INTERNATIONAL JOURNAL OF RESEARCH AND ANALYSIS VOLUME 4 ISSUE 1

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1 EVIDENTIARY VALUE OF E-CONTRACT IN THE LIGHT OF I.T. ACT, 2000 Introduction * PRAVEEN KUMAR MALL Contracts have become so common in daily life that most of the time we do not even realize that we have entered into contract. Right from hiring a taxi to buying airline tickets online, innumerable things in our daily lives are governed by contracts. The Indian Contract Act, 1872 governs the manner in which contracts are made and executed in India. It governs the way in which the provisions in a contract are implemented and codifies the effect of a breach of contractual provisions. It provides a framework of rules and regulations which govern formation and performance of contract. The rights and duties of parties and terms of agreement are decided by the contracting parties themselves, in case of nonperformance. In present scenario with the recent advancement in the areas of computer technology, have in changing the life of people. The communication is no more restricted due to the constraints of geography and time. Information is transmitted and received widely and more rapidly than ever before. And this is where the electronic commerce offers the flexibility to business environment in terms of place; it s an undisputed fact that E-Commerce has become a part of our daily life. Electronic contracts (contracts that are not paper based but rather in electronic form) are born out of the need for speed, convenience and efficiency There was initially an apprehension amongst the legislatures to recognize this modern technology, but now many countries have enacted laws to recognize electronic contracts. The conventional law relating to contracts is not sufficient to address all the issues that arise in electronic contracts. The Information Technology Act, 2000 (IT Act) solves some of the peculiar issues that arise in the formation and authentication of electronic contracts 130

2 Definition of contract The term contract is defined in sec 2(h) of the Indian contract act,1872 as an agreement enforceable by law is a contract 1 ; thus for the formation of a contract there must be 1. An agreement, and 2. The agreement should be enforceable by law. Definition of e-contract E-contracts are conceptually very similar to traditional (paper based) commercial contracts. E- contract is any kind of contract which has been made through electronic devise 2. And traditional contract principles and remedies also apply to E-contracts. Essentials of an e-contract; As in every other contract, an e-contract also requires the following necessary ingredients: 1. An offer needs to be made; In many transactions (whether online or conventional) the offer is not made directly one-on-one. The consumer browses the available goods and services displayed on the website and then choose what he would like to purchase. The offer is not made by website displaying the items for sale at a particular price. This is actually an invitation to offer and hence is revocable at any time up to the time of acceptance 3. The offer is made by the customer on placing the products in the virtual basket or shopping cart for payment The offer needs to be accepted; As stated earlier, the acceptance is usually undertaken by the business after the offer has been made by the consumer in relation with the invitation to offer. An offer is revocable at any time until the acceptance is made. 1 Sec-2(h) of Indian Contract Act, Wigand, R.T. Electronic Commerce: - Definition, Theory and context, The Information Society, Vol 13, No: 1 3 Singh Dr. Avatar Contract and Specific Relief Act, Eastern Book Company, (10th edn. 2008) 4 Diwan Parag, Suri,R.K., Kaushik, Sanjay Computer Networks and E-Commerce Pentagan Press, New Delhi, (edn. 2000) 131

3 Procedures available for forming electronic contracts include: Offers and acceptances can be exchanged entirely by , or can be combined with paper documents, faxes, telephonic discussions etc 5. Web Site Forms: The seller can offer goods or services (e.g. air tickets, cell-phones etc) through his website. The customer places an order by completing and transmitting the order form provided on the website. The goods may be physically delivered later (e.g. in case of clothes, mobiles etc) or be immediately delivered electronically (e.g. e- tickets, mobiles, etc). Online Agreements: Users may need to accept an online agreement in order to be able to avail of the services e.g. clicking on I accept while installing software or clicking on I agree while signing up for an account There has to be lawful consideration; Any contract to be enforceable by law must have lawful consideration, i.e., when both parties give and receive something in return. 4. There has to be an intention to create legal relations; If there is no intention on the part of the parties to create legal relationships, then no contract is possible between them. Usually, agreements of a domestic or social nature are not contracts and therefore are not enforceable 7, e.g., a website providing general health related information and tips. 5. The parties must be competent to contract; Contracts by minors, lunatics etc are void. All the parties to the contract must be legally competent to enter into the e-contract. 6. There must be free consent; Consent is said to be free when there is absence of coercion, misrepresentation, undue influence mistake or fraud 8. In other words, there must not be any subversion of the will of any party to the contract to enter such contract. Usually, in online 5 Maymand, M.M. E-Commerce, Eastern Book Company Deep & Deep Publications, New Delhi, (edn. 2005) 6 Diwan Parag & Singh, Dharm Bir IT encyclopaedia.com 4 Computer Networks and E-commerce, Pentagon Press, New Delhi, (1st edn.) 7 Singh Dr. Avatar Contract and Specific Relief Act, Eastern Book Company, (10th edn. 2008) 8 Sec-14 of Indian contract Act,

