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E-Contracts[1]

Table of Contents

Question Bank

Q.1. Explain in detail Authentication and legal recognition of Electronic record and digital signature.

Q.2. Explain in detail special provisions as to Evidence relating to electronic record.

Short Notes

E-Contract.
E- Commerce.
Digital Signature.

SYNOPSIS

I] Introduction

II] Different forms of e-commerce

III] E-commerce employs some or all of the following practices

IV] Kinds of E-contracts

(a) Electronic Data Interchange

(b) Cyber Contracts

(d) Browse Wrap

V] The Information Technology Act 2000

a) Digital Signature
b) Legal Recognisation of electronic Record (S.4)
c) Legal Recognisation of electronic signature (S. 5)
d) Retention of electronic records (S. 7)
e) Communication and revocation of offer and acceptance
i) Attribution of electronic Records (S. 11)
ii) Acknowledgment of Receipt (S. 12)

iii) Time and place of dispatch and receipt (13)

(1) Time of dispatch of an electronic record

(2) Time of receipt of an electronic record

(3) Place of receipt and dispatch

VI] Indian Evidence Act 1872

A) Admissibility of electronic record
B) Presumptions as to electronic records
a) Presumption as to Gazettes in electronic forms (S. 81 A)
b) Presumption as to electronic agreements (S. 85A)

c)Presumption as to electronic records and digital signatures (S.85B)

d) Presumption as to Digital Signature Certificate (S. 85 C)
e) Presumption as to electronic messages (S. 88 A)
f) Presumption as to electronic records five years old (S. 90 A)

I] Introduction:-

‘Electronic commerce’ is known in short as ‘E-Commerce’ and ‘Electronic Contracts’ as ‘E-Contracts’. In fact, both these terms, i.e. E-commerce and E-contract, are used interchangeably, denoting the same thing.

‘E-commerce’ is trading in products and services using the internet.

E-commerce is defined as “the exchange of business information using electronic formats, including electronic mail, electronic bulletin Boards, and electronic funds transfer.”

E-commerce can also be defined as a commercial activity that occurs via connected computers and mobile devices. It occurs between a user and a vendor through an online information service, i.e., the Internet, between vendor and customer.”

In simple words, e-commerce is a term for any business or commercial transaction involving the transfer of information across the Internet.

Electronic contracts are born out of the need for speed, convenience, and efficiency. They may be created through Email, online agreements, or website forms.

II] Different forms of E-Commerce:-

E-commerce may take different forms, viz.

(i) Mobile commerce

(ii) Electronic fund transfer

(iii) Supply chain management

(iv) Internet marketing

(v) Online transaction processing

(vi) Electronic data interchange

(vii) Inventory management system

(viii) Automated data collection systems etc.

III] E-commerce employs some or all of the following Practices:-

(i) Provide an email or virtual storefront on the website with online catalogues, sometimes gathered in a virtual mall.

(ii) Buy or sell on a website or online marketplace

(iii) Gather and use demographic data through web contracts and social media.

(iv) Electronic data interchange is the business-to-business exchange of data.

(v) Reach prospective and established customers by e-mail or fax.

(vii) Use business-to-business buying and selling,

(viii) Provide secured business transactions.

IV] Kinds of E-contracts:-

Electronic contrast is broadly classified as follows-

A) Electronic Data Interchange:-

Electronic Data Interchange (EDI) is the computer-to-computer exchange of business documents in the standard electronic format between business partners. It is a totally paperless, direct computer-to-computer exchange of business documents without human intervention.

B) Cyber Contracts:-

Cyber contracts are called ‘mouse click contracts’. They are created by the business community’s commonly used communication methods, such as e-mail and commercial websites.

C) Click Wrap Agreements:-

Click Wrap Agreements are also known as ‘click through agreements’ or ‘Click Wrap Licence’. It is a common type of agreement often used in correction with software licenses. It requires the user to scroll through the terms and conditions and expressly firm the agreement to the terms and conditions by taking som

D) Browse Wrap

Browse Wrap contracts are terms and conditions of use that do not require the express agreement of a user. Such agreements are often located in software or are posted on a website, and some statements may indicate that the use of the software or website constitutes the usurer’s agreement to the terms. These terms often may not be brought to the attention of the user.

V] The Information Technology Act 2000:-

In order to provide legal recognition to transactions carried out by means of electronic data interchange and other means of electronic communication, commonly referred to as ‘electronic- commerce”, which involves the use of an alternative to paper-based methods of commerce and storage of information, to facilitate electronic filing of documents with the government agencies and further to amend I.P.C, The Indian Evidence Act 1872, Bankers Books Evidence Act 1891, and the Reserve Bank of India Act 1934 and for matters connected therewith and incidental therewith, The Information Technology Act 2000 is enacted.

