1. 1
Electronic Contracts: Latest trends & Challenges
Contents:-
1.Introduction.........................................................................................2
2.Review of Literature.............................................................................3
3.Conceptual Framework.........................................................................4
4.Critical Analysis......................................................................................7
5.Case Study Related to Aircraft Aftercare...............................................9
6. Results & Discussions............................................................................10
7. References
2. 2
Introduction:-
There has been a incessant increase in the electronic commerce since 1990.
There are certain factors which has contributed to this trend. A study has
found that there has been a 53% increase of CAGR(Compounded Annual
Growth Rate)in countries online retail market from 2013 to 2017. As the digital
platforms such as flipkart, myntra, Amazon have become established
consumers purchasing and selling products have become increasingly
common. For carrying out business deals or transactions there are contracts
which create a legal obligation over parties for its fulfilment with legal
enforceability.
Certain Factors namely access to internet, accessibility to smart phones has
resulted in people entering into electronic contracts either by a click or by
email. These contracts reduce the gap of the distance & its location of the
parties involved.
Example:- A Swedish Company Who wants to buy handicraft products from
India can easily enter into E- Contract rather than arrange meetings for
deciding the terms of contract. This paperless contract has helped in reducing
time and money as well as has smoothened business.
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Review of Literature:-
An electronic contracting framework is aimed at exploring multiple aspects of
contract based systems and addressing the needs of aerospace market. The
framework of aerospace market includes contract specification, negotiation,
monitoring, appropriate agent architectures to handle aspects.
The interactions that take place in the systems are sometimes unreliable and
hence require some societal control to bind these interactions. To address
these, a set of norms have been incorporated to govern their behaviour. If
these norms are taken into account and incorporated into a formal document,
termed as electronic contracts that allow commercial agents who carry out
business transactions.
In the article, the author discusses about the aspects of electronic contracts in
aerospace aftercare, how the elements of the contract based system operate
in the aerospace aftercare. It talks about the overall structure about the
contract architecture the responsibilities of the contract partners who fulfil
their obligations and requests.
4. 4
Conceptual framework:-
Meaning of E-Contract:-
The term "contract" here means entering into a legally binding agreement. E-Contract
means any kind of traditional business where in goods and services are exchanged for a
particular amount. Internet is the mode of communication which provides an opportunity
for the sellers to reach the consumers without the involvement of middle men. In the age of
digital media the whole contract can be completed with the both parties attaching their
digital signatures to electronic copy of the contract with neither the involvement of
couriers.
Essentials of E-Contract:-
Offer:-
In E-Contract, an offer needs to be acknowledged and can be revoked at any time up to the
time of acceptance. When we look for products at online shopping site the things offered to
public is invitation to offer & our acceptance to the conditions for purchasing an item at
fixed price is offer or proposal.
Acceptance:-
According to the Indian Contract Act, all the contracts must have a lawful consideration. The
term "Consideration" means benefits or rewards that parties have agreed to fulfil the
obligations.
Lawful Object:-
The object that enters into a contract must be lawful. If there is no intention on the behalf
of the parties to create lawful considerations then no contract is possible between them.
Hence, it is a void contract.
Competency of Parties:-
It isgenerallyassumedthatboth the partiesare capable of entering into contracts. The parties who
enter into a contract must be of sound mind and not disqualified by law.
Free Consent:-
The partiesenteringinto acontract must have mutual consent and it must be free from any deciet,
mistake, fraud.
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Types of E-Contract:-
Click-Wrap Contract:-
They are mostly found in software installation process. The user has to either click Accept or
Decline the agreement. This type of contract does not have the bargaining power. They
could either accept or reject it. The consent of executing the contract must be free.
Ex- Choosing to make payments online or choosing to reject it is an example of Click-wrap
Shrink Wrap Contract:-
Agreements which can be read and accepted by consumer after opening a product. The
term Shrink Wrap is described after the Shrink Wrap plastic wrapping used to cover
software or other boxes.
Ex- Installing software from a CD into your PC.
Browse Wrap Contract:-
The terms & conditions of use for a website or other downloadable product is posted as a
hyperlink at bottom of screen. The Act of Browsing the website after opening hyperlink is
assumed as consent to contract. In browse-wrap, people are not required to agree to the
terms and conditions for accessing the website but assumed that they agree to the
conditions stated.
Email Contract:-
The contract where parties negotiate the terms & conditions of the contract through
electronic communications. Mostly similar to the traditional form of contracts. It is governed
by Information Technology Act, 2000.
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Issues Faced By E- Contract
Jurisdictional Issue:-
The jurisdictional issue becomes difficult to determine specially when it involves paperless
transactions like e-contract. It means that the location of the computer sources by which
the contract was dispatched and received places no role in determination of jurisdictional of
case. As electronic cases involve no boundaries jurisdictional issue becomes difficult
specially when both parties belong to different parts of the world.
Signature Authentication:-
In traditional contracts signature by both parties is necessary as stated in Indian Contract
Act, 1957.E- Contract cannot be signed by both parties as it is signed electronically or
through digital signatures.
