this is a presentation on electronic contracts. this will be helpful in the study of various types of contract in the law. this topic is also there in the BBA course. in legal environment - 2

1. ELECTRONIC
CONTRACTS
PRESENTED BY:
KAILASH CHOUDHARY (15131077)
LEGAL ENVIRONMENT - 2

2. WHAT IS ELECTRONIC
CONTRACT?
O An electronic contract is an agreement
created and "signed" in electronic form - in
other words, no paper or other hard copies
are used.
O For example, you write a contract on your
computer and email it to a business
associate, and the business associate
emails it back with an electronic signature
indicating acceptance.

3. Are Electronic Contracts
legally binding?
O As per Section 4 of the Information
Technology Act, 2000 legal recognition of
electronic records, where any Information is
in writing, typewritten or printed form is
made available to a user in the electronic
form for subsequent reference shall be
deemed to have satisfied the requirement of
law.

4. ESSENTIALS OF AN
ELECTRONIC CONTRACT
 Offer and Acceptance, throughOffer and Acceptance, through
 EmailEmail
 Website FormsWebsite Forms
 Online AgreementsOnline Agreements
 Lawful ConsiderationLawful Consideration
 Intention to create legalIntention to create legal
relationshiprelationship
 Competent to ContractCompetent to Contract

5. ESSENTIALS OF AN
ELECTRONIC CONTRACT
 Free ConsentFree Consent
 Lawful ObjectLawful Object
 Possibility of performancePossibility of performance

6. INFORMATION TECHNOLOGY
ACT, 2000
 Concept of Originator andConcept of Originator and
AddresseeAddressee
 Acknowledgement of receipt ofAcknowledgement of receipt of
Record/data/informationRecord/data/information
 Time of Dispatch and ReceiptTime of Dispatch and Receipt..

7. ORGINATOR
 AnAn OriginatorOriginator is a person who:is a person who:
 sends, generates, stores or transmits any electronicsends, generates, stores or transmits any electronic
message ormessage or
 causes any electronic message to be sent,causes any electronic message to be sent,
generated, stored or transmitted to any othergenerated, stored or transmitted to any other
person.person.
 An electronic record shall be attributed to theAn electronic record shall be attributed to the
originator—originator—
 if it was sent by the originator himself;if it was sent by the originator himself;
 by a person who had the authority to act on behalf ofby a person who had the authority to act on behalf of
the originator in respect of that electronic record; orthe originator in respect of that electronic record; or
 by an information system programmed by or onby an information system programmed by or on
behalf of the originator to operate automatically.behalf of the originator to operate automatically.
 Does not include an intermediary likeDoes not include an intermediary like
ISP(internet service provider) etc.ISP(internet service provider) etc.

8. ACKNOWLEDGEMENT OF
RECEIPT
 AnAn AddresseeAddressee means a person who ismeans a person who is
intended by the originator to receive theintended by the originator to receive the
electronic recordelectronic record
 but does not include any intermediarybut does not include any intermediary
 Where the originator has not agreed with theWhere the originator has not agreed with the
addressee that the acknowledgment ofaddressee that the acknowledgment of
receipt of electronic record be given in areceipt of electronic record be given in a
particular form or by a particular method, anparticular form or by a particular method, an
acknowledgment may be given by:acknowledgment may be given by:
 any communication by the addressee, automated orany communication by the addressee, automated or
otherwise; orotherwise; or
 any conduct of the addressee, sufficient to indicateany conduct of the addressee, sufficient to indicate
to the originator that the electronic record has beento the originator that the electronic record has been
received.received.

9. TIME AND PLACE OF DISPATCH
AND RECEIPT
 Time of Dispatch:Time of Dispatch: Dispatch of anDispatch of an
electronic record occurs, "when it enters aelectronic record occurs, "when it enters a
computer resource outside the control of thecomputer resource outside the control of the
originator", unless agreed to the contraryoriginator", unless agreed to the contrary
between the originator and the addressee.between the originator and the addressee.