4 contracts, especially when there is no active real-time interaction between the contracting parties 9, e.g., between a website and the customer who buys through such a site, the click through procedure ensures free and genuine consent. 7. The object of the contract must be lawful; A valid contract presupposes a lawful object 10. Thus a contract for selling narcotic drugs or pornography online is void because there object is not lawful. 8. There must be certainty and possibility of performance; A contract, to be enforceable, must not be vague or uncertain and there must be possibility of performance 11. A contract, which is impossible to perform, cannot be enforced, e.g., where a website promises to sell land on the moon 12. Relevant provisions under IT Act; Indian law provides for the authentication of electronic records by affixing a digital signature. The law provides for use of an asymmetric crypto system and hash function and also recommends standards to be adhered. Chapter IV of the Information Technology Act, 2000 contains sections 11, 12 and 13 and is titled Attribution, Acknowledgment and Dispatch of Electronic Records Attribution of electronic records According to section 11 of the IT Act, 2000 An electronic record shall be attributed to the originator (a) if it was sent by the originator himself; (b) By a person who had the authority to act on behalf of the originator in respect of that electronic record; or (c) By an information system programmed by or on behalf of the originator to operate automatically S Shurety, E-Business with Net.Commerce (New Delhi: Prentice Hall, PTR) Sec-24 of Indian contract Act, Sec-29 of Indian contract Act, Singleton Susan, Solicitors Singleton, E-Commerce: A Practical Guide to the Law Gower Publication Sec-11 of Information Technology Act,

5 According to section 2(1) (za) of the IT Act, originator is a person who: 1. sends, generates, stores or transmits any electronic message or 2. causes any electronic message to be sent, generated stored or transmitted to any other person 14. Acknowledgment of Receipt According to section 12(1) of the IT Act; Where the originator has not agreed with the addressee that the acknowledgment of receipt of electronic record be given in a particular form or by a particular method, an acknowledgment may be given by (a) any communication by the addressee, automated or otherwise; or (b) any conduct of the addressee, sufficient to indicate to the originator that the electronic record has been received 15. According to section 12(1) (b) of the IT Act, Addressee 16 means a person who is intended by the originator to receive the electronic record but does not include any intermediary. According to section 12(2) of the IT Act; Where the originator has stipulated that the electronic record shall be binding only on receipt of an acknowledgment of such electronic record by him, and then unless acknowledgment has been so received, the electronic record shall be deemed to have been never sent by the originator 17. According to section 12(3) of the IT Act; Where the originator has not stipulated that the electronic record shall be binding only on receipt of such acknowledgment, and the acknowledgment 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 acknowledgment has been received by him and specifying a reasonable time by which the acknowledgment must be received by him and if no 14 Sec-2(1)(za) of Information Technology Act, Sec-12(1) of Information Technology Act, Sec-12(1)(b) of Information Technology Act, Sec-12(2) of Information Technology Act,

6 acknowledgment 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 18. Time and place of dispatch and receipt; According to section 13(1) of the IT Act 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 19. According to section 13(2) of the IT Act; 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 computer resource of the addressee 20 According to section 13(3) of the IT Act; 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 Sec-12(3) of Information Technology Act, Sec-12(1) of Information Technology Act, Sec-13(2) of Information Technology Act, Sec-13(3) of Information Technology Act,

