E Contracts

WHAT IS E CONTRACT?
E-contract is any kind of contract formed in the

course of e-commerce by the interaction of two or
more individuals using electronic means, such as e-
mail or by the interaction of an individual with an
electronic agent, such as a computer program.
The 2 main parties to an e-contract are-
The Originator and the Addressee.
An Originator, according to the Information and
Communication Technology Act, 2006, is a person
who sends, generates or transmits any electronic
message to be sent, generated, stored or transmitted
to any other person and does not include an
Intermediary.
An Addressee, according to the Information and
Communication Technology Act, 2006, is a person
who is intended by the originator to receive the
electronic record but does not include any
Intermediary
ESSENTIALS/ELEMENT OF E CONTRACT
Since electronic contracts are presently taken as
seriously as offline contracts, the same principles
which apply to a valid contract will apply here. The
law already recognizes contracts formed using
facsimile, telex and other similar technology. An
agreement between parties is legally valid if it
satisfies the requirements of the law regarding its
formation, i.e. that the parties intended to create a
contract primarily. This intention is evidenced by
their compliance with 3 classical cornerstones i.e.
offer, acceptance and consideration.
A. OFFER
Under section 2(a) of The Contract Act, speaks of
offer. “When one person signifies his willingness to
do or to abstain from doing anything with a view to
obtain assent of that other to such act or abstinence,
he is said to make a proposal”. Advertisement on
website may or may not constitute an offer as offer
and invitation to treat are two distinct concepts.
Being an offer to unspecified person, it is probably
an invitation to treat, unless a contrary intention is
clearly expressed. When dealing with business
websites, it is important to establish whether the
content of that business website amounts to an
“offer” or merely an “invitation to treat”. An
invitation to treat is not capable of being turned into
a binding contract by simply accepting its terms.
Rather, it is an invitation to others to make an offer
of their own. By contrast, an offer is an expression
of willingness to enter into a binding contract with
another party.
The communication of offer is complete when it
comes to the knowledge of the offeree and
acknowledgement is received by him.
B. ACCEPTANCE
When the person to whom the proposal is made
signifies his assent thereto, the proposal is said to be
accepted.
Both offer and acceptance can be generally done
through email, website forms, and online
agreements.
For example, Rahim wants to sell his motorcycle.
He displays his goods at www.bikroy.comstaing the
price, quality, description along with other terms and
conditions. Karim wants to buy the motorcycle. He
clicks on the I agree button.
Here Rahim makes an invitation to treat to sell the
motorcycle and Karim accepts the offer. Thus an
online contract is formed between Rahim and Karim.
REVOCATION OF OFFER AND
ACCEPTANCE
Grounds of revocation of an online contract-
1. In case of death of a party involved in the
contract.
2. In case of insolvency of a party involved in the
contract.
3. In case of counter offer. This is also known as
an exception to mirror image rule.
WHAT IS MIRROR IMAGE RULE?
This is a common law principle that denotes that the
acceptance must be a mirror image of the offeror’s
offer. This implies that an acceptance which varies
in terms as against the original offer is not an
acceptance but a counter proposal which will now
have to be accepted by the original offeror otherwise
the whole transaction will lose its effect.
4. An offer can be revoked at any time before the
acceptance is made.
5. An acceptance can be revoked until it is
communicated to the offeree.
C. LAWFUL CONSIDERATION
Like every contract, there must be lawful
consideration for online contract. That means the
consideration of an electronic contract shall not-
 Be forbidden by law.
 Will not be such nature that, if permitted defeat
the provisions of law.
 Is fraudulent.
 Courts regard it immoral.
 Opposed to public policy.
For example, if an auction site facilitates a contract
between two parties where one person provides a
pornographic movie as consideration for purchasing
an mp3 player, such a contract is void because such
consideration is forbidden by law.
D. LAWFUL OBJECT
The purpose of such contract must be a lawful one.
Courts will not enforce contracts that are illegal or
violate public policy. Such contracts are considered
void. An agreement which calls for the commission
of a crime is illegal and therefore void. For example,
an electronic contract to supply marijuana will not
be treated as a valid contract under this ground.
E. COMPETENT PARTIES TO CONTRACT
It is generally accepted that both natural persons and
legal persons are capable of entering contracts, in
case of natural persons, he/she must be of sound
mind and not less than of 18 years of age. In case of
legal persons, it must be recognized in the eye of
law.
F. FREE CONSENT
The consent of the both parties must be free from
any deceit, mistake, fraud etc. E contracts can be
broadly categorized into:
- Shrink Wrap Agreements
- Click Wrap Agreements
Shrink Wrap agreements are those which can only
be read and accepted by the consumer after the
opening of a particular product. The term is
described after the shrink wrap plastic wrapping that
is used to cover software or other boxes. Installing
software from a CD into your PC is an example of a
shrink wrap agreement.
Click Wrap agreements are mostly found in the
software installation process. The user has to click
either ‘Accept’ or ‘Decline’ to accept or reject the
agreement respectively. These agreements lack a
certain amount of bargain power. Choosing to make
payments online or choosing to reject it is an
example of using a click wrap agreement.
Either ways, the consent to such must be free. This
is quite difficult to determine because sometimes the
margin used to determine the strict rule of free
consent gets narrower.

E Contracts

Uploaded by

Copyright:

Available Formats

E Contracts

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

E Contracts

Uploaded by

Copyright:

Available Formats

WHAT IS E CONTRACT?

E-contract is any kind of contract formed in the

You might also like