EContracts Validity Enforceability Legality and Types Regulation Article

E-Contracts Validity, Enforceability, Legality and Types

Regulation Article 11 -15 UNCITRAL Model Law regulate the Electronic Commerce and its related aspects. This recognition/regulation comes in view of the increase in “electronic commerce” activities throughout the world. The Preamble of the United Nation Convention on the use of Electronic Communications, 2005, states, “improve the efficiency of commercial activities, enhance trade connections and allow new access opportunities for previously remote parties and markets, thus playing a fundamental role in promoting trade and economic development, both domestically and internationally. ” Further we should look at Part One, Chapter 3 of the UNCITRAL Model Law on Electronic Commerce, 1996.

Chapter 3, Article 11 -15 Article 11 - Formation and validity of contracts (1) In the context of contract formation, unless otherwise agreed by the parties, an offer and the acceptance of an offer may be expressed by means of data messages. Where a data message is used in the formation of a contract, that contract shall not be denied validity or enforceability on the sole ground that a data message was used for that purpose. Article 12 - Recognition by parties of data messages (1) As between the originator and the addressee of a data message, a declaration of will or other statement shall not be denied legal effect, validity or enforceability solely on the grounds that it is in the form of a data message.

Article 13 - Attribution of data messages (1) A data message is that of the originator if it was sent by the originator itself. (2) As between the originator and the addressee, a data message is deemed to be that of the originator if it was sent: (a) by a person who had the authority to act on behalf of the originator in respect of that data message; or (b) by an information system programmed by, or on behalf of, the originator to operate automatically. (3) As between the originator and the addressee, an addressee is entitled to regard a data message as being that of the originator, and to act on that assumption, if: a. in order to ascertain whether the data message was that of the originator, the addressee properly applied a procedure previously agreed to by the originator for that purpose; or b. the data message as received by the addressee resulted from the actions of a person whose relationship with the originator or with any agent of the originator enabled that person to gain access to a method used by the originator to identify data messages as its own.

Article – 14 Acknowledgement of receipt (2) Where the originator has not agreed with the addressee that the acknowledgement be given in a particular form or by a particular method, an acknowledgement 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 data message has been received. (3) Where the originator has stated that the data message is conditional on receipt of the acknowledgement, the data message is treated as though it has never been sent, until the acknowledgement is received.

Article 15 - Time and place of dispatch and receipt of data messages (1) Unless otherwise agreed between the originator and the addressee, 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. (2) Unless otherwise agreed between the originator and the addressee, the time of 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.

Regulation of E-contracts in India E-contracts, like all contracts, are governed by the Indian Contracts Act, 1872. the Information Technology Act merely recognises the process of contract formation through electronic means and establishes functional equivalence between econtracts and paper-based contracts. Section 2(h) of the Indian Contract Act, defines the term “contract” as an agreement enforceable by law. Section 10 - What agreements are contracts —All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.

IT Act Section 4 - Legal recognition of electronic records— Where any law provides that information or any other matter shall be in writing or in the typewritten or printed form, then, notwithstanding anything contained in such law, such requirement shall be deemed to have been satisfied if such information or matter is– (a) rendered or made available in an electronic form; and (b) accessible so as to be usable for a subsequent reference. Section - 10 A* - Validity of contracts formed through electronic means— Where in a contract formation, the communication of proposals, the acceptance of proposals, the revocation of proposals and acceptances, as the case may be, are expressed in electronic form or by means of an electronic records, such contract shall not be deemed to be unenforceable solely on the ground that such electronic form or means was used for that purpose. * Through amendment in 2009.

Types of e-contracts There are basically two types of e-contracts – 1. Contract entered into through E-mail 2. Standard Form E-contract Contract entered into through E-mail – E-contracts maybe in the form of a contract that is entered into by way of communication of various stages of the formation of the contract such as the communication of an offer, acceptance, etc. and other negotiations of the various terms of the contract through the electronic medium. The contract that is entered into is non-instantaneous and negotiable. The Model Law and the IT Act provide the rules applicable to the formation of contracts in this manner.

Standard Form E-contracts – Alternatively, e-contracts can take the form of non-negotiable and instantaneous contracts of the following types - Click or web-wrap agreements Click-wrap contracts are web-based contracts that require the user’s consent or consent through the “I Accept, ” or “OK” button. The user must accept the terms of use of the particular software with the click-wrap agreements. Users who disagree with the terms and conditions cannot use or purchase the product after cancellation or refusal. Someone almost regularly observes web-wrap agreements. The terms of use shall be set down before acceptance by the users. For instance, online shopping agreement, etc.

Shrink-wrap agreements Shrink wrap contracts are usually a licensing agreement for software purchases. In the case of shrink-wrap agreements, the terms and conditions for access to such software products shall be enforced by the person buying it, with the initiation of the packaging of the software product. Tightening-up agreements are simply the agreements that are accepted by users, for instance, Nokia pc-suite, at time of installing the software on a CD-ROM. Sometimes, after loading the product onto your computer, additional conditions may only be observed and then, if the buyer disagrees, he has an opportunity to return the software product. The shrink-wrap Agreement provides protection by exonerating the product manufacturer of any violation of copyright or intellectual property rights as soon as the purchaser tears the product or the coverage for accessing the product. However, the validity of shrink-wrap agreements does not exist in India with a stable judgment or precedent.

Browse-wrap agreements A browsing wrap agreement can be called an agreement which is to be binding on two or more parties through the use of the website. In case of an agreement on browsing, an ordinary user of a given Website is to accept the terms and conditions of use and other website policies for continuous use. We usually witness such kinds of online contracts in our daily lives. Although this online agreement is becoming common in all of our businesses, there is no precise judicial precedent regarding its validity and enforceability. Other countries, such as courts in the USA, have dealt with those online agreements and held that both Shrink-wrap Agreements and Click-Wrap Agreements are enforceable as far as the general principles of the contract are not violated. Other types of online agreements include contracts for employment, contractors, contracts for consultants, sales and resale agreements, distributors, non-disclosure agreements, software developer and licensing agreements and contracts for source-code escrow.