CHAPTER-VI CONCLUSION AND SUGGESTIONS

Transcription

1 CHAPTER-VI CONCLUSION AND SUGGESTIONS 301

2 CHAPTER-VI CONCLUSION AND SUGGESTIONS Contract law plays an important role in commercial law. It is difficult to carry on any trade, business or any activity without contract law. It effects not only business men but also everybody. The aim of the contract law is to ensure that rights and remedies are honoured which raised by contract. Contract law lays down conditions for parties to enter into contract. Anson stated that contract is a mixture of subjectivity and objectivity concept. According to section 10, consent is subjective concept but the whole is objective concept. Agreements cover both offer and acceptance and it is essential for making a contract. All contracts are agreements but all agreements are not contracts, only those agreements are contract which fulfills the conditions of section 10. For making a contract consent is an essential ingredient and it should be free from coercion, fraud, misrepresentation, if it is not free it is voidable under section 19 and 19 A. But if the consent is obtained by mistake then it is void under section But under English law intention to create legal relationship is essential. Anson has stated that law of contract is a child of commerce and commerce is the reason for origin of law of contract. Although inconvenience, hardship, liability suffered is also a consideration, these agreements are not a contract. It means no intention to create legal relationship. It is for a friendly relationship or social engagements 660. With the economic and social development of societies the law of contract is important for at least two reasons. In the first place the division of. The legal machinery by which free transfers of property and performance of service is arrived out. Contract law is part of the law of exchange which regulates the methods by which individuals exchange goods and services in return for money. Good intention does not make good contract always 661. of basic contract law is not enough to meet the needs of the changing business environment, with new It becomes important to realize that the Indian Contract Act inadequate forms of contracts emerging which are more complicated and those provisions which relate general contracts are insufficient to deal with standard form contracts. Further, although there are a few certain and uniform principles that have been evolved through the case laws, there application has been subjective Theories under pinning the law of contracts are in a state of flux. Criticisms of the Classical model focuses on its emphasis on procedural justice at the expense of substantive justice, its privileging of rules 660 Avtatar Singh, Law of Contract (2012) Central Law Publication id at p 6, 9, assessed on

3 over understanding and context, and its inability to reflect the day to day world of contracts. Welfare interventions on behalf of consumers have mitigated the more extreme injustices of a model based on the assumption that the parties to a contract exercise free will. These interventions remain exceptions to the general rules rather than a general platform on which discussions could be based. Also today, most expositions of contract law do not go beyond the rules, or they tell us little or nothing of the social or economic significance of these rules. The result is a division between the study of formal law and evaluation of the needs of the wider community that it should be designed to serve. However, this aspect can be safely left at the hands of the Courts, for they are guided by the wisdom of the learned Judges. The problem presented by many of these contracts can be summed up as unequal bargaining power between the consumer and the corporate entity that uses them 662. E-contracts can be formed, generally, either through the medium of or website. We often come across these e-contracts in our everyday life but are unaware of the legal complexities connected to it. Contracts entered through are somewhat similar to sending letters to each other though the time taken to send or receive it is very minimal. Sometimes, it may bounce back or doesn t even reach to the other party. Web-wrap agreement is web based agreement which requires assent of the party by way of clicking the I agree or I confirm link. Web based agreement is similar to standard form contract whose terms and conditions are determined in advance and the party has to either accept it or reject it entirely. When it comes to legality/enforceability of such e-contracts entered between contracting parties, it is necessary to look into basic provisions of laws regarding the contracts which are given in The Indian Contract Act 1872 unless the IT Act 2000 specifically provides contrary 663. The superior party that drafts the contract can use the fine print, coupled with the knowledge that the consumer rarely, if ever, reads the terms, to take advantage of the unsuspecting consumer in the underlying transaction. Buyers often make purchases based on price and quality, but there are a number of other factors in the fine print of these transactions that merit consumer attention. These provisions may, and often, work against consumer interests. Though some say consumers can always walk with their feet or dollars and choose to not engage in these transactions, often the consumer, having not read the fine print, is completely unaware of these provisions until the corporation tries to enforce them against the consumer assessed on ibid 303

