Rising ubiquity of e-contracts

Rising ubiquity of e-contracts . Critically examine the emergence of e-contracts in the Indian scenario

Rupak Ghosh

Number of words . Introduction: 155, Objective: 144, Methodology:56, Main body 6466, Conclusion: 131

Total: 6954

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Acknowledgements .

It would not have been possible for me to carry out this study without the encouragement and assistance of Rainmaker. I owe a large measure of gratitude to Mr Shouvik Kr. Guha, Research Associate, of the West Bengal National University of Juridical Sciences. I am thankful to Sankalp Sharma and Aparna Das of Rainmaker for their kind assistance and guidance.

I am extremely grateful to everyone from Rainmaker and West Bengal National University of Juridical Sciences for designing this nice course.

Rupak Ghosh

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Preface .

The revolutionary progresses in information technology have a deep rooted impact in global communication and that’s also having a great impact in the national as well as the global business environment.

.Along with its growing importance it also has challenges due to technological issues and their legal consequences.

In this study the key elements of e-contract (in light of the Indian Contract Act, 1872) has been discussed. Its various issues related to Evidence Act, IT Act, Stamping laws, consumer disputes has been covered.

E-contract is new phenomenon in modern business, so there are some ambiguities in technical and legal issues but will be solved.

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Content . Page number Acknowledgements i Preface ii Content iii

Page number Introduction 1 Objective 1 Methodology 1 Main body 2-20 Click-wrap / Web-wrap agreements 2 - 3

Shrink-wrap / Box-wrap agreement 4 Electronic Data Interchange 4 - 6 Basic Elements of E-Contracts 7 - 8 Relevant Evidence Act provisions 8 - 11 Relevant IT Act provisions 11 - 15 Stamping laws and e-contract 15 Consumer Disputes and E-Contracting 15 - 16 Conflict of Laws in the Internet Era 16 - 19 Conclusion 19 - 20

Bibliography 21

Rising ubiquity of e-contracts

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Introduction:

The revolutionary progresses in information technology have a deep rooted impact in global communication and that’s also having a great impact in the national as well as the global business environment. The business environment is full of agreements between individuals or other "legal persons". It is very basic thing of business, in other words it’s the basis of modern world. Law of Contract (including Electronic Contracts) and the Sale of Goods and the Partnership Act governs versus aspects of contractual agreements those are very fundamental elements of business. As communication is very basic element of contract so the Law of contract is also accepted that technology progress and Electronic contracts (contracts that are not paper based but rather in electronic form) are born out of the need for speed, convenience and efficiency. Due to the ways in which it differs from traditional Contract, electronic Contract raises some new and interesting technical and legal challenges.

Objective: E-contract is the newest tools of modern business. It made the revolutionary change in business world by its speed, accessibility and cost effectiveness. Like every new things it also have challenges from legal and technological aspects. This challenging in nature makes it very attractive to me. As legal issues related to it is in the very beginning stage of development so this study will enlighten me regarding the basic philosophy and logical reasoning behind legal system very easily. This research will enlighten me regarding the logical reasoning behind laws related to e-contracts and various perspectives in Indian context. There are various technological aspects as well as legal consequences related to it. The issue of identity over Internet is also very important when we’re addressing e-contracts. Information technology Act 2000 is also very much relevant to it. So it seems very interesting topic for study.

Methodology: The study has been conducted mainly through secondary data analysis. Sources are mainly legal documents like judgments of some cases, legislations and various other literatures. The analyses of various websites give an idea regarding the processes of e-contract in practical field. The analysis of legislations and some cases are the main backbone of this research.


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Main body E-contract is a contract modeled, specified, executed and deployed by a software system. 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. Electronic contract can be done in many ways. They can be divided into following categories:

The Click-wrap /Web-wrap Agreements. The Shrink-wrap /Box-wrap Agreements. The Electronic Data Interchange or (EDI).

Click-wrap / Web-wrap agreements are those whereby a party after going through the terms and conditions provided in the website or program has to typically indicate his assent to the same, by way of clicking on an "I Agree" icon or decline the same by clicking "I Disagree". These types of contracts are extensively used on the Internet, whether it be granting of a permission to access a site or downloading of a software or selling something by way of a website.

