Central University of South Bihar

School of Law and Governance

Subject: CONTRACT- 11

Assignment Topic

E-Contract its importance and precautions.

Session: 2023-28

SUBMITTED TO: SUBMITTED BY:

DR. Anurag Agarwal KARAN KUMAR

Assistant Professor BALLB 3rd SEMESTAR

Department of Law and Governance ENROLL NO CUSB2313125050

School of Law and Governance

 ACKNOWLEDGEMENT

I would like to express my special thanks of gratitude to my H.O.D. Prof Sanjay Prakash
Srivastava as well as my subject teachers Dr. ANURAG AGARWAL who gave me this
golden opportunity to do this wonderful project on the topic E- Contract and its importance
and precaution
This project also helped me in doing a lot of research and I came to know about so many new
things.

I am extremely grateful to my parents and my friends who gave valuable suggestions and
guidance for completion of my project. This cooperation and healthy criticism came handy and
useful with them.

I would like to thank all the above-mentioned people once again for extending their wisdom,
guidance, and assistance without which this project may not have been a success.

Thanking You

KARAN KUMAR

CUSB2313125050

3RD semester

BA.LLB(Hons)
 TABLE OF CONTENTS
S. No. Particulars Page No.

1 Acknowledgement i

Research Methodology, Research problem, Research hypothesis

2 iii

3 Introduction 1

4 Definition of E- Contract 1-2

5 Essential of e- contract 2-3

6 Legal validity of E- Contract 3-4

7 Kinds of E-Contract 4-5

8 Stamping of E- Contract 5

9 Analysis on accommodation of E-contract in Law 6

10 Importance of E- contract 6-7

11 Precautions 7-8

12 Conclusion 8

13 Bibliography 9
RESEARCH METHODOLOGY
Research Methodology

The research methodology for this project on e-contracts in India encompasses a

systematic approach to gather, analyze, and interpret relevant information. This
section outlines the various steps and methods employed to ensure the accuracy and
reliability of the research findings.

Research Design: The research design for this project is primarily exploratory in
nature, aiming to gain a comprehensive understanding of e-contracts in the Indian
legal framework. It involves a combination of qualitative and quantitative research
methods to collect and analyze data.

RESEARCH PROBLEM
The research problem addressed in this project is to examine and analyze the legal
framework and practical challenges surrounding e-contracts in India. The objective is
to gain a comprehensive understanding of the key issues and implications related to
e-contracts, considering the Indian Contract Act, 1872, and the Information
Technology Act, 2000 and Indian evidence act.

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 INTRODUCTION

As we know we live in era of technology , where we carry out almost all of our day to day
activities with help of gadget and device.it is almost impossible to imagine our life without
technology. Technology helps to connect the world. Like how everything in this world become
digitalized to meet requirements of this fast paced world , the traditional pen paper contracts
have now taken the form of the new age E-contract. From the simple household gasoline from
registrations , everything is happening just one click of mouse. By using this we can done
foregn transation with a foreign entity but today thaks to digital contractwhich have come in
handy and saving all the hassle of transaction. Contracts have been expressely explain the pen
– paper based contracts in indian contract act , 1872 however with evolving unforeseen
circumstanceslike the covid-19 pandemic, and increasing rate of technological developmet and
advancement, globally the concept of e-contract has been coined.its need was strongly felt
during the pandemic in the year 2020 when business companies were shut down and its need
was strongly felt at that timesuch circumstances gave rise to the e-contract and e- signatures
have reshaped the way of doing business and marked the beginning of a digitally equipped in
india. Now question arises what is e-contractand about its validity and more.

What is E-Contract

Section 2(h) of indian contract act 1872 tells us that the term ‘contract’ is an agreement that is
enforceable under the law. Interestingly, in the case of an E-Contract, the essence of Section
2(h) is still sustained by only tweaking the mode in which the Contract comes into existence.

