By Tripti Jaiswal, 2nd year at Hidayatullah National Law University, Lucknow
There are no separate laws or statues to regulate contracts and transactions in electronic form. However, there are several provisions in the existing acts that aid online contracting, most prominently in the Information Technology Act, 2000. They deal with obstacles in the existing legal structure and facilitate transactions in the electronic medium. Additionally, the IT Act has added several amendments to various enactments. The value and importance of E-contract are growing and we will outline the legal framework regarding it.
Information Technology Act, 2000
The way we conduct trade and business has been modified due to the growth of technology. Traditional paper-based methods of communications are being replaced by the internet due to factors like speed and cost-effectiveness. The IT Act, 2000, sets out to make substantial changes in the legal system fuelled by the increasing influence of e-commerce.
Provisions in the IT Act provide legal recognition to E-contract, this can be inferred by Section 10-A of the Act. It closely follows the UNCITRAL model law.[i]It has solved some of the particular issues regarding non-paper based communications, storing information by facilitating electronic filing of records, transferring data, and digital signatures. Details pertained to particular electronic contracts and signature methods are also dealt with. Some relevant provisions governing E-contracts are:
Electronic Signatures: Section 3[ii] of the IT Act deals with authentication of E-records by adding an electronic signature. This authenticates the document because adding a signature makes it legally significant and attributable to the signer. In 2009, Section 3A was added to further explain electronic signatures and the reliability of electronic authentication.
Regarding E-contracts: The IT Act gives directives about the electronic records in the given context to be attributed to the originator.[iii] It provides methods in which acknowledgment of a receipt may be sent, given that the method has not been pre-determined by the parties beforehand.[iv] It also establishes the dispatch of E-records— as information can be sent instantly, the time of dispatch is agreed upon to be the moment when a message leaves a computer.[v]
Indian Contract Act, 1872
As the IT Act was enacted to resolve matters related to cybercrimes, E-commerce is not given much emphasis in the text. Therefore, it does not contain terms related to contracts or sales of goods which are crucial to E-commerce. As a result, the law relating to contracts is governed by the Indian Contract Act, 1872.[vi] E-contracts follow all the basic rules of contract as stated, and are considered valid similar to written contracts when they fulfill all the essentials of a valid contract.
Indian Evidence Act, 1872
Similar to contracts, the admissibility of E-contract is a major obstacle when we substitute conventionally paper-based methods with modern ones. The IT Act set out to change many enactments to provide ancillary support to online contracting and the Indian Evidence Act, 1872, was a major segment which set rules about the admission of evidence in an electronic format, certification of digital signatures, admission of electronic records, and many other rules.
Admission[vii] is defined in the Indian Evidence Act and was further explained by Lucknow Court[viii] to be a statement of fact that waives the assertion of the opposite party. Thus, E-contracts were considered to be admissible. While the evidence of oral admission is generally disallowed, the Act provides circumstances when an exception can be made.[ix] Several new sections were added to the Indian Evidence Act which:
Gave relevancy to a certifying authority to form an opinion[x] or certify[xi] electronic signatures in court.
Prescribe the mode for proof of contents of electronic records[xii] and digital signatures.[xiii]
Presumes genuineness of E-record kept officially or by the form described to be lawful.[xiv]
Presume the authenticity of secure electronic records in a proceeding.[xv]
Thus, E-contracts are similar to paper contracts in their value as permissible evidence and the Indian Evidence Act has brought several amendments to eliminate ambiguity.
Setbacks
The IT Act was enacted to enforce laws governing E-commerce. While there have been infinite developments in technology and online contracts, the Act has remained relatively changed and has not kept up with the change in the digital market and media.
Apart from Sections 11-13, the IT Act does not state any laws relating to contracts. While the IT Act and the Indian Contract Act are meant to be enforced together, the latter is obsolete for E-contract. The existing law of contract needs to be changed to include E-commerce.
Although the IT Act focuses on payment instruments, delivery instruments, and standard practices, it is very vague on the subject of the place of formation of contracts and specific rules regarding cross border transactions. Individuals and businesses have no freedom for choice of law.[xvi]
Conclusion
Revolutionized by the developments of the digital age, the new era of communications is affecting our economic activities in a major way. Despite the lack of laws oriented towards E-contract, the Information Technology Act, the Indian Evidence Act, and the Indian Contract Act have collectively facilitated the growth and development of E-commerce in the Indian market. The provisions and the later amendments were written to validate transactions and contracts made using the electronic medium and update laws to reposition E-contracts and E-records as equal to written contracts and pieces of evidence.
The lack of stringent and specific laws for the purpose of governance of E-contracts or E-commerce as a whole poses a challenge to the judicial systems. The legislation in India attempts to address all aspects of E-contracts, but the enacted remains static and fails to evolve with the technology. They disrupt the smooth functioning of transactions over the electronic medium. It is the need of the hour for the laws to be amended on par with technological development.
The IT Act is one of its kind as it uniquely provides legal and technical provisions. It is substantive law, therefore we need procedural laws for the enforcement of the IT Act. Judges, advocates, and court staff also need to be trained to deal with E-contract and cyber law. The modern-day judges need to be well acquainted with all these issues.
REFERENCES [i]Raman Jit Singh Chima, Freedom of Expression in a Digital Age, THE CENTRE FOR INTERNET& SOCIETY, Apr 21, 2015. https://cis-india.org/internet-governance/blog/freedom-of-expression-in-a-digital-age (last visited on 08 Sept. 2020). [ii] Sec 3, Information Technology Act, 2000. [iii] Sec 11, Information Technology Act, 2000. [iv] Sec 12, Information Technology Act, 2000. [v] Sec 13, Information Technology Act, 2000. [vi]Sundaram, Sethuram&Deepa, Ms & Kumar, E-Contracts in India: The Legal Framework, Issues and Challenges, INTERNATIONAL JOURNAL OF EMERGING INNOVATIONS IN SCIENCE AND TECHNOLOGY (Vol 4, Issue 2). (2018) (pg. 13-15)https://www.researchgate.net/publication/330281294_E-Contracts_in_India_The_ Legal_Framework_Issues_and_Challenges(last visited on 08 Sept. 2020). [vii] Sec 17, Indian Evidence Act, 1872. [viii]Latafat Husain v. LalaOnkar Mal, (1934) 10 Luck 423 http://14.139.60.114:8080/jspui/bitstream/ 123456789/31559/1/057_Latafat%20Husain%20v.%20Lala%20Onkar%20Mal%20%28423-439%29.pdf(last visited on 08 Sept. 2020). [ix] Sec 22A, Indian Evidence Act, 1872. [x] Sec 47A, Indian Evidence Act, 1872. [xi] Sec 73A, Indian Evidence Act, 1872. [xii] Sec 65A, Indian Evidence Act, 1872. [xiii] Sec 67A, Indian Evidence Act, 1872. [xiv] Sec 81A, Indian Evidence, 1872. [xv] Sec 85A, Sec 85B, Sec 85C, Sec 88A, Sec 90A, Indian Evidence, 1872. [xvi] Neeta PramodGhadge, A Study of Formation and Challenges of Electronic Contract in cyberspace,2015 (pg. 225-275) https://shodhganga.inflibnet.ac.in/bitstream/10603/38507/14/14_chapter%207.pdf(last visited on 08 Sept. 2020).
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