The Signature is not valid for certain documents such as Trust Deed, Real Estate deed,
Powers of Attorney, Negotiable Instrument Except Cheque
Loss Due to Technical Error:-
E-contracts executed between the parties are stored not like paper transactions but they
are stored in virtual world. It is assumed that anything in the digital world exists and there
are no administration legal judicial guidelines where the whole information is lost due to
failure of technology.
Parties to Contract:-
Sometimes, transactions in e contract are between unknown people. This poses a threat to
the people involved. The people involved in this transaction should not be a minor, lunatic
or disqualified by law. So the websites do come up with options such as personal details of
the person, sign up to the site, so that the website gets to know about the lunacy of the
party. Despite these measures, E-Contract is in question because of the lack of stringent
legislation to deal with such issues.
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CRITICAL ANALYSIS
Electronic Contracting In Aircraft Aftercare
Aircraft engine manufacturers are now more inclined to provide long term service contracts
for maintaining engines bearing operations. In these type of contracts, airlines pay engine
manufacturers hourly rates for engines and manufacturers provide minimum service levels.
They face penalties when aircraft is waiting for engine repairs. Aerospace Contracts are
sometimes complex and include certain conditions:-A)The idle time for aircraft repairs
B) Availability of Spare Engines at specific locations
Engine Usage measured in terms of usage cycles depends on the duration of the flight. After
a particular number of cycles aircraft engines must undertake maintenance before using
them again. Here the airline requests the engine manufacturer for the exchange of engines
for the new ones. Here, the manufactures need to respond within a certain time frame.
Contract Parties:-
Contract Parties accomplish the business goals and administrative roles which deals with the
maintenance of the contract environment .
Business Contract Parties:-
They are the parties for whom the contract is created.
Ex:- Aircraft Operator and Engine manufacturer.
Administrative Contract Parties:-
They are the parties that ensure that the contract is accessible and other administrative
functions to ensure the contract is in implementation.
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Classification of Business Roles:-
Airline Operators:- They conduct the flight operations, schedule maintenance before the
engine's usage time.
Engine Manufacturers:-They are responsible for maintenance operations and work by
contracted deadlines when scheduled and maintain a stock of operational engines according
to contractual obligations.
Observer:- They monitor maintenance requests from airline and operations by
manufacturer and notify the manager in case of breach of contract.
Manager:-They receive messages of violation from observer and take steps towards
correcting them.
Stages of Contracting Parties:-
Creation:- They involve searching and finding interaction partners who negotiate the
terms of contract.
Maintenance and Updating a contract in a controlled repository
Fulfilling Contract Clauses by Participants
Management, persons who keep a track of the obligations in contract and take
actions for violations.
Termination of contract when there is a breach of the validity of the contract or
when the contract has expired.
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Case Study:-
In the study two Airlines, Simple Jet and Miller Air perform flights and update engine logs.
At one point in miller aircraft the engine reaches a point where it needs replacement &
maintenance as the engineshave reachedthe hardlifeandthe optimal numberof cycles has
been reached before it can be used again.
As a result Miller aircraft requests its engine manufacturer general kinetic to perform
maintenance operations.
As perthe contract agreementthe general kineticperforms the maintenance operations by
swapping the specificed engines and notifying Miller Air.
Here the operator scheduled the maintenance at the appropriate time to the airlines
manufacturer.
According to the contract, the engine manufacturer complies with the agreement and
responds by carrying out mantainenace activites.
If it were the case that the manufacturer delayed in delievering the engine to the Aircraft
companythe observerwouldreporttothe managerof the Miller Company for the violation
of the executed contract between the companies & would take legal action.
In the study of Hardjet &Boing Following activities took place:-
Hardjet requested Boing for servicing of an engine of one of its planes.
As a result, Boing requests for an engine from heathedge by placing an order.
Heathedge orders a part of the engine from Pm1.
But Pm1 informs for the delay in order and states that the delivery time for the part is 5
days. Heathedge finds it unacceptable as there is less feasibility for the service people to
repair the engine within the stated time period.
So, Heathedge orders the part from Pm2.
Pm2 communicates the delivery time as 3 days. Heathedge finds the time acceptable.
Because of delaysintransportthe part is received from pm2 after 5 days. And the engine is
repaired and repaired 8 days after receipt of the order. Hence, heathedge has violated its
obligation with boing to repair the engine within 7 days.
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Results & Discussion:-
In the Case Study 1, the companies, Miller Aircraft & General Kinetic involved in the contract carry
out their activities sincerely, hence honouring their agreement.
In Case Study 2, There is a violation of contract as delay in time for repairing the engine by
heathedge also indiciatesthatBoingcannotfulfill the agreement of keeping a minimum number of
engines available for hardjet.
References:-
1.Ayushi Singh, Sukhwinder Singh(January - March 2019).E-CONTRACT IN INDIA: ISSUES
AND CHALLENGES, Vol. 7, pp: (597-602).
2. Felipe Meneguzzi, Sanjay Modgil, Nir Oren, Simon Miles, Michael Luck,
Camden Holt, and Malcolm Smith. A contract-based system for aerospace aftercare
3. Felipe Meneguzzi, Simon Miles, Camden Holt. Electronic contracting in aircraft aftercare:
A case study.