You enter into Agreement with Google, by clicking I accept Create my account


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Online purchase can also be done by this type of process.

The leading case on browse-wrap agreements is Specht v. Netscape Communications Corp. , where free downloads of Netscape's software obtained web-usage information from its users, presenting privacy concerns. The browse-wrap terms included an arbitration clause. Upon installation, users were merely told to "please review and agree to the terms of the Netscape Smart Download software license agreement before downloading and using the software." The court ruled that this was an invitation and not a condition, and could not constitute assent. Providers of online services and software have the option of click-wrap agreements, and have to bear with the consequences of failing to use it. However, it appears that terms on a browse-wrap agreement would bind competing businesses.

Based on the foregoing cases, businesses would do well to keep some best practices in mind while deploying E-Contracts: 1. Online agreements should be as conspicuous as possible. 2. Whenever possible, use click-wrap rather than browse-wrap and the viewing of the terms should be mandatory. This could be accomplished by graying out Accept until the user has scrolled to the bottom on the agreement. 3. A notice should be included near the Accept button to make the user grasp the significance of his actions, such as "By clicking Accept, you are entering into a legally binding agreement." 4. Keep a record of the moment that the user clicked Accept

In few clicks the online purchase can be done… and Himalaya Drug Company will enter into an agreement to send described product.


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Shrink-wrap / Box-wrap agreement: Shrink-wrap agreements are paper based software license agreements. They are generally attached to the outside box of the software which is covered by plastic shrink wrap. The license is agreement is clearly visible and readable through the shrink wrap. Once an individual breaks the seal of the shrink wrap and opens the box, they essentially agree to the terms and conditions of the software license. Box-wrap agreements consist of a product or piece of software that has been shipped to a consumer in a box. As soon as the consumer receives and opens the box, they will be presented with the company’s license agreement in regards to the software or product. If the consumer doesn’t agree to the company’s software license agreement, then he has to seal the box back up and ship it back to the company without touching the software inside.

License Agreements are Shown during Installation Process of Software Electronic Data Interchange or EDI is “The electronic communication between trading partners of structured business messages to common standards from computer application to computer application". The EDI standards were designed to be independent of communication and software technologies. EDI can be transmitted using any methodology agreed to by the sender


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and recipient. This includes a variety of technologies, including modem (asynchronous and synchronous), FTP, e-mail, HTTP, AS1, AS2, etc. It is important to differentiate between the EDI documents and the methods for transmitting them. When they compared the synchronous protocol 2400 bit/s modems, CLEO devices, and value-added networks used to transmit EDI documents to transmitting via the Internet, some people equated the non-Internet technologies with EDI and predicted erroneously that EDI itself would be replaced along with the non-Internet technologies. These non-internet transmission methods are being replaced by Internet protocols such as FTP, telnet, and e-mail, but the EDI documents themselves still remain In other words they are contracts used in trade transactions which enables the transfer of data from one computer to another in such a way that each transaction in the trading cycle (for example, commencing from the receipt of an order from an overseas buyer, through the preparation and lodgement of export and other official documents, leading eventually to the shipment of the goods) can be processed with virtually no paperwork. Here unlike the other two there is exchange of information and completion of contracts between two computers and not an individual and a computer.


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A Contract done by e-mail


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Basic Elements of E-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.

As in every other contract, an electronic contract also requires the following necessary ingredients:

I. 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 merchant's website and then chooses 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. The offer is made by the customer on placing the products in the virtual 'basket' or 'shopping cart' for payment.

II. 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.

Procedures available for forming electronic contracts include:

a. E-mail: Offers and acceptances can be exchanged entirely by e-mail, or can be combined with paper documents, faxes, telephonic discussions etc.

b. Web Site Forms: The seller can offer goods or services (e.g. air tickets, software 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, music CDs etc) or be immediately delivered electronically (e.g. e-tickets, software, mp3 etc).

c. 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 email account.

III. 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. Therefore, if an auction site facilitates a


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contract between two parties where one person provides a pornographic movie as consideration for purchasing an mp3 player, then such a contract is void.

IV. 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, e.g., a website providing general health related information and tips.