The Act is based on a model law on electronic commerce adopted by the General Assembly of the United Nations in 1997. The resolution was passed to bring uniformity throughout all states on paperless communication methods and information storage.

10 of the Act validates contact formed through electronic means. It lays down that wherein 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 were used for that purpose.

Thus, for the above section, it is clear that all requirements of contract formation, i.e., proposal, acceptance, competency of parties, consideration, free consent, and lawful object, are necessary to form an e-contract. However, due to the peculiar nature of e-contracts, some provisions relating to the communication of proposal, acceptance, and revocation are applicable with some changes provided in the Act.

A) Digital Signature

A digital signature is very important to authenticate e-contracts. The Act (Information Technology Act) has made provisions for digital signature.

1) S. 2 (p) defines “digital signature” as the authentication of any electronic record by a subscriber by means of an electronic method or procedure in accordance with the provisions of S. 3.

As per S. 3, the subscriber may authenticate electronic records (contract, etc.) by affixing his digital signature.

2) Electronic Signature S. 3 A-

3-A provides another mode of authentication of record as an ‘electronic signature’. The section provides that a subscriber may authenticate any electronic record by such electronic signature or electronic authentication technique, which is (i) considered reliable and (ii) may be specified in the second schedule.

B) Legal Recognition of Electronic Records[2] (S.4)

where any law provides that information or any other matter shall be in writing or in the typewritten or in the 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 subsequent reference.

C) Legal Recognition of electronic signature[3] (S. 5)

Where any law provides that information or any other matter shall be authenticated by affixing the signature, or any document shall be signed or bear the signature of any person, then, notwithstanding anything contained in such law, such requirement shall be deemed to have been satisfied, if such information or matte is authenticated by means of an electronic signature affixed in such manner as may be prescribed by the Central Government.

D) Retention of electronic records[4] (S. 7)

Where any law provides that documents, records, or information shall be retained for any specific period, then that requirement shall be deemed to have been satisfied if such documents, records or information are retained in the electronic form as provided under the section).

E) Communication and revocation of offer and acceptance

1) Attribution of electronic Records (S. 11)

An electronic record shall be attributed to the originator-

(a) if it was sent by the originator himself or

(b) by a person who had the authority to act on behalf of the originator in respect of that electronic record or

2 (za) defines ‘originator[5]’ as “a person who sends, generates, stores or transmits any electronic message, or causes any electronic message to be sent, generated, stored or transmitted to any other person but does not include an intermediary[6].
2(1)(b) defines ‘Addressee[7]’ as a person intended by the originator to receive the electronic record but does not include any intermediary.

Illustration 1

A uses his gmail.com email account to send an email to B. A is the originator of the email, Gmail.com is the intermediary, and B is the addressee.

Illustration 2

‘A’ logs in to his web-based ‘gmail.com’ email account. He composes an email and presses the “Send” button, thereby sending the email to B. The electronic record (email in this case) will be attributed to A (the originator in this case) as ‘A’ himself has sent it.

Illustration 3

A instructs his assistant C to send the above-mentioned email. In this case, the email will also be attributed to A (and not his assistant C), even though it has been sent by another person.

Illustration 4

Suppose ‘A’ goes on vacation. Meanwhile, he does not want people to think that he is ignoring their emails. He, therefore, configures his gmail.com account to automatically reply to all incoming email messages with the following message:

“Thanks for your email. I am on vacation and will reply to your email when I return.”

Now every time that gmail.com replies to an incoming email on behalf of ‘A’, the automatically generated email will be attributed to A as it has been sent by an information system programmed by A to operate automatically.

2) Acknowledgment of Receipt[8] (S. 12)

(i) Where the originator has not expected from the addressee that the acknowledgement of receipt of electronic record 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 is sufficient to indicate to the originator that the electronic record has been received.

(ii) Where the originator has stipulated that the electronic record shall be binding only on receipt of an acknowledgement of such electronic record by him, then unless acknowledgement has been so received, the electronic record shall be deemed to have never been sent by the originator.

(iii) Where the originator has not stipulated that the electronic record shall be binding only on receipt of such acknowledgement, and the acknowledgement has not been received by the originator within the time specified or agreed or (if no time has been specified or agreed to within a reasonable time), then the originator may give notice to the addressee stating that no acknowledgement has been received by him and specifying a reasonable time by which the acknowledgement must be received by him and if no acknowledgement is received within the aforesaid time limit he may after giving notice to the addressee, treat the electronic record as though it has never been sent.

3) Time and place of dispatch and receipt[9]:- (13)

a) Time of dispatch of an electronic record:-

Save as otherwise agreed to between the originator and the addressee, the dispatch of an electronic record occurs when it enters a computer resource outside the control of the originator.

