Digital Contract and Its Acceptance and Validity in India Digital Signature and Its Importance

DIGITAL CONTRACT AND ITS
ACCEPTANCE AND VALIDITY IN INDIA;

DIGITAL SIGNATURE AND ITS
IMPORTANCE
Mrutyunjay Sethy
Asst.Professor, Dept. of LIS
KU
What is a Contract?
A contract is basically an agreement between two parties creating a legal

obligation for both of them to perform specific acts. Each party is legally
bound to perform the specified duties such as rendering a payment or
delivering goods.
■ Mutual Assent:
■ Offer and Acceptance:
■ Consideration:
Digital/Electronic contracts
■ Digital/Electronic contracts are the contracts which take place through
e-commerce, without meeting of the parties to the contract. These
contracts are generally very similar to the paper based commercial
contracts in which the commercial transactions conducted and
concluded electronically. With the advancement of technology and the
globalization, it has accelerated the presence of e-commerce
companies throughout the world.
What is an E-contract ?
Digital/E-contract is a contract modeled, specified, executed and

deployed by a software system. Digital/E-contracts are conceptually
very similar to traditional (paper based) commercial contracts.
Vendors present their products, prices and terms to prospective
buyers. Buyers consider their options, negotiate prices and terms
(where possible), place orders and make payments. Then, the
vendors deliver the purchased products. Nevertheless, because of the
ways in which it differs from traditional commerce, electronic
commerce raises some new and interesting technical and legal
challenges.
Essentials of Digital/Electronic contracts
The Indian Contract Act, 1872 defines contract as an agreement between

two or more parties for the buying/selling of goods or services for a valid
consideration. The essentials to a valid contract are also some of the
essentials to an e-contract which are:
■ An offer and acceptance has to be made.
■ There should be a lawful consideration.
■ There should be a free consent between the parties to a contract.
■ The object of the agreement should be lawful.
■ Parties must be competent enough to contract.
■ The contract must be enforceable by law.
Methods of Digital/e-contracting
There are three main methods of contracting electronically:

■ Electronic mail, or e-mail
■ Website Contracts
■ Online/Click to Agree Contracts
Types of Digital/e-contracting
Browse Wrap Agreements
■ This agreement is considered as a browse wrap agreement which is
intended to be binding upon the contracting party by the use of the
website. These include the user policies and terms of service of
websites such as Flipkart or E-bay and are in the form of a “terms of
use”, a “user agreement” or “terms of service”, which can be used as
the links at the corner or bottom of website.
Shrink Wrap Contracts
■ These contracts are the license agreement by which the terms and
conditions of the contract are enforced upon the contracting
parties and are usually present on the plastic or in manuals
accompanying with the software products which the consumer
buys.
Click Wrap Agreements
■ These agreements require the user to give his consent to the terms and
conditions which are known as end user agreement and governs the
licensed usage of the software by clicking “Ok” or “I agree” button.
There are certain kinds of check which ensures that the terms of the
agreement are binding upon the contracting parties. These are as
follows:
■ The user agreement or the terms of service must be specifically
conveyed to the party. By simply inserting a link to the terms on the
website without drawing any attention of the user shall not be
considered as the intimation to user. Therefore, if the user continues to
use the website after the intimation of the terms shall be considered as
the acceptance of the contract.
■ The terms of the agreement should not be changed if the user has given
his assent for the particular action.
■ The changes made to the terms of the agreement must be specifically
intimated to the user which providers a user to give a fresh consent for
the modifications in the terms. In case the user does not agree to the
changes then he has the option to leave the website at that very
moment
Specific Exclusions
IT Act 2000 excludes from electronic transactions the following
documents:
■ Negotiable Instruments
■ Power of Attorney
■ Trust Deed
■ Will
■ Sale Deed or Conveyance deed with respect to the immovable
property of any documents relating to any interest in an immovable
property.
Execution of E-contracts
■ The recognition and regulation to E-Contracts is provided by various
laws such as Information Technology Act, 2000 and the Indian
Evidence Act, 1872. The provisions in the I.T. Act mention about the
attribution, acknowledgement and dispatch of electronic records and
secured electronic procedures.
■ The IT Act recognizes the basic features of the contract such as the
communication of the proposals, acceptance of proposals, revocation
of proposals and acceptances, as the case may be which could be
expressed either in electronic form or by means of an electronic
record.
Acceptance and Validity of e-Contract
■ Under the provisions of the Information Technology Act, 2000 particularly

Section 10-A, an electronic contract is valid and enforceable.
■ The only essential requirement to validate an electronic contract is
compliance with the necessary pre-requisites provided under the Indian
Contract Act, 1872.
■ Also, the courts in India give due regard to electronic contracts under the
provisions of the Indian Evidence Act, 1872.
Benefits of e-contracting
■ e-contracting can protect contractual partners in electronic
environments and reduce process costs. It can also provide new
opportunities on contract management and contract monitoring.
Other benefits are:
■ Avoiding errors
■ Reusing content
■ Reducing time-to-contract
■ Machine processible data
ISSUES IN ELECTRONIC CONTRACTS
■ Authenticity
■ As to source or origin of the communication
■ Integrity
■ As to accuracy and totality of the communication
■ Non repudiation
■ As not being able to deny the communication
■ Writing and signature
■ Confidentiality
■ As to control the disclosure of information during transmission
■ Digital Signature
■ Bio-metric Measures
Digital Signature
■ A digital signature is a mathematical technique used to validate the authenticity and integrity of a
message, software or digital document. As the digital equivalent of a handwritten signature or stamped
seal, a digital signature offers far more inherent security, and it is intended to solve the problem of
tampering and impersonation in digital communications.
How digital signatures work
■ Digital signatures are based on public key cryptography, also known as
asymmetric cryptography. Using a public key algorithm, such as RSA, one
can generate two keys that are mathematically linked: one private and one
public.
Classes of digital signatures
There are three different classes of Digital Signature Certificates:
■ Class 1: Cannot be used for legal business documents as they are validated based only on an email ID and
username. Class 1 signatures provide a basic level of security and are used in environments with a low
risk of data compromise.
■ Class 2: Often used for e-filing of tax documents, including income tax returns and Goods and Services
Tax (GST) returns. Class 2 digital signatures authenticate a signee’s identity against a pre-verified
database. Class 2 digital signatures are used in environments where the risks and consequences of data
compromise are moderate.
■ Class 3: The highest level of digital signatures. Class 3 signatures require a person or organization to
present in front of a certifying authority to prove their identity before signing. Class 3 digital signatures
are used for e-auctions, e-tendering, e-ticketing, court filings and in other environments where threats to
data or the consequences of a security failure are high.

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DIGITAL CONTRACT AND ITS

ACCEPTANCE AND VALIDITY IN INDIA;

A contract is basically an agreement between two parties creating a legal

Digital/E-contract is a contract modeled, specified, executed and

The Indian Contract Act, 1872 defines contract as an agreement between

There are three main methods of contracting electronically:

■ Under the provisions of the Information Technology Act, 2000 particularly

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