10. TIME AND PLACE OF DISPATCH
AND RECEIPT
Time of Receipt:Time of Receipt:
 If the addressee has designated a computerIf the addressee has designated a computer
resource for the purpose of receiving electronicresource for the purpose of receiving electronic
records:records:
 receipt occurs at the time when the electronicreceipt occurs at the time when the electronic
record enters the designated computer resource;record enters the designated computer resource;
oror
 if the electronic record is sent to a computerif the electronic record is sent to a computer
resource of the addressee that is not theresource of the addressee that is not the
designated computer resource, receipt occurs atdesignated computer resource, receipt occurs at
the time when the electronic record is retrieved bythe time when the electronic record is retrieved by
the addressee;the addressee;
 If the addressee has not designated a computerIf the addressee has not designated a computer
resource along with specified timings, if any, receiptresource along with specified timings, if any, receipt
occurs when the electronic record enters theoccurs when the electronic record enters the
computer resource of the addressee.computer resource of the addressee.
 Unless agreed to the contraryUnless agreed to the contrary

11. TIME AND PLACE OF DISPATCH
AND RECEIPT
Place of Dispatch and Receipt:
 an electronic record is deemed to bean electronic record is deemed to be
despatched at the place where thedespatched at the place where the
originator has his place of business,originator has his place of business,
 An electronic record is deemed to beAn electronic record is deemed to be
received at the place where the addresseereceived at the place where the addressee
has his place of businesshas his place of business..

12. TYPES OF ELECTRONIC
CONTRACT
There are several types of contracts that personsThere are several types of contracts that persons
engaged in the business of manufacture of softwareengaged in the business of manufacture of software
or hardware would, in course of their business, beor hardware would, in course of their business, be
required to enter into. These are:required to enter into. These are:
 Click Wrap ContractClick Wrap Contract
 Source Code Escrow AgreementsSource Code Escrow Agreements
 Software Development & Licensing AgreementsSoftware Development & Licensing Agreements
 Shrink Wrap ContractShrink Wrap Contract
 Employment ContractsEmployment Contracts
 Consultant AgreementsConsultant Agreements
 Contractor AgreementsContractor Agreements
 Sales, Re-Seller & Distributor AgreementsSales, Re-Seller & Distributor Agreements
 Non-disclosure AgreementsNon-disclosure Agreements

13. CLICK WRAP CONTRACT
 A "click-wrap agreement" is a Web version of theA "click-wrap agreement" is a Web version of the
shrink-wrap licensing agreement. It comes into forceshrink-wrap licensing agreement. It comes into force
when an online buyer or user clicks on the 'I Agree'when an online buyer or user clicks on the 'I Agree'
button on the webpage to purchase or download abutton on the webpage to purchase or download a
program. The term "click-wrap" is derived from theprogram. The term "click-wrap" is derived from the
fact that such online agreements often requirefact that such online agreements often require
clicking with a mouse on an on-screen icon or buttonclicking with a mouse on an on-screen icon or button
to signal a party's acceptance of the contract. Amongto signal a party's acceptance of the contract. Among
other things, click-wrap agreements are used to:other things, click-wrap agreements are used to:
 establish the terms for the download and use of softwareestablish the terms for the download and use of software
over the Internet;over the Internet;
 set forth a Web site's Terms of Service,set forth a Web site's Terms of Service, i.e.,i.e., the rules bythe rules by
which users may access the Web site or a portion of thewhich users may access the Web site or a portion of the
Web site such as a chat or message service; andWeb site such as a chat or message service; and
 establish the terms for the sale of goods and servicesestablish the terms for the sale of goods and services
online.online.

14. CLICK WRAP CONTRACT
 Type and ClickType and Click where the user must typewhere the user must type
"I accept" or other specified words in an on-"I accept" or other specified words in an on-
screen box and then click a "Submit" orscreen box and then click a "Submit" or
similar button. This displays acceptance ofsimilar button. This displays acceptance of
the terms of the contract. A user cannotthe terms of the contract. A user cannot
proceed to download or view the targetproceed to download or view the target
information without following these steps.information without following these steps.
 Icon ClickingIcon Clicking where the user must click onwhere the user must click on
an "OK" or "I agree“ button on a dialog boxan "OK" or "I agree“ button on a dialog box
or pop-up window. A user indicates rejectionor pop-up window. A user indicates rejection
by clicking “Cancel” or closing the window.by clicking “Cancel” or closing the window.