Hence, an E-Contract is an agreement that is enforceable under the law and is in all respects
drafted, negotiated, and executed digitally. Unlike a traditional contract which is paper-based,
E-Contracts are digital in their entirety. In an E-Contract, though there is an absence of a
physical meeting of the parties, a meeting of minds is present absolutely. The parties
communicate with each other over the internet or through telephonic media. An E-Contract is

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a step ahead of traditional pen-paper contracts and comes into existence through simple words,
it is an agreement that gives rise to a legal obligation to perform an act as promised by the
promisor (the person who makes a promise) in return for consideration provided to him by the
promisee (the person to whom the promise is made). An electronic contract, commonly referred
to as an e-contract, is a legally enforceable agreement formed through electronic means. It is
drafted, negotiated and executed digitally, and hence it is completely digital in nature. The term
“e-contract” or “electronic contract” has not been defined under The Indian Contract Act, 1872
or The Information Technology Act, 2000 (herein referred to as the “IT Act, 2000”), but the IT
Act, 2000, talks about the validity of contracts formed through electronic means. It is
mentioned under Section 10A of the IT Act, 2000, that if communication, electronic and digital
mediums.

Essentials of e-contracts

The essentials of e-contracts is similar as a contract .there are several essential elements and
condition that must be met in order to build an effective e-contract.here are some points to
consider:

1 .Offer and Acceptance

An e-contract, like conventional contracts, calls for a specific offer from one party and the other
side’s acceptance of that offer. Electronic channels, such as emails, online forms, or electronic
communication on a website, may be used to communicate the offer and acceptance. Both
parties must accept the agreement’s provisions and demonstrate their desire to be bound by it.

2. Consideration

Consideration is the term used to describe an exchange of money, products, or services for
something of worth between the parties. A sufficient amount of attention must be given by both
parties for an e-contract to be deemed genuine. This requirement ensures that each party
receives a benefit or suffers a detriment due to the contract.

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3. Intention to Create Legal Obligations

A valid e-contract requires an intention from both parties to create legally binding obligations.
Therefore, it is important to establish that the parties intended to enter into a legal agreement
and not merely engage in casual or preliminary discussions.

4. Meeting of Minds

Also known as consensus ad idem (or meeting of minds), a valid e-contract necessitates a
meeting of minds between the parties. This means that both parties must have a shared
understanding of the essential terms and conditions of the contract. The use of clear and
unambiguous language in electronic communication is crucial to ensure that the parties agree.

5. Electronic Signatures

E-contracts often require the use of electronic signatures to authenticate the identity of the
parties and indicate their intention to be bound by the contract. Different jurisdictions may have
specific laws governing electronic signatures, such as the use of digital signatures, encrypted
codes, or other electronic authentication methods. Compliance with the applicable electronic
signature laws is essential for the enforceability of the e-contract.

6. Compliance With Applicable Laws and Regulations

E-contracts must abide by the rules and guidelines that apply to electronic transactions in the
country where the contract is created or enforced. These may include laws related to data
protection, consumer rights, electronic commerce, and electronic evidence. It is important to
be aware of and adhere to the legal requirements specific to e-contracts in one’s jurisdiction.

By ensuring that the above-mentioned key components and requirements are met, parties can
create a valid e-contract that is enforceable in the digital realm.these are the essential key
elements for making an e-contract.

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 Legal validity of an e-contract

E-contracts are considered valid and enforceable if they meet certain conditions, such as being
created with the intent to create legal relations having appropriate consent of the parties, and
having the ability to be accessed and reatained in a manner that is usable for future reference.

As much as we are accustomed to performing our Contractual Obligations in the traditional

method, in the current era, we are also warming up to the idea of Electronic Contracts largely
due to the hassle-free nature of such transactions and primarily because it is recognized by the
Indian Judicature. In order to further understand as, how is an E-Contract legally recognized
under Indian Law it is imperative to emphasize the nexus between Section 10 of the Indian
Contract Act,1872 and Section 10-A of the Information Technology Act, 2000.

Section 10 of the Indian Contract Act, 1872 provides the crucial pre-requisites for a Contract
to be legally valid. It is mandatory that a Contract satisfies the essentials specified in Section

10 of the Contracts Act, i.e., offer ,acceptanceValidity 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 record, such contract shall not be deemed to be
unenforceable solely on the ground that such electronic form or means was used for that
purpose.”

The nexus between Section 10 of the Indian Contract Act and Section 10(A) of the Information
Technology Act is that, when an E-Contract satisfies all the essentials under Section 10 of the
Indian Contract Act, then as per Section 10-A of the Information Technology Act, it’s legal
authenticity cannot be relinquished only for the plain condition that it was digitally conceived
and executed.

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Consequently, when an agreement meets all the essential conditions of a contract, it cannot be
denied validity only for the mere reason that it was electronically formulated. In a nutshell,
EContracts are enforceable by law and considered valid contracts.