V. 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 contract.

VI. There must be free and genuine consent

Consent is said to be free when there is absence of coercion, misrepresentation, undue influence or fraud. 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 contracts, especially when there is no active real-time interaction between the contracting parties, e.g., between a website and the customer who buys through such a site, the click through procedure ensures free and genuine consent.

VII. The object of the contract must be lawful

A valid contract presupposes a lawful object. Thus a contract for selling narcotic drugs or pornography online is void.

VIII. 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. A contract, which is impossible to perform, cannot be enforced, e.g., where a website promises to sell land on the moon.

Relevant Evidence Act provisions

Evidence recorded or stored by availing the electronic devices is given the evidentiary status. For instance: the voice recorded with the help of a tape recorder, the digital voice recorder, digital cameras, digital video cameras, video conferencing have been added to new evidentiary assets. Justice Gururajan, of the Karnataka High Court also has already held in a civil suit that video conferencing evidence is a valid evidence.

The position of e-documents in the form of SMS, MMS and email in India is well demonstrated under the law and the interpretation provided in various cases. In State of


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Delhi vs Mohd Afzal & Others, 2003(3) 11 JCC 1669 it was held that electronic records are admissible as evidence. If someone challenges the accuracy of a computer evidence or electronic record on the grounds of misuse of system or operating failure or interpolation, then the person challenging it must prove the same beyond reasonable doubt. The court observed that mere theoretical and general apprehensions cannot make clear evidence defective and in admissible. This case has well demonstrated the admissibility of electronic evidence in various forms in Indian courts.

The evidentiary value of e-contracts can be well understood in the light of the following sections of Indian Evidence Act. Sections 85A, 85B, 88A, 90A, and 85C deals with the presumptions as to electronic records whereas Section 65B relates to the admissibility of electronic record. The above mentioned sections can be explained as follows:

Section 85A: 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. 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.

Section 85B: 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. 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.

Section 88B: 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, but the court shall not make any presumption as to the person by whom such message was sent.

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.

Section 90A: In case of an electronic record being 5 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. For the purpose of this section, electronic records are said to be in proper custody if they are in the custody of the person with whom they


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naturally be. An exception can be effected in case circumstances of a particular case render its origin probable.

Section 85C: 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.

Section 65B: 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, in case the following conditions are satisfied:

The evidentiary value of electronic records is widely discussed under section 65A and 65B of the Evidence Act, 1872. The sections provide that if the four conditions listed are satisfied any information contained in an electronic record which is printed on paper, stored, recorded or copied in an optical or magnetic media, produced by a computer is deemed to be a document and becomes admissible in proceedings without further proof or production of the original, as evidence of any contacts of the original or any facts stated therein, which direct evidence would be admissible.

The 4 Required Conditions

• The computer output containing such information should have been produced by the computer during the period when the computer was used regularly to store or process information for the purpose of any activities regularly carried on during that period by the person having lawful control over the use of the computer.

• During such period, information of the kind contained in the electronic record was regularly fed into the computer in the ordinary course of such activities.

• Throughout the material part of such period, the computer must have been operating properly. In case the computer was not properly operating during such period, it must be shown that this did not affect the electronic record or the accuracy of the contents.

• The information contained in the electronic record should be such as reproduces or is derived from such information fed into the computer in the ordinary course of such activities.

It is further provided that where in any proceedings, evidence of an electronic record is to be given, a certificate containing the particulars prescribed by 65B of the Act, and signed by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities would be sufficient evidence of the matters stated in the certificate.

The supreme court in State v Navjot Sandhu (2005) 11 SCC 600. while examining the provisions of newly added section 65B, held that in a given case, it may be that the


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certificate containing the details in sub-section 4 of section 65B is not filed, but that does not mean that secondary evidence cannot be given. It was held by the court that the law permits such evidence to be given in the circumstances mentioned in the relevant provisions, namely, sections 63 and 65 of the Indian Evidence Act 1872. Paragraph 150 of the judgment which is apposite, reads as under: 150. According to Section 63, secondary evidence means and includes, among other things, copies made from the original by mechanical processes which in themselves insure the accuracy of the copy, and copies compared with such copies.