7 According to section 13(4) of the IT Act; The provisions of sub-section (2) shall apply notwithstanding that the place where the computer resource is located may be different from the place where the electronic record is deemed to have been received under sub-section (3)of section(13) 22. According to section 13(5) of the IT Act; For the purposes of this section, (a) If the originator or the addressee has more than one place of business, the principal place of business, shall be the place of business; (b) If the originator or the addressee does not have a place of business, his usual place of residence shall be deemed to be the place of business; (c) "Usual place of residence", in relation to a body corporate, means the place where it is registered 23 Evidentiary Value under Indian Evidence Act; It is pertinent to contextualize at this juncture that evidence recorded or stored by availing the electronic gadgets is given the evidentiary status. For instance: the voice recorded with the help of a tape recorder. Now-a-days, the digital voice recorder, digital cameras, digital video cameras, video conferencing are adding a new dimension to the evidentiary regime. The emergence of information and communication witnessed sea change by elevating the status of the evidence recorded, generated or stored electronically from the secondary to primary evidential status 24. The shift in the paradigm owes to the efforts of the working group of the UNCITRAL Model law on electronic commerce and assigning of the legal recognition to e-record or data message 25. The evidentiary value of e-contracts can be well understood in the light of the following sections of Indian Evidence Act, 1872 Sections 85A, and 85B, 88A, 90A and 85C deals with the presumptions as to electronic records. 22 Sec-13(4) of Information Technology Act, Sec-13(5) of Information Technology Act, Joseph,P.T. E-Commerce an Indian perspective PHI Learning Pvt Ltd. (3rd edn. 2008) 25 UNCITRAL Model law on Electronic Signatures with Guide to enactment

8 According to Section 85A of Indian Evidence Act, 1872; As regards presumption to electronic agreements, this section is incorporated. It says that every electronic record of the nature of an agreement is concluded as soon as a digital signature is affixed to the record 26. Section 85A has been added in order to ensure the validity of e-contracts. But there are some restrictions as regards the presumptive value. The presumption is only valid to electronic records, electronic records that are five years old and electronic messages that fall within the ambit of Section 85B, Section 88A and Section 90A of Indian Evidence Act. According to Section 85B of Indian Evidence Act, 1872; Section 85B provides that the court shall presume the fact that the record in question has not been put to any kind of alteration, in case contrary has not been proved. The secure status of the record may be demanded till a specific time 27. The digital signature should also be presumed to have been affixed with an intention of signing and approving the electronic record. Further it has been provided that the section should not be misread so as to create any presumption relating to the integrity or authenticity of the electronic record or digital signature in question. According to Section 88A of Indian Evidence Act, 1872; 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 28. This section is self-explanatory as it purports to follow the basic rules of a valid hard-copy agreement. The words may presume authorize the court to use its discretionary power as regards presumption. Sections 85A and 85B contained the words shall presume which expressly excluded this discretionary power of the court. According to Section 90A of Indian Evidence Act, 1872; In case of an electronic record being five years old, if proved to be in proper custody, the court may presume that the digital signature was affixed so as to authenticate the validity of that agreement. The digital signature can also be affixed by any person authorized to do so 29. For the purpose of this section, electronic records are 26 Sec-85(A) of Indian Evidence Act, Sec-85(B) of Indian Evidence Act, Sec-88(A) of Indian Evidence Act, Sec-90(A) of Indian Evidence Act,

9 said to be in proper custody if they are in the custody of the person with whom they naturally be. An exception can be effected in case circumstances of a particular case render its origin probable. As far as a digital signature certificate is concerned, the court shall presume that the information listed in the certificate is true and correct. Inclusion of the words shall presume again relates to the expressed exclusion of the discretionary power of the court. According to Section 65B of Indian Evidence Act, 1872; Section 65B talks about admissibility of electronic records. It says that any information contained in an electronic record which is printed on a paper or stored/recorded/copied on optical/magnetic media produced by a computer shall be deemed to be a document and is admissible as evidence in any proceeding without further proof of the original 30.The information contained should have been regularly fed into the computer, during that period, in the ordinary course of activities. The computer was operating properly during that period and if not, it would not have affected the accuracy of data entered. A certificate issued is also admissible if it contains a statement which: Identifies the electronic record containing the statement. Conclusion To end with, it can be said that electronic contracts are almost same as other hard copy contracts as far as its evidentiary value is concerned and in case of any discrepancy there are certain prerequisites that fill the lacunae. All electronic contracts are valid contracts as they are legalized by the Information Technology Act and one could be made liable if there is any infringement with the terms and conditions. 30 Sec-65(B) of Indian Evidence Act,