional terms may only be viewed after installing the programme into
your computer, and if the customer disagrees, he has the option to return the software
package. The Shrink-wrap Agreement protects the product maker by absolving the
manufacturer of any infringement of copyright or intellectual property rights as soon
as the customer rips the product or the covering for the goods. However, there is no
firm decision or precedent in India regarding the legality of shrink-wrap agreements.
2. Click or web-wrap agreements
A Click-wrap contract refers to a web-based contract that needs approval or assent of
the user via the "I Accept," or "OK" button. With the clickwrap agreements, the user
must accept the conditions before using a specific software. Users who do not agree
with the terms and conditions will be unable to use or purchase the product following
cancellation or rejection. Someone nearly always abides by web-wrap agreements.
Before users agree to the terms of service, they must be written down. For example,
online shopping, software download or installation, to purchase airline tickets or
music online, using websites, registering an account on a social media website, etc.
3. Browse-wrap agreements
A browsing wrap agreement is a contract that is binding on two or more parties
through the usage of a website. In the event of a browsing agreement, an ordinary user
of a particular website is required to accept the terms and conditions of use as well as
other website rules for continued usage. Such internet contracts are very common in
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our daily lives. Other nations have dealt with such online agreements and determined
that both Shrink-wrap Agreements and Click-Wrap Agreements are enforceable as
long as the contract's general principles are not breached.
4. E-signatures
After the parties have formed the contract to suit their interests, the stage olexecution
by affixing an e-signature is the following step. The IT Act recognises two types of
signatures: digital signatures generated by an asymmetric crypto-system and hash
function, and electronic signatures defined in its second schedule, wherein the user of
an Aadhar card is assigned a unique identification number via which they can
electronically sign documents via third-party forums (often through generation of a
one-time-password). Section 5 of the IT Act defines e-signatures as a broad range of
ways for signing a document, whereas a digital signature is a type of e-signature that
employs cryptography.
While a lack of jurisprudence on the legal tenability and feasibility of e-signatures
indicates that acceptance of the same remains uncertain, efforts have been made to
overcome these issues through changes to the IT Act. The Information Technology
(Amendment) Act of 2008 replaced the phrase 'digital signature' for 'electronic
signature' with the goal of broadening the scope of e-signatures.
E-signatures are valid if they are uniquely linked to the signatory, who must have
complete control over all data used to create the e-signature, if alterations to the
e-signature or the document to which it is affixed can be detected after the act of
signing, and if a digital signature certificate is issued after the process is completed.
With the exception of Schedule I papers, a combined interpretation of the IT Act and
the Evidence Act will give legal legitimacy and enforceability to electronic
documents completed using e-signatures.
Contracts for employment, contractors, consultants, sales and resale agreements,
distributors, non-disclosure agreements, software developer and licence agreements,
and contracts for source-code escrow are all examples of online agreements.
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Validity of E- Contracts in India
A milestone achievement happened in the world of contracts with the enactment of 'The
United Nations Convention on Contracts for the International Sale of Goods (1980), bringing
a drastic impact on the commercial business functioning. However, it failed to provide
particular laws on e-contracts, which gave birth to UNCITRAL Model Law on e-commerce.
They realised the growth of the e-sector and approached enacting a model law to recognize
and legitimise such procedures of business doings.
It minimised the limitation of authentication and verification of identity by devising and
legitimising digital signatures for eliminating unverified and unauthentic transactions. With
this, India on the forerun, enacted in 2000, the Information Technology Act (IT Act) and
made various simultaneous amendments to the Indian Penal Code, 1860, Indian Evidence
Act, 1872, the Bankers' Book Evidence Act, 1891, and the Reserve Bank of India Act 1934,
to provide recognition to electronic documents and electronic commerce transactions.
E-contracts are legally valid under:
The Indian Contract Act, 1872
● Recognizes digital agreements provided they fulfill essential contract elements.
The Information Technology (IT) Act, 2000
● Grants legal recognition to electronic records and digital signatures.
The Evidence Act, 1872
● Allows electronic records as admissible evidence in courts.
Case Law Precedents
● Trimex International FZE Ltd. v. Vedanta Aluminium Ltd. (2010): Recognized
email communications as legally binding contracts.
The primary statutes governing e-contracts are covered by the provisions of the Indian
Contract Act, 1872 and the Information Technology Act, 2000. The former lays down
in Section 10, the essential requirements for a contract's enforceability namely, basic
principles of contract like offer and acceptance, free consent, capacity, and lawful
consideration. These principles form the core structure of a valid contract and for an
e-contract to hold ground, it needs to pass the litmus test laid under Section 4 read
with Section 10A of the IT Act, 2000.