4 Worse, often entire industries have contracts containing these unfair provisions, thereby leaving the consumer with no meaningful alternate choice. Even worse, businesses often reserve for themselves the right to modify the terms of the contract, making comparison shopping pointless if the contract or the prospective contract is always subject to change. To add insult to injury, these contracts often contain forced arbitration, venue and/or choice-of- law provisions, so resolution of disputes no longer even takes place in a public courtroom forum, but in a private, business-dominated industry of arbitrators, who are neither required to follow the rule of law, nor are subject to its oversight. Contract law and a consumer's day in court have been "privatized" to a process whose outcomes are often unknowable and unchallengeable. Typical contract law is based on the idea of mutual commitment and assent to the terms of the deal. As a consequence, courts impose a "duty to read" on the consumer and presume that the terms of the agreement signed have been agreed to between the parties to the contract. Generally, courts are not inclined to find an equitable exception to imposing the terms of a contract that have been agreed to between the business and individual consumer, who is considered irresponsible for not having read the contract. Exceptions, in the form of successful defenses against a contract, such as fraud, duress, or unconscinability are few and far between 664. In standard form contracts there is no mutuality of assent, and there is often no time for or inclination by the consumer to read the terms, or even an ability to cross comparison shop those terms. And even if the consumer did try to comparison shop, it wouldn't do much good if the sellers can always change their terms and insulate their provisions from meaningful judicial review 665. This adds up to a fiction in the law of contracts and makes a mockery of the idea of consumer freedom in a free market. 666 Now it is an accepted fact that contract is changing due to privatization, industrialization, urbanization globalization. Many new terms have come in contract for example e-contract, escrow agreement, joint venture agreement, contract farming, outsourcing contracts etc. All forms of E-Contracts ought to be made as conspicuous as possible to satisfy legal standards of notice of terms. Its binding legal nature must work upon the end-user, and browse-wrap notices must ideally only be supplemental to a contract that the user has already manifested his assent to. The present study has arrived at the following conclusions: outsourcing contracts involves the conducting of one or more organizational activities, traditionally in house, by external agents. 664 Ibid 665 fair contracts.org assessed on http// Fair contracts. org.//problem assessed on

5 The primary motivation behind outsourcing, especially offshore outsourcing, is cost reduction which is made possible by the significantly lower per capita costs of labour in most offshore destinations. Taking up such practices also allows companies to improve their own operations and compete better with other firms in terms of having better logistics, more rationalized inventories, quicker time to market, etc. The present way of outsourcing transactions has transformed the way many corporations look at business. Companies that have multiple operations are often found struggling against smaller, more agile companies that have cut their costs and are pricing products and/or services lower. In a sense, the concept of growth itself has been redefined, since the new facts for companies situated in developed economies is to focus on their core competencies and allow other processes to be outsourced to India and China, essentially reducing the size of their operations! In this background, it becomes clear that the importance of outsourcing contracts can scarcely be overstated. The present study also arrived at, the conclusion the contract, plays the single most-important role in making sure that the transaction itself goes through in a manner that is beneficial for all parties involved. As with any new industry, outsourcing contracts too have developed several peculiar features over the course of the last decade. Interestingly however, not many outsourcing relationships have, as yet, ended up in courts hence, the quantum of expressed judicial opinion is scarce 667 and some of which apply to the outsourcing industry in general. First, offshore outsourcing has grown at a hectic pace over the past decade and more, mostly due to the fact that properly executed outsourcing transactions can lead to cost savings, which is increasingly important in globalize world, but also partly due to the quality of outsourcing services offered, especially in destinations like India 668, that escrow agreement is a necessary tool in today s life. Its advantages are many, the most important one being that it encourages business expediency. The primary problem in India is that there is no law governing escrow agreements, especially escrow agents, and this should be rectified. Moreover, the wording of the clauses, especially in relation to damages caused by the negligence of escrow agent, should be worded carefully, and should be fair to both the parties escrow agreements are also used in joint development agreements to ensure that the Escrow agent steps in to decide the rights of either party in case of default by the other both Indian contract and English contract are different on the Sai Ram Bhatt, Law of business contract in India(2010) Sages Publication id at p.167. R. Dossani, and M. Kenny, Went for Cost, Stayed for Quality? Moving the Back Office to India, available online at Edu/pubs/20337/ dossani_kenney_09_2003. pdf (accessed on October 8, 2008). 305