Section 65 enables secondary evidence of the contents of a document to be adduced if the original is of such a nature as not to be easily movable. Hence, printouts taken from the computers/servers by mechanical process and certified by a responsible official of the service-providing company can be led in evidence through a witness who can identify the signatures of the certifying officer or otherwise speak of the facts based on his personal knowledge. Irrespective of the compliance with the requirements of section 65-B, which is a provision dealing with admissibility of electronic records, there is no bar to adducing secondary evidence under the other provisions of the Indian Evidence Act 1872, namely, sections 63 and 65.

The evidentiary value of an electronic record totally depends upon its quality. The Indian Evidence Act, 1872 has widely dealt with the evidentiary value of the electronic records. According to section 3 of the Act, evidence means and includes all documents including electronic records produced for the inspection of the court and such documents are called documentary evidence. Thus the section clarifies that documentary evidence can be in the form of electronic record and stands at par with conventional form of documents.

As per the IT (Amendment) Act, 2008, Section 79A empowers the central government to appoint any department, body or agency as examiner of electronic evidence for providing expert opinion on electronic form of evidence before any court or authority.

Relevant IT Act provisions

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 Despatch of Electronic Records.

Attribution of Electronic Records

According to section 11 of the IT Act

11. An electronic record shall be attributed to the originator—


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(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.

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.

The term originator does not include an intermediary.

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.

According to section 2(1)(b) of the IT Act, Addressee means a person who is intended by the originator to receive the electronic record but does not include any intermediary.

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 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.

Time and place of despatch and receipt

According to section 13(1) of the IT Act Save as otherwise agreed to between the originator and the addressee, the despatch of an electronic record occurs when it enters a computer resource outside the control of the originator.


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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.

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 despatched 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.

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).

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.

A landmark judgement was given by the Allahabad High Court with respect to the formation of electronic contracts.

P.R. Transport Agency vs. Union of India & others

AIR2006All23, 2006(1)AWC504


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IN THE HIGH COURT OF ALLAHABAD

Civil Misc. Writ Petition No. 58468 of 2005 Decided On: 24.09.2005

Appellants: P.R. Transport Agency through its partner Sri Prabhakar Singh Vs.

Respondent: Union of India (UOI) through Secretary, Ministry of Coal, Bharat Coking Coal Ltd. through its Chairman, Chief Sales Manager Road Sales, Bharat Coking Coal Ltd. and Metal and Scrap Trading Corporation Ltd. (MSTC Ltd.) through its Chairman cum Managing Director

Background of the case

Bharat Coking Coal Ltd (BCC) held an e-auction for coal in different lots. P.R. Transport Agency's (PRTA) bid was accepted for 4000 metric tons of coal from Dobari Colliery.

The acceptance letter was issued on 19th July 2005 by e-mail to PRTA's e-mail address. Acting upon this acceptance, PRTA deposited the full amount of Rs. 81.12 lakh through a cheque in favour of BCC. This cheque was accepted and encashed by BCC.

BCC did not deliver the coal to PRTA. Instead it e-mailed PRTA saying that the sale as well as the e-auction in favour of PRTA stood cancelled "due to some technical and unavoidable reasons".

The only reason for this cancellation was that there was some other person whose bid for the same coal was slightly higher than that of PRTA. Due to some flaw in the computer or its programme or feeding of data the higher bid had not been considered earlier.

This communication was challenged by PRTA in the High Court of Allahabad. [Note: Allahabad is in the state of Uttar Pradesh (UP)]

BCC objected to the "territorial jurisdiction" of the Court on the grounds that no part of the cause of action had arisen within U.P.

Decision of the court

1. The acceptance was received by PRTA at Chandauli / Varanasi. The contract became complete by receipt of such acceptance.

2. Both these places were within the territorial jurisdiction of the High Court of Allahabad. Therefore, a part of the cause of action had arisen in U.P. and the court had territorial jurisdiction.


