1. International Indexed & Referred Research Journal, April, 2012. ISSN- 0974-2832, RNI-RAJBIL 2009/29954; VoL. IV * ISSUE-39
Research Paper - Law
Electronic Contract
* Mr. Amit Dubey April , 2012
* LL.M. & Research Scholar (Law) Barkatullah University, Bhopal
The electronic contracts are develop out of need for so agreed. 3. The last method is "The digital signature"
speed convenience and efficiency. There are no need process - It contents electronic records are the equiva-
for delayed couriers and traveling costs and other ex- lent to hard copy records if they are signed with digital
press. Contracts are in essence an agreement between signature using special encryption technology.
two or more parties to conduct any business transac- Consideration
tion. Such a contract has to be valid and lawfully bind- Consideration is the price of promise. In legal
ing on the parties to mutually benefit their interest and term of the consideration is what one party to a contract
transaction. The contract, which could be oral or writ- will get the other party in return to performing contract
ten, is arrived through a process of negotiation with obligation.
proposals counter proposals towards acceptance by Illustration
the concerning parties. Such an acceptance the pro- The photographer A and B above the promise
posals converted to an agreement. The Indian con- of Rs. 5000/- for the photographs to be used in the web-
tracts Act Section 2(h) states that "An agreement en- portal is the consideration that A gets from B and the
forceable by law is contact". permission to use the photographs is the consider-
Contracts in the traditional information tech- ation that A gets tram B. This set of promises between
nology prior to the internet scenario pertained to fol- A and B is what brings about the contract between
lowing: them. According traditional contract of one party makes
(A) Manufacturing contract of hardware products, a promise and the other party offer nothing in exchange
accessories etc. for that promise, the promise is unenforceable a "Gra-
(B) Contract related to software product. tuitous promise" thus the gratuitous promises are said
(C) Contract for service and maintenance and post to be unenforceable without consideration.
online. Object of electronic contract:
(D) Electronic contract or online contract. Electronic contract facilitate transaction and
Formation of online contracts or Electronic contract: agreements electronically without the parties physical
There are following methods in which online contract appearance of the parties to each other. It means that
can formed- the traditional contract process of offer acceptance
1. By exchange of e-mails1. 2. By the acceptance of and agreement to transact through electronic mode
orders entered on e-commerce/ web sites2. 3. Online than physical mode of paper E-commerce to succeed
conduct, such as clicking on an "I accept the Terms" such contract need to be validated legally an alternate
button3. 4. An electronic data Interchange (EDI), elec- mode of transaction through online using the internet
tronic exchange of purchase order, and other standard- technology.
ized business documents between computers in a com- The object of electronic contracts are -
puter4. 5. Electronic Agent5. 1. Electronic contract is to create a secure atmosphere
Generally contract must be in writing to be of transacting online with alternate mode to paper and
electronic records or document are being now made writing. 2. Electronic contract create a electronic docu-
equivalent to " Hardcopy" written records with the mentation system which will safe guard to the contact-
recognition of electronic contract in most of the coun- ing parties in the comparison of traditional mode of
tries. contract. 3.In electronic contract the status of parties,
An electronic contract requires the following - status statuary provisions and monitoring or verifying
1. The "Automatic equivalence" method in which elec- the softcopies & authorities by finalizing the contract.
tronic records are the equivalent of hard copy record. 4. Online transaction intentional or unintentional frauds
2. The second one is the "By agreement" process - In can be check by genuine methods or other sources.5.To
this method electronic records are the equivalent to create necessary legal relation to oversee such trans-
hard copy records of the parties to the transaction have action.
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2. International Indexed & Referred Research Journal, April, 2012. ISSN- 0974-2832, RNI-RAJBIL 2009/29954; VoL. IV * ISSUE-39
6. Online transaction, parties establish or frame rules 4. Lawful object and Lawful Consideration: - A valid
and regulation for smooth functioning contract. contract pre supposes a lawful object and lawful con-
7. Parties make digital signature legally valid & incor- sideration thus a contract for selling narcotic drugs
porating the same with the existing legal regime of online in void.
contracts sale & goods evidence and customer Acts. 5. Possibility of performance of contract:
On the above significant objects such elec- A contract to be enforceable must be uncer-
tronic transactions will depend on the appropriate legal tain and there must be possibility of performance. A
frame work, which recognizes electronic records or contract which is impossible to perform can not be
writing or digital signature. It should facilitate for a enforced e.g. where a website promises to sell land on
secure system such transactions and should create the moon.