It is substantial to ascertain the legal validity of an E-Contract for the primary purpose of
resorting to legal recourse in the event of any breach the, consensus ad idem , lawful
consideration.

Kinds of e-contracts

E-contracts are specified to the nature of the business.there are various types of e-contract
execute depending on the structure of the business. The amalgation of the onventional contracts
with the proficiency of technology constitutes an e- contract. The few most common types of
e- contracts :

1. Shrink wrap agreement

2. click wrap agreement
3. browse wrap agreement

Shrink Wrap agreements are the End User License Agreements (EULA) or Terms and
Conditions, which are packaged with the products. The technique of enclosing the
product in a plastic wrap is called Shrink Wrap which declares that the customer
purchasing it is bound by the EULA.

Usage of the product is deemed acceptance by the user. Interestingly, the acceptance is
by default once the product is purchased along with the packaging being ripped and
utilized. An example of Shrink Wrap Agreements is Software Drive

Clickwrap agreements are a form of agreement used for software licensing, websites,
and other electronic media. When the user logs in to a website the terms and conditions
or the privacy policies of the website are to be accepted by the user as legal consent.

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Though the user is intimated in this method about the existence of certain terms and
conditions and is required to accept the same, there is no power of negotiation.

The user clicks “I Agree” to be bound by the legal obligations. Some prominent
examples of Click Wrap agreements are Amazon, Flipkart, and Make My Trip.

Browse Wrap Agreements are online contract or license agreements commonly used
in website notices or mobile applications. The terms and conditions are provided in a
‘Hyperlink’ in some part of the website which is not beforehand intimated to the user.

There is no procedure to assent or reject the Terms and Conditions. At the onset, when
the user is aware of such terms they can scroll down and double click on the terms and
conditions to have a complete view of the same.

Stamping of e-contract

According to the Indian stamp act , 1899 , stamp duty is levied on the instrument. The
term instruments engulfs every document which has a right or liability excluding bill of
exchange, letter of credit , cheque , promissory note , bill of landing.

It should be noted that the term document also includes any electronic record as defined
in section 2(1)(t) of the IT Act 2000.

In India electronic documents are stamped by taking a print of the document on a stamp
paper or by the method of franking or by the method of E-stamping.

Analysis on accommodation of e-contracts in law

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Electronic contracts are much in use in the present day, and they play a major role in
trade and business. The main reasons for this are that they are easily accessible,
environment-friendly, faster and easier to work on, with the chances of errors being
minimal when compared with paper-contracts. Provisions relating to e-contracts have
also been accommodated in different areas of the law, as discussed above.

The validity and enforceability of e-contracts were discussed in detail in the case of
Tamil Nadu Organics Private Limited vs. State Bank of India (2019). The Madras High
Court in this case held that e-contracts are enforceable under law and contractual
obligations shall arise from the same.

In Trimex International FZE Ltd. Dubai vs. Vedanta Aluminium Ltd. (2010), the
Supreme Court held that since the offer and acceptance were communicated by the
parties through the exchange of e-mails, the e-mails would constitute a contract in
themselves. The Supreme Court of India observed that if a contract is concluded, a
formal contract prepared and initialled by the parties would not affect the
implementation of such a contract. the case of Bhagwandas Goverdhandhas Kedia vs.
Girdhari Lal Parshottamdas & Co. and Anr. (1965), the Supreme Court held that the
place for enforcement of a contract formed through electronic means would be the place
where acceptance of the offer was received.

Importance of e-contract

E-contracts, or electronic contracts, have become increasingly important in today's

digital age due to the following reasons:

1. Efficiency: E-contracts streamline the contract creation and signing process by

eliminating the need for physical paperwork, mailing, and manual signatures. This
results in faster contract execution and reduced administrative burden.

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2. Cost-effectiveness: E-contracts reduce costs associated with printing, scanning,
and storing paper documents. They also minimize the need for postage and courier
services, making contract management more cost-effective.

3. Accessibility: E-contracts can be accessed and signed from anywhere at any

time, as long as there is an internet connection. This accessibility facilitates remote
collaboration and enables parties to execute contracts without being physically present.

4. Security: E-contracts often incorporate advanced security measures such as

encryption, digital signatures, and secure authentication methods to protect the integrity
and confidentiality of the contract data. This helps prevent unauthorized access and
tampering of contract information.

5. Legal compliance: E-contracts are subject to specific electronic signature laws

and regulations that ensure their validity and enforceability. By complying with these
legal requirements, parties can have confidence in the legality of their electronic
agreements.