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Manner of attesting e-contracts: The amendments to the Act introduced the concept of “electronic signatures” thereby widening the scope of the forms that may be used to authenticate an electronic document. However, the amended Act limits these forms of authentication to only such techniques as have been approved by the Indian government and included in the schedule 2 of the Act. Currently, the Indian government has only recognized and notified digital signatures using crypto programming and hash function, as the approved form of authorization technique or electronic signature. Therefore, parties to the contract must apply to a certifying authority to avail a digital signature to be able to electronically execute (i.e authenticate) a commercial contract. Stamping laws and e-contract: The last and the most difficult hurdle to be crossed by corporate India while executing a commercial contract electronically, is compliance with Indian stamping laws. The Indian law stipulates that any instrument chargeable with duty (including electronic documents) must be stamped in accordance with the relevant laws, immaterial of the form of execution6. Appropriate stamp duty needs to be paid either prior to, or at the time of, electronic execution of the commercial contract in order for it to be capable of enforcement by a court in India, without having to pay penalty. Although Indian law recognizes that stamp duty is payable on instruments executed electronically, it is yet to prescribe procedures to be followed for “electronic stamping” of electronic documents. As of date, the applicable Indian law on stamping only enables procurement of electronically stamped certificate (confirming payment of stamp duty), in addition to payment of stamp duty through conventional methods (such as getting the instrument franked or through procuring non-judicial stamp paper). Therefore, electronic commercial contracts cannot be “stamped” electronically. The absence of confluence of stamping laws and the Act, has resulted in lack of legal infrastructure to facilitate “paperless stamping” of electronic documents. The extent of evidentiary value conferred to an electronically executed contract attested by other forms of signature, is also ambiguous. All of these factors hinder Indian businesses from moving towards a “paperless” world and renders most e-business initiatives largely futile. Considering that India has a huge business potential in the coming years, initiatives towards bettering the technological infrastructure and the legal framework regulating the same would be highly beneficial. This would also attract more cross-border transactions, further benefiting the economy of the country. Consumer Disputes and E-Contracting Having seen the law on E-Contracts in general, discussing the intricate issues relating to Business to Business, Business to Consumer Contracts, and specific issues on software transactions, this part of the paper looks at the more practical legal aspects of E-Contracts. The enforceability of the software contracts made through shrink-wrap and click-wrap formulae, and the issues on private international law, be it the jurisdiction of


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any dispute arising, or the choice of law applicable to the dispute, etc., are matters of utmost importance. As seen in Part A, the two most common forms of contract entered with consumers, the shrink-wrap and click-wrap contracts, are contracts of adhesion, where the end-user of the software or service does not have any negotiating power with the software developer and is bound to take it as given. In such cases, it is only imperative to see if the law gives an absolute contractual autonomy to the software developers in imposing any obligations and limitations on the purchasers' rights, especially in light of the Consumer Protection Act and other similar laws of the country. Next, another equally important aspect of these online contracts is the conflict of laws issues. As hard as it is to determine the extent of the transboundary jurisdiction of the courts over traditional disputes, it is much harder to ascertain jurisdictional issues in the context of an essentially non-demarcable entity like the Internet that is insensitive to any locational constraints. Also, the laws on traditional contracts relating to simple concepts, such as the formation, performance, and payment, are not applicable to contracts formed over the Internet, significantly affecting the question of choice of law. To provide a simple example, a website advertising a particular product, and selling it via the Internet may be located in Florida. However, having a dot com existence enables it to be accessed across the globe, and have a worldwide market. Now, if a consumer in India purchases the product, and finds a defect with it, where should he file the suit? And which law would govern the liability of the product manufacturer? To further complicate the given case, if the product sold via the Internet is not a tangible good that has to be physically delivered to the purchaser (and hence to make the law of the place of delivery the applicable law), and is, instead, a software that is downloaded by the purchaser, thence having no correlation whatsoever with the situs of the purchaser, how would one determine the forum conveniens and the applicable law? While most online contracts that are entered into nowadays provide expressly for the jurisdiction in case of a subsequent dispute, and the law that would govern the contract, confusion still exists in the few where either the jurisdiction clause is absent, or where it is unclear. Even in cases where the choice of law and jurisdiction is provided, the courts at times overlook its express words and act for the cause of reasonability and fairness, especially in consumer contracts to favor the disadvantaged consumer and to offset the implications of a contract of adhesion. Conflict of Laws in the Internet Era