Illustration

‘A’ composes a message for ‘B’ at 11.30 a.m. At exactly 11.45 a.m., he presses the “Submit” or “Send” button. When He does that, the message leaves his computer and begins its journey across the internet. It is no longer under A’s control. The time of dispatch of this message will be 11.45 a.m.

b) Time of receipt of an electronic record:-

Save as otherwise agreed between the originator and the addressee, the time of receipt of an electronic record shall be determined as follows, namely:-

(a)if the addressee has designated a computer resource for the purpose of receiving electronic records-

(i) Receipt occurs at the time when the electronic record enters the designated computer resource; or

(ii) if the electronic record is sent to a computer resource of the addressee that is not the designated computer resource, receipt occurs at the time when the electronic record is retrieved by the addressee;

(b) If the addressee has not designated a computer resource along with specified timings, if any, receipt occurs when the electronic record enters the addressee’s computer resource.

Illustration

A company promises to deliver any order within 24 hours of receipt to its Marketing Department at the designated email address if the attached form is filled out and the ‘submit’ button is pressed.

‘X’, a customer, fills out this order form and presses the submit button. The moment the message reaches the company’s server, the order is deemed to have been received.

‘Y’, on the other hand, emails his order to the company’s ‘Information Department’ and not to a given address. Mr S, the head of the department, checks this account intermittently. After two weeks, Mr S logs in to the account at 11.30 a.m., which is to be considered the time of receipt of the message, although it was sent two weeks earlier.

c) Place of receipt and dispatch

Save as otherwise agreed to between the originator and the addressee, an electronic record is deemed to be dispatched at the place where the originator has his place of business and is deemed to be received at the place where the addressee has his place of business.

The provisions of sub-section (2) shall apply notwithstanding that the place where the computer resource is located may differ from where the electronic record is deemed to have been received under sub-section (3).

In P.R. Transport Agencies V/s Union of India (AIR 2006 All 23)

Facts- Petitioner sent a bid for e-auction. The Respondent accepted his bid for the supply of coal by sending the e-mail the petitioner received at its Chandauli (U.P) office. Disputes as to the auction arose between parties. The petition was filed before the U.P. High Court in Allahabad.

Issue– Whether the U.P. High Court has jurisdiction.

Held—Since the e-mail of acceptance was received at Chandauli in U.P., the Court at U.P. has jurisdiction.

VI] Indian Evidence Act 1872:-

The enactment of the Information Technology Act 2000 necessitated an amendment to the Indian Evidence Act. The amendment for the admissibility of an electronic record and some presumptions about electronic records are added to the Environment Act. We will discuss them as follows-

A) Admissibility of electronic record:-

65 (A) and S. 65 (B) of the Evidence Act 1872 deal with the Admissibility of electronic records in evidence.
65 (A) provides that the contents of electronic records may be proved in accordance with the provisions of S. 65 (B).
65 (B) lays down provisions as to the admissibility of electronic records-

It lays down that-

(1) Notwithstanding anything contained in this Act, any information contained in an electronic record which is printed on paper, stored, recorded or copied in optical or magnetic media produced by a computer (hereinafter referred to as the computer output) shall be deemed to be also a document, if the conditions mentioned in this section are satisfied in relation to the information and computer in question and shall be admissible in any proceedings, without further proof or production of the original, as evidence of any contents of the original or of any fact stated therein of which direct evidence would be admissible.

(2) The conditions referred to in subsection (1) in respect of a computer output shall be the following, namely:

(a) the computer output containing the information was produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer;

(b) during the said period, information of the kind contained in the electronic record; or of the kind from which the information so contained is derived was regularly fed into the computer in the ordinary course of the said activities;

(c) throughout the material part of the said period, the computer was operating properly or, if not, then in respect of any period in which it was not operating properly or was out of operation during that part of the period, was not such as to affect the electronic record or the accuracy of its contents; and

(d) the information contained in the electronic record reproduces or is derived from such information fed into the computer in the ordinary course of the said activities.

(3) Where over any period, the function of storing or processing information for the purposes of any activities regularly carried on over that period, as mentioned in clause (a) of sub-section (2), was regularly performed by computers, whether

(a) by a combination of computers operating over that period; or

(b) by different computers operating in succession over that period; or

(d) in any other manner involving the successive operation over that period, in whatever order, of one or more computers and one or more combinations of computers-

all the computers used for that purpose during that period shall be treated for the purposes of this section as constituting a single computer, and references in this section to a computer shall be construed accordingly.

(4) In any proceedings where it is desired to give a statement in evidence by virtue of this section, a certificate doing any of the following things, that is to say,

(a) identifying the electronic record containing the statement and describing the manner in which it was produced;

(b) giving such particulars of any device involved in the production of that electronic record as may be appropriate for the purpose of showing that the electronic record was produced by a computer;

(c) dealing with any of the matters to which the conditions mentioned in sub-section (2) relate, and purporting to be signed by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities (whichever is appropriate) shall be evidence of any matter stated in the certificate, and for the purposes of this subsection, it shall be sufficient for a matter to be stated to the best of the knowledge and belief of the person stating it.

