Understanding online contract law: A comprehensive overview
Tanvi Sondkar
Advocate Balasaheb Apte College of Law
This blog is written by Tanvi Sondkar, a Third-Year Law Student of Advocate Balasaheb Apte College of Law
Understanding online contract law: A comprehensive overview.
Recent years have seen tremendous advancements in technology. As such, there has been a significant shift in how people live, engage, and conduct business. Geographical boundaries no longer impede communication. Information travels farther and faster than ever before, with no boundaries. The usage of e-commerce has made electronic commerce a part of our lives, eliminating many of the obstacles that existed in the past. Electronic commerce refers to the process of conducting business through computerized communication networks, where goods, services, and information are bought and sold. The use of e-contracts has quickly increased with the rise of e-commerce.
Nonetheless, the concept of electronic contracts remains ambiguous and faces numerous challenges. Indian contract law expressly recognizes the common contractual rule. The Indian Contract Act, 1872 does not set any specific rules about e-contracts.
An online contract is electronically modelled, signed, and completed, usually over the Internet. An online contract has very similar conceptual foundations and is drafted in the same manner as a standard paper-based contract. The seller that wants to sell their items must display their products, prices, and terms of purchase to potential buyers in the event of an online contract. If a buyer decides they want to buy the products, they can electronically sign the contract or indicate their agreement by clicking the "I Agree" or "Click to Agree" buttons. Once the terms are agreed upon and the money is paid, the transaction can be completed. In essence, servers provide communication between two PCs.
Contracts created via the Internet are very different from those created through earlier channels. The main issue with online contract creation is the applicability of the rule of offer and acceptance. In reaction to client activities, the website acts as the agent as well as the retailer. If the user accepts the terms and gives their agreement, the website is required to offer them to them. After the appropriate payment is received, the consumer and the retailer's website finalize the terms of the transaction.
There are various types of online contracts:
The three main types of online contracts are shrink-wrap agreements, click-or web-wrap agreements, and browse-wrap agreements. These kinds of online contracts are something we regularly encounter in our day-to-day lives.
1. Shrink-wrap:
When buying software products, these license agreements are usually important. If a shrink-wrap agreement is in place, the customer agrees to the terms and conditions that apply when they open the box and access the software product. Shrink-wrap agreements are, in short, those that the user agrees to when downloading and installing software from a website. Antivirus software, Photoshop, and the Microsoft Office suite are a few examples. There are neither reliable court decisions nor well-established precedents in India about the legality of shrink-wrap agreements.
2. Click-Wrap:
Web-based contracts known as "Click-Wrap" agreements need the user to click the "I Agree," "I Accept," or "Ok" buttons on the dialog box to approve the contract. To utilize the particular application or complete the purchase, users must effectively agree to the terms and conditions of click-wrap agreements. Those who disagree with the terms and conditions will not be able to use or purchase the goods after it is cancelled or rejected. Web-wrap contracts are almost always followed. The terms and conditions are disclosed to users before acceptance. For example, internet shops such as Flipkart, Amazon, and so on.
3. Browse-Wrap:
A “browse-wrap” agreement is created through the use of websites and is meant to bind two or more parties. When a website has a browse wrap agreement, frequent users are assumed to have accepted the terms of use and other policies to continue using the website. Google or Facebook, for example.
Case Law: Hotmail Corporation v. Van Money Pie Inc, et al. The court for the Northern District of California upheld in the well-known case of Hotmail Corporation that the defendant is bound by the terms of the license because he clicked on the “I agree” box, indicating his assent to be bound, which is when the validity of clickwrap agreements was first considered.
The legal position in India. The Information Technology Act 2000 has made certain provisions for the validity and the formation of online contracts but no specific legislation has been incorporated for the validity of online contracts in India. Sections 85A, 85B,88A, 90A, and 85C of the Indian Evidence Act deal with the presumptions as to electronic records. Section 85A has been inserted later to confirm the validity of electronic contracts. It says that any electronic record in the form of an electronic agreement is concluded and gets recognition the moment a digital signature is affixed to such record.
Conclusion:
Many people have a propensity to agree to terms and conditions without completely reading them. However, doing so creates a legally binding agreement whose provisions may be strictly enforced against them. These steps should only be taken after thoroughly reviewing the contract’s content. Even though [1]We see these online contracts all the time. Most people are unaware of the legal complexity that surrounds them; using online contracts presents both technological and legal difficulties.
References;
[1] https://ironcladapp.com/journal/contracts/online-contracts/
3 https://blog.ipleaders.in/all-you-know-about-online-contracts/
4 https://www.indiafilings.com/learn/valid-contract/
5 Shetty, D. K. (n.d.). The Simplest Book on Contract Law. Navneet Publications .