15. SOURCE CODE ESCROW
AGREEMENTS
 A Source Code Escrow Agreement is anA Source Code Escrow Agreement is an
agreement betweenagreement between
 the software owner,the software owner,
 the party receiving the license andthe party receiving the license and
 the escrow agent.the escrow agent.
 It is for the deposit of the source code of aIt is for the deposit of the source code of a
software with a third party escrow agent.software with a third party escrow agent.
 Escrow is typically requested by a party licensingEscrow is typically requested by a party licensing
software (the licensee), to ensure maintenancesoftware (the licensee), to ensure maintenance
of the software.of the software.
 The software source code is released to theThe software source code is released to the
licensee if the licensor files for bankruptcy orlicensee if the licensor files for bankruptcy or
otherwise fails to maintain and update theotherwise fails to maintain and update the
software as promised in the software licensesoftware as promised in the software license
agreement.agreement.

16. SOFTWARE DEVELOPMENT &
LICENSING AGREEMENTS
 It is also known asIt is also known as End-User LicenseEnd-User License
Agreement.Agreement.
 An End User License Agreement is a legalAn End User License Agreement is a legal
contract between the manufacturer and/orcontract between the manufacturer and/or
the author and the end user of anthe author and the end user of an
application.application.
 The End User License Agreement detailsThe End User License Agreement details
how the software can and cannot be usedhow the software can and cannot be used
and any restrictions that the manufacturerand any restrictions that the manufacturer
imposesimposes
 For example, most such agreements ofFor example, most such agreements of
proprietary software prohibit the user fromproprietary software prohibit the user from
sharing the software with anyone else.sharing the software with anyone else.

17. SHRINK WRAP CONTRACT
 The term "shrink wrap agreement" refers to theThe term "shrink wrap agreement" refers to the
purchase agreements that are attached topurchase agreements that are attached to
shipped products, usually bound by shrink wrapshipped products, usually bound by shrink wrap
(plastic wrapping) that contain terms and(plastic wrapping) that contain terms and
conditions. Shrink wrap agreements can includeconditions. Shrink wrap agreements can include
the following terms:the following terms:
 licenseslicenses
 rights of userights of use
 fees and paymentsfees and payments
 forum clausesforum clauses
 warranties andwarranties and
 limitations of liability.limitations of liability.

18. EMPLOYMENT
CONTRACTS
O The employment contracts are made for the
purpose of governing the relationship
between the management and the
employees of the company. There contracts
are need to be drafted carefully, keeping in
mind the interest of the company, as well as
the law relating to the enforcement of such
contract.

19. CONSULTANT
AGREEMENTS
 There is a fast growing trend, to hire personsThere is a fast growing trend, to hire persons
as consultants rather than take them on theas consultants rather than take them on the
roll of the company. In such case it would beroll of the company. In such case it would be
necessary to execute a ‘Consultantnecessary to execute a ‘Consultant
contract’. It is very similar to the employeecontract’. It is very similar to the employee
agreement.agreement.

20. CONTRACTOR
AGREEMENTS
 Similar to the consultant contract theSimilar to the consultant contract the
companies prefer to enter into contractorcompanies prefer to enter into contractor
agreement in case of the smalleragreement in case of the smaller
companies. Care must be taken in regard tocompanies. Care must be taken in regard to
the maintainance of the confidentiality ofthe maintainance of the confidentiality of
the imformation that such contractthe imformation that such contract
employees would be exposed to, as well asemployees would be exposed to, as well as
standard protection of the proprietarystandard protection of the proprietary
information.information.

21. SALES, RE-SELLER &
DISTRIBUTOR AGREEMENTS
 In addition to the employees hired for theIn addition to the employees hired for the
development of its products, imformationdevelopment of its products, imformation
technology companies also engagetechnology companies also engage
personnel for the sales and marketing of thepersonnel for the sales and marketing of the
products development in such companies.products development in such companies.
The company would enter into re-seller andThe company would enter into re-seller and
distribution agreement with those persons.distribution agreement with those persons.
Care must be take to ensure thatCare must be take to ensure that
restrictions on territory, price, classes ofrestrictions on territory, price, classes of
persons for whom goods are bought andpersons for whom goods are bought and
sold.sold.

22. NON-DISCLOSURE
AGREEMENTS
 Under certain circumstances, softwareUnder certain circumstances, software
companies working on a specific project,companies working on a specific project,
would be required to obtain employee non-would be required to obtain employee non-
discloser agreements from their employees,discloser agreements from their employees,
in respect of the project upon workingin respect of the project upon working