6 basis of kinds of contract. 669 To make a Joint venture Successful it requires utmost harmony, understanding, and confidence between parties. The various issues as raised in the research, ranging from the approach to the integrities in various clauses, if addressed by the parties during the drafting of a joint venture agreement can make the agreement a facilitator rather than an impediment in the continuation and growth of the joint venture. 670 From strict control by the state, there has been a shift toward a free-market system wherein private players are allowed to participate. The model of contract farming has evolved from in-house consumption by sponsors (bipartite model) to a more complex one quadripartite model. Due to increased complexity on account of linkages to other players, such as banks and processors/marketers, it has become very important to precisely apportion the rights and obligations of the grower/farmer and the sponsor 671. Parties to an agreement are generally free to determine how a contract is concluded, how it can be terminated and remedial consequences for breach of contract, just as they can generally determine a contract's content. The courts have pointed out only residual limits on the parties' autonomy to determine how a contract concludes. The courts' defaults, or standard rules, which are generally alterable, are that a contract is automatically concluded if it becomes impossible for one party to perform. If one party breaches her side of the bargain in a serious way, the other party may cease his own performance. If a breach is not serious, the innocent party must continue his own obligations but may claim a remedy in court for the defective or imprecise performance he has received. The principle remedy for breach of contract is compensatory damages, limited to losses that one might reasonably expect to result from a breach. This means a sum of money to put the claimant in mostly the same position as if the contract breaker had performed her obligations. In a small number of contract cases, relating to property or trust obligations, a court may order restitution by the contract breaker. so that any gains he has made by breaking the agreement will be stripped and given to the innocent party. Moreover where a contract's substance is for such a thing unique that damages would be an inadequate remedy courts may use their discretion to grant an injunction against the contract breaker. 672 US law does have a general duty of good faith in the performance and enforcement of contracts but in India and England no such duty is found. In American contract interpretation by courts as well as good 669 Sai Ram Bhatt ;Law of Business Contract in India(2010) Sages id at p Id at p www. ausib.org assessed on http// assessed on

7 intention of the parties is more required than Indian and English contract In U.S.A. mistaken party can avoid the contract but mistaken party can not do so in England and India. With regards to the law of the 25 Member States, they must comply with the requirements of the various EU legislations governing contracts and come to terms with the legal challenges posed by the divergence of national contract laws and inconsistencies from the way the EU laws are implemented in the Member States 673. The dependence on electronic commerce in the conduct of day to day business worldwide continues to grow. With this growth comes the need for guidelines for electronic commerce and certification of the validity of electronic transactions. In recognition of the increasing number of international transactions executed by means of electronic commerce, in 1996 the United Nations General Assembly adopted the Model Law on Electronic Commerce of the United Nations Commission on International Trade Law (UNCITRAL). The decision by UNCITRAL to create model legislation on electronic commerce was made in response to a number of countries having inadequate or outdated current legislation governing communication and the storage of information that does not contemplate electronic commerce. Certain current legislation restricts modern modes of communication by requiring the use of written, signed or original documents. The law of contract being the area of private law and the brain child of corporate world, the underlying postulate in any legal regime governing contractual relations is, that the contracting parties must get freedom to contract, adhere to the terms and conditions of contract and also get adequate redress in the event of breach thereof. American and international law on electronic contracts appears to have resolved the doubts previously applicable to 'shrink wrap' and 'clickwrap' contracts. Difficulty may arise in determining the appropriate jurisdiction of the execution and performance of a contract that has been entered into electronically. Merely entering into an electronic contract, by itself, does not establish 'minimum contracts' with another state. The exercise of personal jurisdiction by a state may be premised on the existence of the electronic contract, coupled with a party s deliberate and repeated contracts with the forum state. Negotiating, entering into, performing or breaching a contract may be sufficient to subject a party to personal jurisdiction under the 'long-arm' statutes of many states. The legal issues and problems arising from cyber contracts have not so far been properly addressed or adjudicated by our courts in India and so the scepticism of the contracting parties regarding the legal principles to be applied is not well founded despite the fact that the information Technology Act 2000 and 673 Www. Mactech.org assessed on