evidentiary value of such record. 6. To create legal relations: Where the parties has no
Essentials of Electronic Contract intention to crate legal relationships on the part of
An offer in electronic contract is the offer or contract then no contract is possible between them, An
proposal which made directly by e-mail. The consumer agreement of domestic or social nature are not contract
"browses" the available articles or goods and services and therefore are not enforceable e.g. a website pro-
displayed on the merchant's website and then choose vided general health related information of and other
what the other party would like to purchase when the tips.
offer is made by website displaying the items for sale 7. Legal Formalities: The legal formalities are essential
at a specific price. This process is actually an invitation for the both types of the contracts government and the
to offer and hence is revocable at any time up to the time legal persons. Government contract and semi govern-
of acceptance. The offer is made by the customer a ment etc. can not be completed through online con-
placing the products in the virtual shopping cost for tract.
payment the offer need to be accepted. Kinds of software contract6
Procedure of electronic contracts- On the software contracts are divided in fol-
The following procedures are available for lowing categories:
forming electronic contract: (a) Standard package of software: - The standard soft-
(A) E-mail:- An offer and acceptance can be exchanged ware is the type of software written and produced to
by e-mail or can be combined with paper documents, address mass consumers around the world. Microsoft
faxes, telephonic conversion etc. windows come under this category.
(B) Website Forms: - The seller can offer goods or (b) Bespoke Software: - Bespoke software is the type
services through his website the customer places an of software specially commissioned & written to meet
order by completing and transmitting the order from the need of specially needs of varied customers Indian
provided on the website. The later or be immediately on software firm are also involved in Bespoke software
spot delivered electronically (Railway e-tickets, Air production for example an airline company may want
tickets, software mp3 etc.). Bespoke software which will such its operation Infosys
(C) Online agreements: - Online agreements are impor- created retailing Reebok shoes software.
tant elements of an electronic contract in which the (c) Customized software: - Customized software is a
user may need to persons provided a pornographic standard software package, which offered to the needs
movie as consideration for purchasing on mp3 players, of the customers many hospital and hotel management
and then such a contract is void. software package are standard software packages of-
Similarities between the Traditional Contracts and ten modified to meet the variations of the customers
Electronic Contracts: there are many network packages which are fulfilled the
1. Offer and Consideration are essential. need of customers.
2. The parties must be competent to contract: -All the In electronic contract these software are dealt
contracting parties must be legally competent to enter as manufacturing where hardware manufacture can
into the contract. Contract made by minors and lunatics bundle as standard package and other like customized
are void. and Bespoke software are dealt as contract between
3. Free consent: - Consent is said to be free when there parties based an functionalities and there by the terms
is absence of coercion, misrepresentation, undue influ- of contract. On site contacts need to take into account
ence and fraud. Generally in online contracts are spe- of not merely the technical aspects and delivery of
cially when there is no active real time interaction be- software but also labour laws, gender laws and other
tween the concerning parties, e.g. between a website accounting aspects of the country where the firm in-
and the customer who buys through such a site, the tend to operate in drawing up the contract.
click through procedure ensures free consent.
SHODH, SAMIKSHA AUR MULYANKAN 29

3. International Indexed & Referred Research Journal, April, 2012. ISSN- 0974-2832, RNI-RAJBIL 2009/29954; VoL. IV * ISSUE-39
Conclusion: copies contract and courier one copy back. The further
In the electronic scenario the whole transac- option is that the both parties meet some where and
tion can be completed in few seconds both contracting sign the contract. The rights and duties of parties and
parties similarly put their digital signature to an elec- terms or conditions of agreement decided by contract-
tronic contract interesting parties, the first party frame ing parties. The court of law Acts to enforce the agree-
or prepares up two copies of the contract sign them and ment in non performance case.
courier them to the other party, who in turn signs both
R E F E R E N C E
1. By exchanging e-mail communications, the parties rectly by the receiving computer. EDI is often used to
can create a valid contract. Offers and acceptances transmit standard purchase orders, acceptances, in-
may be exchanged by e-mail. voice and other records, thus reducing paperwork and
2. Where a Web site operator offers goods or services the potential for human error.
for sale, which the customer orders by completing and 5. In Russell & Norving "An agent is anything that can
transmitting an order form displayed on screen. Once be viewed as perceiving its environment through sen-
the vendor accepts the order, a contract is formed. The sors and acting upon that environment through ef-
goods and services may than be physically delivered fects. A human agent has eyes, ears, and other organs
off-line. for sensors, and hands, legs, mouth, and other body
3. In a general rule, contracts can be crated and ac- parts for effectors. An electronic agents display char-
cepted by terms and condition. acteristics that are very close to human characteristics
4. EDI involves the direct electronic exchange of infor- such as intelligence, autonomy and pro-activeness.
mation between computer the data is formatted using 6. http://www.asianlaws.org.
standard protocols so that it can be implemented di-
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