Do you have an uneasy feeling when you “agree” to all the legal terms on websites and the Internet? You feel like you should read the terms before you accept them, but you don’t have time. Also, you wouldn’t understand them if you read them and also you have no choice but to agree to the terms, so why not save some brain cells and just click “I agree” and get on with your life? Well the Internet has revolutionised people’s way of communicating. The way people are doing businesses has also changed the Internet. It created a new kind of trade called e-commerce. E-commerce is growing ever since the dot com boom worldwide. For instance, a buyer can buy goods from a vendor from wherever he wants to (across the globe) with just a few clicks, without having to move from their place. How is all this possible? Because the e-commerce brought about a new form of contracting and changed the view of internet. These e-contracts are commonly known to us and are used by us in our daily lives. However, let us first understand what is contract? It is an agreement between two private parties which creates mutual legal obligations towards each other. A contract can either be oral or written. In India, the Indian Contract Act, 1872 governs all agreements and contracts, including online contracts.


Enter into any business agreement and it is said that it will be mailed to you. Why? Because these days, most companies send contracts via email so they can be signed faster, and work can be completed immediately with haste. Not only companies but also the lawyers and everyone working in their profession prefer their clients to sign the requisite papers online. All online contracts are valid and enforceable in nature. These documents include all kinds of paper.

Let’s talk how many consumers understand the Online Contracts They “Agree” To. Well, consumers have the opportunity to read their contracts but consumers freely choose to ignore contracts. If consumers choose not to do read, the argument goes, they have no one else to blame.

Online contract is an agreement signed and executed electronically, usually over internet. An Online contract is conceptually very similar and is drafted in the same manner in which a traditional paper-based contract is drafted. In case of an online contract, the seller who intends to sell their products, present their products, prices and terms for buying such products to the prospective buyers. In turn, the buyers who are interested in buying the products either consider or click on the ‘I Agree’ or ‘Click to Agree’ option for indicating the acceptance of the terms presented by the seller or they can sign electronically. The most common contracts are “End User License Agreement” where the installation of software or terms/conditions/ user agreement on the Website requires a click on the” I agree” button and we all have to agree with those terms and conditions. The communication is basically made between two computers through servers. Online can be categorized into three types mainly i.e. browse or web wrap contracts, shrink wrap contracts and clickwrap contracts.

· Shrink-wrap agreements are usually the licensed agreement applicable in case of software products buying. In case of shrink-wrap agreements, with opening of the packaging of the software product, the terms and conditions to access such software product are enforced upon the person who buys it.

· Click- wrap agreements are web-based agreements which require the assent or consent of the user by way of clicking “I Agree’ or “I Accept” or “Ok” button on the dialog box. In click –wrap agreements, the user basically have to agree to the terms and conditions for usage of the particular software. Users who disagree to the terms and conditions will not be able to use or buy the product upon cancellation or rejection.

· Browse wrap agreement is an agreement made intended to be binding on two or more parties by the use of website. In case of browse wrap agreement, a regular user of a particular website deemed to accept the terms of use and other policies of the website for continuous use.


The Information Technology (Amendment) Act, 2008 substituted the term ‘digital signature’ with the term ‘electronic signature’. A digital signature is technology specific and is irreversibly unique to both the document and the signer. Before digital signature providers became widespread, people would create an image of their signatures, then digitally paste the image into a document as their signature. A digital signature actually provides a greater degree of security than a handwritten signature. The recipient of a digitally signed message can verify both that the message originated from the person whose signature is attached and that the message has not been altered either intentionally or accidentally since it was signed. The fundamental drawback of online contracts is that if there is no alternate means of identifying a person on the other side than digital signatures or a public key, it is possible to misrepresent one’s identity and try to pass of as somebody else.


In a country like India, where the literacy rate is not so high, the concept of ‘Digital India’ is a far reach. People still feel insecure to do online based transactions mainly because the terms and conditions of such contracts are not transparent. The evidentiary value of electronic contracts has been given recognition and can be understood in the light of various sections of Indian Evidence Act. Sec 65B of the Indian Evidence Act deals with the admissibility of electronic records. Section 85A, 85B, 88A, 90A and 85C of the Indian Evidence Act deal with the presumptions as to electronic records. Sec 85A has been inserted later to confirm the validity of electronic contracts. It says that any electronic record in the form of electronic agreement is concluded and gets recognition the moment a digital signature is affixed to such record. The presumption of electronic record is valid only in case of five years old record.


An online contract is designed and enacted with an aim to provide security to online transactions. Online contract is a much efficient concept in the interest of time and money in comparison to the traditional method of paper and writing contract. The e-contracts have their own merits and demerits. On the one hand they reduce costs, saves time, fasten customer response and improve service quality by reducing paper work, thus increasing automation. With this, E-commerce is expected to improve the productivity and competitiveness of participating businesses by providing unprecedented access to an on-line global market place with millions of customers and thousands of products and services. On the other hand, since in electronic contract, the proposal focuses not on humans who make decisions on specific transactions, but on how risk should be structured in an automated environment. Therefore, the object is to create default rules for attributing a message to a party so as to avoid any fraud and discrepancy in the contract. But to keep a pace with the fast advancement of the technology, a separate legislation in regard to electronic or online contract has to be enacted in India.

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