The Internet age and the very many transactions between parties across the globe, while having an impact on several areas of law, have also led to the (need of) evolution of a new brand of jurisdictional jurisprudence as mentioned earlier. The two major factors that need to be considered vis-a-vis a court extending its jurisdiction over E-business, that have in fact acted as the twin reasons for the various case laws on this point, and the evolution of the law, are first, the chief reason behind corporates choosing business over the Internet is precisely because of its cost effectiveness, and


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to now factor in the potential costs of defending against litigation in every place where they could be accessed would be a major dent in their cost planning, making the Web-based business more expensive. Second, on the other hand, to allow the business and service providers to insulate themselves against the jurisdiction in every state, except the place where they are physically located, would be troublesome and unreasonable to the consumers situated across the globe, who have a much lesser bargaining power and resources to litigate in a foreign country.

To achieve a balance between these two diverse considerations, American courts have applied the principles of minimum contact, effective functions, and the theory of long arm statutes, generally used in traditional contracts, with necessary adaptations to E-Contracts. The courts, in most cases, assume jurisdiction where it is proved that the corporate on his own volition marketed and contracted with the other party belonging to the forum state, with the cause of action arising out of his actions.

Indian law, on the assumption of jurisdiction in Internet disputes, though not enough case laws to prove the point, is theoretically similar to the position in the United States. Section 20 of the Civil Procedure Code (CPC) deals with jurisdictional aspects and provides that a court may assume jurisdiction in a case, when the cause of action arises within its sphere. The section, though more relevant to domestic courts, can be interpreted to apply to transnational issues as well as private international law; although it has an international character, it is essentially the domestic law of a country. This provision for jurisdiction based on the cause of action is quite wide in its ambit, enabling the court to assume jurisdiction over a dispute regardless of where the principles are resident or the situs of the business, so long as a portion of the cause of action took place within the local jurisdiction, while still having an implied standard set, in a way similar to the US long-arm jurisdiction provisions.

Further, the Indian procedural law also provides for the recognition and enforcement of such decisions—its own as well as the enforcement of foreign decisions since a mere assumption of jurisdiction, and passing a judgment without it being recognized and enforceable in another country would have no effect. Section 13 of the CPC spells out the effect of foreign judgments on Indian courts, providing for their enforcement in all cases except under a few circumstances, in which case the courts would delve into the issues of jurisdiction of the court, the public policy, and morality of the decision to be enforced, keeping the merits of the case as off-limits. Under sec. 44A of the code, the decrees of the Indian courts are enforceable in countries which the central government has declared by notification under the Section, and those which have entered into reciprocal agreements with the Government of India, in respect of the enforcement of their decrees in the Indian courts. Such agreements and reciprocal relationships are of essence especially in Internet contracts, where the parties have an international


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existence, needing a mutual cooperation between countries in effecting the valid judgments of each other.

However, in case of a country that does not have a reciprocal agreement with India, any judgment that has to be enforced there can be done only by commencing a new action for enforcement in that court, which might often be complicated since the foreign court may wish to re-assess the merits of the case or re-assess the Indian court's assumption of jurisdiction before giving effect to the decisions. This difficulty in the recognition and enforcement of judgments in other countries exists not only for the Indian courts, but for other jurisdictions as well, and mainly occurs because of the possibility of multiple jurisdictions hearing a particular matter arising over the Internet, and the wide range of laws that may govern the dispute. A Uniform Code, as it exists in the United States, dealing with interstate jurisdictions providing for the jurisdictional questions and choice of law if enacted for international jurisdiction in E-Contracts, similar to the CISG (Conventional International Sales of Goods) for the sale of goods would bring in a legal certainty, solving most of the controversies and confusion regarding jurisdictional matters.

The same is also the case with the determination of the law that would govern the contract. Under traditional contracts, the governing law would be the law of the state where the transaction occurred, unless agreed otherwise by the parties to the contract, for which the rules of private international law were used in case of transnational contracts. However, moving over to E-Contracts, where the parties belong to different countries, and where there is no specific factor to determine the place of consummation of the contract, there is no mention of what the proper law is, in the rules of most of the domestic legislations. This pushes the courts to apply the law of the country that has the closest connection to the country, with the courts again differing in the factors that they take to arrive at this decision.

