LAW & EMERGING TECHNOLOGY

RE-INTERNAL ASSIGNMENT

Q. Explain the formation of E-Contract and its legal aspects with the help of provisions
under the Information Technology Act,2000.
Ans. An E-Contract is a contract that is formed electronically, typically through the internet,
where the offer, acceptance, and terms of the contract are exchanged in digital format. The
Information Technology Act, 2000, governs electronic contracts in India, providing legal
recognition to digital signatures, electronic records, and online agreements. The IT Act
establishes a legal framework to regulate e-contracts, ensuring that electronic transactions are
as valid and enforceable as traditional paper-based contracts.
 Formation of an E-Contract
The formation of an e-contract follows the following principles:
1. Offer: One party proposes terms to another party, typically in the form of an email,
website, or other online platforms.
2. Acceptance: The other party accepts the terms electronically. Acceptance can occur
through clicking an "I Agree" button on a website or responding to an email.
3. Consideration: There must be an exchange of something of value (e.g., payment for
goods or services).
4. Intention to Create Legal Relations: Both parties must intend to enter into a legally
binding agreement.
5. Capacity: The parties involved must have the legal capacity to contract.
6. Consent: There must be mutual consent between the parties, free from coercion,
undue influence, or misrepresentation.
In e-contracts, these components are reflected through digital actions such as clicking on "I
Accept" or "Place Order" buttons, which imply agreement to terms and conditions posted
online.
 Legal Aspects of E-Contracts under the Information Technology Act, 2000
The Information Technology Act, 2000 provides a legal framework for the formation and
enforcement of e-contracts in India. The key provisions of the Act that address e-contracts
include:
1. Section 10A - Validity of Contracts:
Section 10A of the IT Act specifically provides that contracts formed through electronic
means (such as email, websites, or digital platforms) shall not be deemed unenforceable
solely because they are in electronic form. This provision grants legal validity to e-contracts
in India.
It ensures that contracts made using electronic signatures or digital means are treated the
same as paper-based contracts.
2. Section 2(1)(t) - Definition of Electronic Record:
This section defines "electronic record" as data, information, or a document created,
generated, transmitted, or stored in an electronic form. An e-contract is essentially an
electronic record that constitutes a legally binding agreement between the parties involved.
3. Section 2(1)(p) - Definition of Digital Signature:
A digital signature is defined as a cryptographic means to authenticate the identity of the
person signing an electronic record. For an e-contract to be legally valid, the parties often
need to authenticate the agreement with a digital signature, ensuring that the parties' identities
are verified.
A valid digital signature has the same legal effect as a handwritten signature in a paper-based
contract, provided it is made with a secure digital signature, issued by a Certifying Authority.
4. Section 3 - Electronic Governance:
It establishes that any information or document required by law to be in writing or
typewritten can be provided electronically. This includes e-contracts, which are subject to the
same legal scrutiny as traditional contracts.
5. Section 4 - Legal Recognition of Electronic Records:
This section grants legal recognition to electronic records and ensures that any information
stored electronically is deemed valid for all legal purposes. It provides a strong legal
foundation for e-contracts, making them as enforceable as traditional contracts.
6. Section 5 - Legal Recognition of Electronic Signatures:
Section 5 of the IT Act recognizes the legal validity of electronic signatures, which are often
used in e-contracts for authentication. These signatures must be secured and verifiable, and
they serve the same function as handwritten signatures in traditional contracts.
7. Section 11 - Authentication of Electronic Records:
This section specifies that an electronic record must be authenticated by a method that is
reliable and ensures the identity of the sender. It highlights the importance of ensuring the
integrity and authenticity of electronic communications in the context of forming contracts.
8. Section 65B - Admissibility of Electronic Evidence:
This section deals with the admissibility of electronic records as evidence in court. In the case
of disputes arising from e-contracts, electronic records such as emails, website transactions,
or digitally signed documents are admissible in court under certain conditions.
Since e-contracts are made online, often between people or businesses in different places,
having enforceable rules builds trust. Without enforceability, people might not take online
agreements seriously, leading to fraud or disputes. To ensure the enforceability of e-contracts
under Indian law, the following principles must be followed:
1. Consent and Clarity: All terms and conditions of the contract should be clearly
stated in the electronic form, ensuring that both parties understand and agree to them.
Websites commonly use "clickwrap agreements," where users must click "I Agree" to
proceed, indicating their consent.
2. Digital Signatures: A digital signature serves to authenticate the identity of the
parties. This ensures that the agreement is legally binding and not subject to dispute
regarding the identity of the signer.
3. Compliance with Indian Contract Act, 1872: E-contracts must also comply with the
general principles of the Indian Contract Act, 1872, especially with regard to offer,
acceptance, consideration, and the capacity to contract.
4. Dispute Resolution: Since e-contracts often involve parties in different jurisdictions,
it is important for e-contracts to include provisions regarding dispute resolution,
governing law, and jurisdiction to prevent legal conflicts in case of a breach
In Conclusion, E-contracts are an essential part of today’s digital world, allowing businesses
and individuals to enter into agreements quickly and efficiently. The Information Technology
Act, 2000 ensures their legal validity by recognizing electronic records, signatures, and
transactions. This framework makes e-contracts as enforceable as traditional paper contracts.
However, challenges like cybersecurity risks, lack of awareness, and jurisdictional issues
need to be addressed. With regular updates to the law and stronger security measures, e-
contracts can become even more reliable and widely accepted in the future.