8 the allied amendments to Indian Penal Code, 1860; the Indian Evidence Act, 1872; the Bankers Book Evidence Act, 1891 and the Reserve Bank of India Act, 1934 is a timely legislative attempt to tackle some of the complicated legal issues and problems. The Information Technology Act is supplemental to the existing provisions of Contract Act In English Law, a contract made by a minor, is voidable at the option of the minor. This means that a minor can, on attaining majority, ratify a contract entered into by him when he was a minor. Under the Indian Contract Act, however, the position is different. A minor is absolutely incapable to enter into a contract. This means that the agreement is void ab initio. Such a contract cannot be ratified. The minor is not bound even after he attains the age of majority. Under English Law contracts without consideration are valid. The formal contracts of English Law are binding by their form alone and are older than the doctrine of consideration. Thus, although ingenious attempts have been made to treat consideration, itself, as a matter of form, this is paradoxical because the essence of consideration is exchange of value, regardless of any particular form. A contract without consideration is void under Indian contact act and cannot be legally binding or enforceable 675. Section 25, is an exception and states that contracts are valid even without 676 consideration 677. The present research work contains six chapters. The first chapter of present research is introduction which articulates the problem of study, Changing Concept of Contract-Recent Problems and Issues. It covers the research methodology, and gives an overview of literature which includes books, articles and various landmark judgments of Indian courts as well as English courts. The present study has sought to highlight the legal complexities encountered in negotiating a concept of contract under Indian Contract Act, 1872, and under post Indian Contract Act 678. The second chapter of present study is Concept of Contract under the Indian Contract Act, In this chapter the main problems which have arisen are two (1) deals with capacity to contract (2) deals with remedy (3) deals with standard form contracts. The third chapter is Concept of Contract: Changes in Present Scenario. In this chapter the study has sought to highlight the introduction of notions of contract, introduction of e-contract, kinds of e- contract, Indian position of e contract and escrow agreements out sourcing contracts, farming, and joint venture agreement. The main problems which have arisen in this chapter are deals with 674 Papers ssrn.com/so13/papers.com /cam? abstract id= assessed on ibid 676 Legalpundits.Indiatimes.com assessed on Law of Contract. assessed on assessed on

9 relating to e contract for example performance of e contract jurisdiction is the main issue. The fourth chapter is A Comparative study of contract law of India, America and U.K. From this chapter it has contained that the Indian Contract Act has borrowed extensively from the provisions of codes governing the law of contracts in other countries, but is mainly based on English law and, indeed, if there are no relevant domestic cases, Indian courts have taken into consideration English common law in the absence of express provisions in this Act. That probably goes some way to explaining why Indian law and English law have remained similar in terms of contract law principles despite the fact that India has had this codified law for nearly 150 years whilst the UK has continued to rely more on its common law principles. However, it should be noted that when the Indian Contract Act does deal with a specific matter then it is not permissible to draw on English principles of contract law, and you should certainly not fall into the trap of assuming that because a provision in the Act was originally derived from a familiar English law principle that it will now be applied in the same way under both laws 679. Under the English law, contracts are divided into formal contracts and simple contracts. A formal contract is one which is in writing, signed, sealed and delivered to the other party. All other contract is simple contracts. Formal contracts do not require any consideration but simple contract must be supported by consideration. No such distinction exists in India. All contracts expect those specified in section 25 and 185 must be supported by consideration 680 The Indian law of contract is based on common law contract principles which have been codified in the Indian Contract Act 681. Duty on good faith America and U.K. are different. In American contract interpretation by courts as well as good intention of the parties is more required than Indian and English contract In U.S. contract mistaken party can avoid the contract but mistaken party can not do so in England and India. The rationale behind the e-commerce legislations of the EU and the U.S. is similar in that they create legal certainty by validating electronic contracts. The fifth chapter deals with Judicial Articulation, this chapter highlighted the decisions from 1872 to-till date. The sixth chapter of present study is conclusion and suggestions. Difficulties of remote authentication and the resulting problems of attribution can be relegated to questions of proof and evidence not contract formation as such. Suggestions 679 Www. Lawgram.com assessed on Shriram lawworld.blogsport.com assessed on Www. Lawgram.com assessed on