Nevertheless, most contracts entered online, be it Business to Business or Business to Consumer, specify both the jurisdiction, as well as the governing law of any subsequent dispute. In such cases, the courts generally uphold the contract between the parties, giving way to contractual autonomy, albeit with certain limitations especially for Business to Consumer contracts that are contracts of adhesion, hence requiring the intervention of the courts to induce reasonability of the terms and fairness. This is simply because the issue of consumer protection is closely intertwined with public policy, and legislatures the world over have realized the unequal bargaining power of the consumers in determining the jurisdiction and governing law of the contract, similar to the determination of the other relevant terms of the contract, giving a significant scope for forum shopping by the corporate.


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Additionally, the legislations of various countries and international conventions themselves provide for the consumer protection in such contracts of adhesion and prohibit the exclusion of their jurisdiction and consumer favorable laws by the contractual terms. For instance, sec. 28 of the Indian Contract Act and Section 11(2) of the Consumer Protection Act provide for the protection of the rights and remedies that the Indian law provides to its consumers, and allows the court to disregard the agreement between the consumer and the vendor as far as the choice of forum and the governing law is concerned.

At the International level, the Hague Convention provides for the prerogatives of the consumer as a party deserving special treatment. Article 7 provides that a consumer may bring suit in the courts of the state in which he is habitually resident, if the consumer's claim relates to trade or professional activities that the defendant has engaged in or has directed to that state irrespective of the terms of the contract.

Even the Brussels Convention restricts the freedom of contract in online transactions, limiting the recognition of jurisdiction clauses only to non- consumer contracts. Article 5 of the convention prohibits the choice of law made by the E-Contracts from depriving the consumer of the protection afforded to him by the mandatory rules of the law of his country, including the consumer's right to sue and to be sued in his or her domicile.

There has been an ongoing effort to form new rules that would apply to the online environment reflecting a growing consensus to accord appropriate respect to the freedom of contract of the parties, while providing some protection to the consumers in terms of reasonability for facilitating the development of electronic commerce. However, there are no strong and pervasive laws as such for E-Contracts at present at the international level, both for determining the governing law of the contract, as well as the establishment of the forum conveniens, and the recognition and compulsory enforcement of such decisions in other jurisdictions. What could be done at best is to frame an international convention for the recognition, enforcement, and determination of the substantive laws of a contract that would solve various problems relating to E-Contracts at a practical level.

Conclusion E-Contracting greatly reduces geographical barriers and increases the probability of global business in very first manner. This raises several issues of private international law, and the legal regime here is quite obscure. There is no clarity or uniformity since countries tend to apply their own domestic laws on jurisdiction, recognition and enforcement, and determination of the applicable law. E-contract is very new tools of modern business that is making the business faster. There may be some ambiguity in


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some legal issues related to it however it is not a big issue as law is very dynamic subject and will mortified itself according to the need.

The need of the hour is an International Convention that would provide a holistic basis for the development of substantive and procedural aspects of E-Contracts


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Bibliography 1) Bakshi P.M & Suri R.K, Cyber and E-commerce Laws, Bharat Publishing House,

edn 1, 2002 2) 2. Ryder D.Rodney, Guide to Cyber Laws, Wadhwa & Co. Publishers, edn.1,

2001. 3) K.M. Das, "Forum-Selection Clauses in Consumer Click-wrap and Browse-wrap

Agreements and the Reasonably Communicated Test," 4) N. Kamath, Law Relating to Computers, Internet and E-Commerce: A Guide to

Cyber Laws (Delhi: Universal Law Publishing Co. Pvt. Ltd., 2000). 5) T. Ramappaa, Legal Issues in Electronic Commerce (New Delhi: Macmillan India

Ltd., 2003) 6) Information Technology Act, 2000, Vikas® is the registered trademark of Vikas®

Publishing House Pvt. Ltd. 7) www.legalserviceindia.com/ 8) www.asianlaws.org/ 9) www.legalserviceindia.com/ 10) http://www.indiankanoon.org/