(5) For the purposes of this section,

(a) Information shall be taken to be supplied to a computer if it is supplied thereto in any appropriate form and whether it is so supplied directly or (with or without human intervention) by means of any appropriate equipment;

(b) where in the course of activities carried on by any official information is supplied with a view to its being stored or processed for the purposes of those activities by a computer operated otherwise than in the course of those activities, that information, if duly supplied to that computer, shall be taken to be supplied to it in the course of those activities;

(c) a computer output shall be taken to have been produced by a computer whether it was produced by it directly or (with or without human intervention) by means of any appropriate equipment.

Explanation. For the purposes of this section, any reference to information being derived from other information shall be a reference to its being derived therefrom by calculation, comparison or any other process.

B) Presumptions as to electronic records[10]:-

Following newly added sections of the Indian Evidence Act lays down some presumptions as to electronic records, viz.

1) Presumption as to Gazettes in electronic forms (S. 81 A):-

The court shall presume the geniuses of every electronic record purporting to be the official Gazette or purporting to be electronic record directed by any law to be kept by any person if such electronic record is kept substantially in the form required by law and is produced from proper custody.

2) Presumption as to electronic agreements (S. 85-A):-

The court shall presume that every electronic record purporting to be an agreement containing the digital signatures of the parties was so concluded by affixing the digital signature of the parties.

3) Presumption as to electronic records and digital signatures (S. 85- B):-

In any proceeding involving a secure electronic record, the Court shall presume, unless the contrary is proved, that the secure electronic record has not been altered since the specific point of time to which the secure status relates.

In any proceedings involving secure digital signature, the Court shall presume, unless the contrary is proved, that-

(a) the secure digital signature is affixed by the subscriber with the intention of signing or approving the electronic record;

(b) except in the case of a secure electronic record or a secure digital signature, nothing in this section shall create any presumption relating to the authenticity and integrity of the electronic record or any digital signature.

4) Presumption as to Digital Signature Certificate (S. 85 C):-

Unless the contrary is proved, the court shall presume that the information listed in a Digital Signature Certificate is correct, except for information specified as subscriber information that has not been verified if the subscriber accepted the certificate.

5) Presumption as to electronic messages (S. 88-A):-

The court may presume that an electronic message forwarded by the originator through an electronic mail server to the addressee to whom the message purports to be addressed corresponds with the message as fed into his computer for transmission, but the court shall not make any presumption as to the person by whom such message was sent.

6) Presumption as to electronic records five years old (S. 90-A):-

Where any electronic record, purporting or proved to be five years old, is produced from any custody which the court in the particular case considers proper, the Court may presume that the digital signature which purports to be the digital signature of any particular person was so affixed by him or any person authorised by him in this behalf.

Explanation- Electronic records are said to be in proper custody if they are in the place in which, and under the care of the person with whom, they naturally be, but no custody is improper if it is proved to have had a legitimate origin, or the circumstances of the particular case are such as to render such an origin probable also.

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[1] इटरनेट व्दारे करार [इंटरनेट द्वारा अनुबंध]

[2] इलेक्ट्रॉनिकस रेकॉर्ड ला कायदेशिर मान्यता [इलेक्ट्रॉनिक रिकॉर्ड की कानूनी मान्यता]

[3] इलेक्ट्रॉनिकस सहीस कायदेशिर मान्यता [इलेक्ट्रॉनिक हस्ताक्षर की कानूनी मान्यता]

[4] इलेक्ट्रॉनिकस दस्तैवज साठवनुक [इलेक्ट्रॉनिक दस्तावेज़ भंडारण]

[5] इलेक्ट्रॉनिकस रेकॉर्ड/ प्रस्ताव इ. पाठविनारा. [इलेक्ट्रॉनिक रिकॉर्ड/प्रस्ताव आदि। प्रेषक]

[6] मध्यस्थ

[7] माहीती इ. मिळविनारा [सूचना आदि। प्राप्तकर्ता]

[8] इलेक्ट्रॉनिकस रेकॉर्ड मिळाल्याची पोहोच [ इलेक्ट्रॉनिक रिकॉर्ड प्राप्ति की पावती]

[9] इलेक्ट्रॉनिकस रेकॉर्ड पाठविले व मिळाल्याची वेळ व ठीकाण [भेजे और प्राप्त किए गए इलेक्ट्रॉनिक रिकॉर्ड का समय और जगह]

[10] इलेक्ट्रॉनिकस रेकॉर्ड संबंधि कायदेषिर ग्रहीते [इलेक्ट्रॉनिक रिकॉर्ड के संबंध में कानूनी सलाह]