10 The main suggestions for the problems found in present study are- 1. Sec 11 & 12 of Indian Contract Act 1872 state that minors are incompetent to enter into a contract. But these sections don't talk about the circumstances if a minor becomes part of an agreement, what would be nature of that agreement; whether that would be void or void able. It is entirely based on the case of Mohribibee v. Dhrmodash Ghosh. Where the court held that minors agreements are void ab initio. 2. My next suggestion is as to distinction in age of majority is different in the same circumstances. A person who has attained age attained of 18 years can entered into a contract under section 4 of Indian Majority Act but in case of a guardian appointed by court, minor can enter into a contract when he attains the age of 21 years and such person have right to vote at the age of 18 years, why this distinction is made out? Uniformity should be maintained by adding a provision to this effect. 3. Under the Indian Contract Act as regards the remedy against a fraudulent minor because the remedy is given under Section 33(2) a & b of Specific Relief Act 1963 are only discretionary in nature but not obligatory. 4. Contracts should be just, fair and reasonable. Contract terms should be disclosed to consumers before entering into a contract 1) Disclosure should be clear and simple. 2) The public and private sectors should check these disclosures practically. 3) Contracting parties should be conscious while making a contract. 4) Contracting parties should, be aware of contract terms. 5. Consumers should be conscious about the contents of contract to prevent fraud and deception. 6. Regulators must make more rules to remove unfair and deceptive practices in businessto-consumer standard form contracts. Disclosure itself is practices is not a sufficient answer to the problem, though better disclosure may be a step toward eliminating harmful provisions and practices; 7. The private and public sectors need to teach consumers the ways to understand the importance of fair contract terms. 8. The media needs to report about businesses that are doing the right thing to consumers by making their contracts just, fair and reasonable. 310

11 9. Courts should consider changing the presumption of enforceability of harmful terms not knowingly agreed to but buried in the fine print in standard form contracts between business and individual consumers Certifying authority should be universal which issue digital signature. 11. Company Act should be amended. 12. Corporate social responsibility should be of companies. 13. Electronic contracts are enforceable as traditional papers were enforceable. As legal rules of evidence to such e - contracts cannot be applied, so there is a problem in interpreting, adopting and compiling many other existing legal terms in the context of electronic transaction As the information technology 2000 is silent as regards mode of assent or acceptance of click wrap agreement the parties can be released from performance of contract. 15. Meeting of minds is not possible while making agreement through so some rules need to be made at international level for this. 16. In case of shrink wrap agreements can the mere reading of an agreement followed by the opening of a package bind the purchaser to the license agreement? Though there are legal precedents, which suggest that a signed agreement is not necessary to bind a party to an agreement; the answer is still undivided since a major legal test of the shrink wrap license has yet to take place There is need to check the instruction of privacy that consists of messages that contain forbidden publicity of medicine sexually explicit inform action. 18. There should be special rules made out universally for the problems of hacking, internet security, computer viruses corrupting the documents and files, etc, other nuisance which need to address. 19. The best course of action is to consider law focusing on the manner of disclosure of B2C online contract terms as it is possible to activate a desirable substantive result for the consent on the same thing in the same sense. 20. Many terms need to be fixed, while deciding the question of jurisdiction like the cause of action, LP address, domain names or geographical location of information system. 21. There should be universal rule of acceptance. 682 faircontracts.org assessed on assessed on Www. Mactech.org assessed on

12 22. Legal capacity, is not explicitly dealt but the information technology Act, 2000 has ousted certain written instruments from its scope-negotiable Instrument, power of attorney, trust will and contract of sale or conveyance of immovable property. 23. Adequate security measures must be ensured to enhance and permit the parties to prove the integrity of their system with respect to the receipt retention and retrieval of digital agreements The parties entering into a contract on the internet should be aware of the consumer protection laws and provision in the MRTP Act, which can regulate the pricing of goods. 25. Law relating to right of disposal of information, right of information, protection of secrecy and privacy, responsibility for data and information should be universal Rules and regulation should be made on environment protection if there is threat or risk to environment by contracting parties 27. Rules relating to jurisdiction of courts on contract conflicts should be universal. 28. Under section '85 A, '85 B and 85 C, of Evidence Ac,1872 relating to presumption of electronic agreements is that the court shall presume that every electronic record purporting to be an agreement containing the digital signature of the parties was so concluded by affixing the digital signature of the parties to be genuine There should be amendment in private international law as regarding the place of jurisdiction to be decided decide as it is a global problem o assessed on Www. Youngworld.com assessed on31.o