Article by Ankit Anand
Student of KLE Society's Law College, Bengaluru
"The black clouds of Covid-19 are expected to prove itself as a silver line for the emergence of e-contracts in India."
E-Contracts are not new to India, but the rigid mindset of the people has been a big wall that comes in the way of its application and execution. Currently, the ongoing global pandemic scenario has reached out to different streams pushing India towards digitalization. India’s recent developments in digitalization are a far cry from what they used to be, in a noticeably short span of time. Instances like digital classrooms or to work from home job, it is all becoming a norm today. Offices are working on limited capacity which has caused the organizations to reevaluate the manner they execute their businesses. These instances now arise a question about the upcoming future of E-contracts in India. It is now a question for the legal system whether they are prepared for the upcoming challenges that will come when E-contracts will have a spurt growth?
The Scenario in India:
Indian laws and judiciary have always supported and welcomed e-contracts, but it is the traditional pen-paper contracts which are persistent. In the last few years, though India has evolved as one of the fastest digitalized countries in the world, we cannot see a remarkable and substantial increase in the field of e-contracts. This current pandemic however can prove itself as the catalyst in this field.
E-Contracts are those contracts that are entered by the parties electronically without meeting each other. These contracts are of several types., whose validity requires the pre-requisites of a contract defined under the Indian Contract Act,1872. Furthermore, the recognition and regulation of E-contracts are also provided by various laws also such as IT Act,2000 and the Indian Evidence Act,1872.
There are numerable cases where the Indian Courts have dealt with the validation of e-contracts. In the case of LIC, India v. Consumer Education and Research Centre[i], the honorable SC held while observing the negotiations of the terms of the contract that, “In the dotted-line contracts, there would be no place or occasion for a weaker party to bargain as to assume to have equal bargaining power. He has to accept or leave the service or goods in terms of the dotted-line contract. His option would be to accept the unfair terms or forgo the service forever.”
In validating the enforceability of e-contracts, the Hon’ble SC in the case of Trimex International FZE v. Vedanta Aluminium Ltd[ii] held that “even without there being the execution of a formal contract, the electronic communications if satisfying the requirements of Indian Contract Act, constitute a legally enforceable agreement.”
Legal Validity and its Execution in India:
· Under the Indian Contract Act,1872., the word “contract” has been defined in S.2(h) as “An agreement enforceable by law”. This Act provides for the pre-requisites to make a contract valid such as offer, acceptance of offer, free consent, competent parties. The E-contract is as valid as written contract.
· The IT Act,2000 provides legal recognition to the E-contract which can be inferred from S.10-A of the Act that states “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." This Act also talks about the Digital Signature which is digital schematic script related to a person. S.3 of the Act shows the verification of the Electronic Records by affixing Digital Signature and infers that these signatures are reliable in any electronic authentication.
· The recognition of electronic documents can also be seen under S.65-A of the Indian Evidence Act,1872. While S.65-B of this Act provides for the procedure for furnishing of electronic documents. It states that any information contained in an electronic record produced by a computer in printed, stored or copied form shall be deemed to be a document and that can be admissible as proof or evidence in any proceeding without further proof of the original. So, any e-mail or communication made electronically will be recognised as substantial and valid evidence in a court of law.
Future growth amidst the challenges:
The rapid rise in digitalization coupled with this pandemic is a golden time in which the fate of e-contracts can shine. India right now is capable of accepting the concept of digital contracts like never before. The number in e-contracts has risen significantly in the past months and later even this pandemic is over, there is a possibility that it will continue to be a norm.
However, there are some serious challenges might be a hindrance to the growth of digital contracts. There are:
· The e-contracts does not ensure whether the individual entering it is legally competent and has the capacity to enter the contract.
· The digital contract weakens the position of online users who cannot make any counter or negotiate as a party.
· Since, e-contracts have administration spreading all over the geographical location, it creates an issue for the lawsuit filing.
· In present, there is no bar that law of a foreign country cannot be applied, or an Indian party cannot be subject to foreign jurisdiction.
· As the IT act specifically recognizes digital signature only and Aadhar e-sign, foreign signatories will be unable to undertake e-signing and they have no option other than to rely on the signing methods available to them and prove the authenticity through evidence.
The Indian Law addresses all the sphere and avenues of the e-contract. But the advancement of technology, the rapid development in the digitalisation and the broadening sphere of business will be create a job for the legislators to amend the laws accordingly.
The Present Pandemic situation has created an environment which will eventually force the people into accepting the digital contracts. Our legal system has already put into motion to make the required laws for validating, recognising, and enforcing such contracts in the times to come. However, problems like notarization of E-Contracts needs to be dealt as E-notarization has not been recognised in India so far. Now, the question remains unanswered whether the e-contract laws will get a facelift in times to come or not? But it is evident from this ongoing situation that the e-contract will leave an impact and try to take upon the traditional method of contracts.