6. Environmental sustainability: By reducing the use of paper and physical

resources, e-contracts contribute to environmental sustainability by lowering carbon
footprint and promoting eco-friendly business practices.

7. Scalability: E-contracts are scalable and can accommodate a large volume of

transactions efficiently. They are particularly beneficial for businesses that deal with
numerous contracts and need a streamlined process for managing contract workflows.

Overall, e-contracts offer numerous benefits that enhance efficiency, security,

accessibility, and compliance in contract management processes. Embracing econtract
technology can help businesses streamline their operations, reduce costs, and improve
overall productivity in today's digital business environment.

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 PRECAUTIONS RELATED TO E-CONTRACT

Compliance with Laws: Familiarize yourself with the electronic signature laws and
regulations applicable in your jurisdiction When dealing with e-contracts, it is essential
to take certain precautions to ensure the validity, security, and enforceability of the
electronic agreements. Here are some key precautions to consider:

1. Use Secure Platforms: Ensure that you use secure and reputable platforms or
software for creating, storing, and managing e-contracts. Choose platforms that offer
encryption, secure authentication methods, and compliance with electronic signature
laws.

2. Authentication: Implement strong authentication measures to verify the

identity of the parties involved in the e-contract. This can include using two-factor
authentication, digital signatures, or other secure methods to prevent unauthorized
access.

3. Data Protection: Protect the confidentiality and integrity of the contract data
by implementing appropriate security measures such as encryption, access controls, and
regular data backups. Ensure that sensitive information is not exposed to unauthorized
parties.

4. Ensure that your e-contracts comply with legal requirements to ensure their
validity and enforceability in case of disputes.

5. Clear Terms and Conditions: Clearly outline the terms and conditions of the
contract in the e-document to avoid misunderstandings or disputes later on. Make sure
that all parties involved understand and agree to the terms before signing the e-contract.

6. Record Keeping: Maintain proper records of all e-contracts, including audit

trails, timestamps, and any changes made to the contract during the negotiation process.
This documentation can serve as evidence in case of disputes or legal challenges.

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7. Training and Awareness: Provide training to employees and stakeholders
involved in creating or signing e-contracts to ensure they understand the process,
security measures, and legal implications of electronic agreements. Raise awareness
about best practices for handling e-contracts securely.

8. Backup and Recovery: Implement robust backup and recovery procedures to

prevent data loss or corruption of e-contracts. Regularly back up contract data to secure
locations and have contingency plans in place in case of system failures or cyber
incidents.

By taking these precautions, businesses can mitigate risks associated with e-contracts
and ensure that their electronic agreements are legally binding, secure, and compliant
with regulatory requirements. It is essential to prioritize security, compliance, and
transparency when working with e-contracts to protect the interests of all parties
involved.

CONCLUSION

In conclusion, e-contracts have become a common and convenient way for businesses
to enter into agreements electronically. However, it is crucial to take precautions to
ensure the validity, security, and enforceability of these electronic agreements. By using
secure platforms, implementing strong authentication measures, protecting data,
complying with laws, outlining clear terms and conditions, maintaining proper records,
providing training and awareness, and implementing backup and recovery procedures,
businesses can mitigate risks associated with e-contracts.

Prioritizing security, compliance, and transparency when dealing with e-contracts is

essential to protect the interests of all parties involved. By following best practices and
taking necessary precautions, businesses can confidently navigate the world of
econtracts and leverage the benefits of digital transactions while minimizing potential
risks.

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 As the world is steadily moving towards complete digitalization and the idea of remote
operations in all fields is quickly gaining momentum it can be safe to say that e contract
is the next potent revolution that in its stride is ready to completely take over the
business field globally and as a result gradually fade away the usage of traditional
contracts in al spheres.

Bibliography

BOOKS

Avtar singh “Law of contract & specific relief act”

Dr Y.S Sharma “Law of Contract”
R.K Bangia “Law of Contract”

WEBSITE

• https://eprocure.gov.in/cppp/rulesandprocs/kbadqkdlcswfjdelrqueh
wuxcfmijmuixngudufgbuubgubfugbububjxcgfvsbdihbgfGhdfgFHytyh
RtMjk4NzY=
• https://legislative.gov.in/sites/default/files/A1872-09.pdf
• https://legislative.gov.in/sites/default/files/A1872-01.pdf
• https://legislative.gov.in/sites/default/files/A1899-2.pdf

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