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In Tamil Nadu Organic v. State Bank of India (2019), the court of law recognized
the validity of the e-auction sale procedure and the legal necessity of observing the
obligations arising out of it. The court in the above case remarked on the need of
promoting development in technology and appreciated its objective of facilitating
transparency and efficiency in the conduct of business.
With the growing upgradation in technology, the manner of executing documents has
also evolved. There was a need to resort to convenient and transparent ways of
executing binding documents and thus, e-contracts and e-signatures gained immense
momentum.
The legal character of the concept of e-signatures is expressed in Section 5 of the IT
Act of 2000. An electronic signature enables one to provide individual identity.
Identification, verification, and authentication are some of the prime worrying
limitations of electronic transactions have been attempted to be overcome by
legitimising safe procedures and concepts of e-contracts and e-signatures. The
enforceability of electronic/digital signatures is treated as that of handwritten
signatures in India.
Admissibility of E- Contracts
E-contracts gained admissibility as evidence following the passage of the Indian Information
Technology Act of 2000, and as a result, Section 65(b) of the Indian Evidence Act of 1872,
allowed the presentation of an electronic record as evidence in a court of law.
There are other provisions, such as Sections 3, 85, 88, and 90, that deal solely with the
numerous presumptions relevant to the legal notion of electronic records.
Under the provision of the Indian Evidence Act, 1872, Section 3 read with Sections 65A and
65B, amended as of the year 2000, explicitly recognizes electronic records as admissible
evidentiary documents produced for the inspection of the court. Consequentially in the year
2009, another required amendment in the Evidence Act, 1872 extrapolated the concepts of
electronic signatures and certification into its paradigm. Sections 85A and 85B were also
inserted in the year 2000, to raise a presumption of validity and legitimacy of the electronic
record/signature and document/agreement until proven otherwise. Such laws strengthened
digital laws and acceptance, thereby providing inclusivity to digital/electronic media in the
justice system. Such inclusivity and acceptance were long-awaited and required to keep pace
with the modern world of the growing use of technology.
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Judicial Decisions in Relation to E- Contracts
A series of ratios upheld in various judgments by the Indian judiciary have been laid down
hereunder. The ratio makes the point of view of the judiciary clear with regard to electronic
contracts. Not only are these decisions relevant, taking into account our topic for discussion,
but they can be said to be a notable precedent for a similar range of issues to arise in the
coming future.
1. The Supreme Court of India while deciding the case of Arjun Panditrao Khotkar v.
Kailash Kushanrao Gorantyal and Others (2020) had observed the elements and
importance of Sections 65 A and 65B of the Indian Evidence Act, 1872 in ascertaining the
validity of a document. It had stated that while it is easy to figure out uncertainty to be faced
by courts while deciding the proof and enforceability of electronic contracts, such uncertainty
will function as a catalyst in aiding complete development and effective use of such
technology.
2. The Supreme Court's view while deciding the case of Trimex International FZE Ltd.
Dubai v. Vedanta Aluminium Ltd (2010) is notable for it stated that in the absence of
signed agreement between the parties, it would be possible to infer standing of a valid
agreement from various documents duly approved and signed by the parties in the form of
exchange of emails, letter, telex, telegrams and other means of telecommunication. Thus, the
Court clarified that even digital means of approval will be termed as valid forms of approval
and will hold the same value as written forms of approval.
3. In the case of State of Punjab and Others v. Amritsar Beverages Ltd. and Others
(2006), the Supreme Court of India had highlighted that Section 63 of the Act of 1872
includes in its ambit the procedure for furnishing electronic documents as evidence, as have
been provided by Section 65B of the Act.
4. The Karnataka High Court's opinion in the case of Sudarshan Cargo Pvt. Ltd. v. M/s.
Techvac Engineering Pvt. Ltd (2013) is noteworthy for discussion in light of our present
subject matter for it had upheld the validity of e-mail correspondence as a legitimate
electronic record and piece of evidence towards a confession, as in the particular case.
Thus the Court had clarified that communication mace through email qualifies under
Section 2(b) of the IT Act, 2000.
5. In a notable case of Rudder v. Microsoft Corporation (1999), the court of law had
determined that the "click-wrap" agreement was enforceable, by ruling that scrolling across
multiple pages was to be presumed to be the same as turning through multiple pages of a
written contract in the paper. Thus, digital contracts were given a dignified position through
this decades-old case.
