What are e-contracts(electronic contracts)?



Electronic Contract refers to a contract that takes place through e-commerce, often without the parties meeting each other. It refers to commercial activities transacted electronically. E.g. e-auction, online purchase through luckonluck.com site, online credit transfer through bank accounts, payment via payment apps, ATM cash withdrawal, and so on.

Ø  Earlier there were 2 problems with e-transactions and contracts:

              1}            Writing / Recording / Storing the transactions

         2)            Recognizable signatures

Ø  Electronic transactions are:

1)                        Cheaper

2)                        Easier to perform

3)                        Easier to Store

4)                        Easier to Retrieve


There are 4 major types of e- contracts:

    1.      Browse wrap contracts

    2.      Shrink wrap contracts

    3.      Click wrap contracts

    4.      e-mail contracts

1. Browse Wrap Contract

                 i.            A browse wrap agreement is intended to be binding on the contracting party by the use of the website.

               ii.            Such contracts are usually used by websites wherein the continued use of a website by a user is deemed to be acceptance of its revised terms of use and other policies.

2. Shrink Wrap Contract

                 i.            A shrink wrap contract is a license agreement where the terms and conditions of the contract are enforced upon the consumer as soon as he opens the package.

               ii.            Such contracts can be generally observed in the case of buying of software products. E.g. The license agreement, indemnity by the user for any copyright or intellectual property rights of the manufacturer violation, arbitration, limitation of liabilities of the manufacturer, etc. as soon as the buyer opens the pack (containing the software product).

3. Click Wrap Contract

                 i.            Click wrap contract or click through agreements require the user to manifest his consent or assent to the terms and conditions governing the licensed usage of the software by clicking "OK" or "I Agree" button on the dialog box.

               ii.            A user may choose to disagree or reject the terms by clicking cancel or closing the window. Such a user will not be able to buy or use the service upon rejection.

             iii.            Unlike the shrink wrap agreements where the terms of the agreement are hidden inside the box, in case of click wrap agreements, all the terms and conditions are accessible prior to acceptance, either in the same window or through a hyperlink.

4. An email contract has 2 categories:

                    i.            The contract draft and its signed up scanned/unscanned copies are exchanged via email OR direct email offer and email acceptance

                  ii.            A link is sent via email to the other party which clicks to verify its acceptance

A Electronic contract infographics

Status of e-contracts in India

1.      Indian Contract Act 1872 does not exactly and explicitly provide for e-contracts

2.      The Information technology Act 2000, commonly known as the IT Act governs e-contracts or their provisions

3.      The IT Amendment Act gives power to the ventral government on ascertaining as to what mode of signatures are considerable as electronic signatures

4.      IT Act Amendment in 2008 provided for the validity of contracts formed through electronic means by bringing in Section 10A stating such contracts cannot become unenforceable merely as they are in electronic form

5.      The IT Act imposes regulations on 3 parties to the electronic process transmission:

                                i.            Originator

                              ii.            Intermediary

                            iii.            Addressee



Infographics showing features of e-contracts

Evidence vis-à-vis E-contracts

                    i.            Evidence recorded or stored on electronic devices hold the status of evidence

                  ii.            Electronic evidence acceptable as evidence (State of Delhi vs. Mohammad Afzal)

                iii.            Voice records taken with the help of various electronic devices and various modes are treatable as evidence



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