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Conclusion:
In the modern digital era, e-contracts have revolutionized the way businesses and individuals
enter into agreements, offering convenience, efficiency, and security in transactions. The rise
of e-commerce, fintech, and digital business platforms has fueled the growth of electronic
contracts, making them an indispensable part of commercial and legal operations. While
conceptually similar to traditional contracts, e-contracts differ in their mode of execution,
relying on digital communication, electronic signatures, and secure authentication
mechanisms. The legal framework in India, governed primarily by the Indian Contract Act,
1872, the Information Technology Act, 2000, and the Indian Evidence Act, 1872, provides a
robust foundation for the validity, enforceability, and admissibility of e-contracts.
Despite these advancements, challenges persist in the implementation and interpretation of
e-contracts. Questions regarding consent, authentication, jurisdiction, and the enforceability
of digital agreements often arise. The lack of specific legislative provisions addressing
nuanced issues such as smart contracts, blockchain-based agreements, and international
e-commerce transactions further complicates the legal landscape. Judicial pronouncements,
however, have played a crucial role in shaping the jurisprudence surrounding e-contracts.
Cases like Trimex International FZE Ltd. v. Vedanta Aluminium Ltd. and Tamil Nadu
Organic v. State Bank of India have reinforced the validity of electronic communications
and digital agreements, providing much-needed clarity on their legal standing.
Furthermore, the legal recognition of electronic signatures under the IT Act, 2000, and their
acceptance under the Indian Evidence Act, 1872, has facilitated the widespread adoption of
e-contracts. Digital authentication methods, such as Aadhaar-based eKYC and asymmetric
cryptography, have enhanced the security and reliability of e-contracting processes. However,
certain agreements, such as wills, negotiable instruments (except cheques), and power of
attorney documents, still require physical execution, limiting the full potential of digital
transactions.
The evolution of technology continues to challenge traditional legal norms, necessitating a
dynamic and adaptive legal framework for e-contracts. With advancements in artificial
intelligence, smart contracts, and blockchain technology, the future of e-contracting is poised
to become even more automated and self-executing. Regulatory bodies and judicial
authorities must work towards bridging the existing legal gaps to ensure that e-contracts
remain legally sound and commercially viable.
As businesses and individuals increasingly rely on digital transactions, the need for a secure,
transparent, and efficient legal framework governing e-contracts becomes paramount.
Striking a balance between innovation and regulation is essential to fostering trust in digital
transactions while safeguarding the interests of all contracting parties. The continued
refinement of e-contract laws, guided by both legislative developments and judicial
interpretations, will play a pivotal role in shaping the future of electronic commerce and
digital contracting in India and beyond.
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Bibliography
Books & Legal Commentaries:
1. Avtar Singh, Law of Contract and Specific Relief, Eastern Book Company, 12th
Edition, 2017.
2. R.K. Bangia, Indian Contract Act, Allahabad Law Agency, 14th Edition, 2020.
3. M.C. Kuchhal & Vivek Kuchhal, Business Law, Vikas Publishing House, 6th Edition,
2018.
4. P. Narayan, E-Commerce: Legal Issues and Cyber Laws, Gogia Law Agency, 2019.
Statutes & Legal Provisions:
5. The Indian Contract Act, 1872.
6. The Information Technology Act, 2000.
7. The Indian Evidence Act, 1872.
8. The Electronic Signature or Electronic Authentication Technique and Procedure
Rules, 2015.
Judicial Precedents:
9. Trimex International FZE Ltd. v. Vedanta Aluminium Ltd., (2010) 3 SCC 1.
10.Tamil Nadu Organic Pvt. Ltd. v. State Bank of India, (2013) 6 SCC 682.
11.LIC India v. Consumer Education & Research Centre, AIR 1995 SC 1811.
12.Shri V. Ramaiah v. State of Karnataka, AIR 2007 SC 2334.
Articles & Research Papers:
13.Sharma, P. (2021), “E-Contracts in India: Legal Challenges and Way Forward,”
International Journal of Law and Technology, Vol. 9, Issue 2, pp. 45-60.
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14.Mehta, R. (2019), “The Role of Digital Signatures in E-Contracts: A Legal
Perspective,” Journal of Cyber Law & Policy, Vol. 5, Issue 1, pp. 89-105.
15.Singh, A. (2020), “Smart Contracts and Blockchain: A New Era of E-Contracting,”
Indian Journal of Legal Studies, Vol. 12, Issue 3, pp. 120-138.
Web Sources:
16.Ministry of Electronics & Information Technology, Government of India –
https://www.meity.gov.in
17.Reserve Bank of India – https://www.rbi.org.in
18.National Informatics Centre – https://www.nic.in
19.Supreme Court of India Judgments – https://main.sci.gov.in
20.Iblogpleaders.com
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