validity of email contracts

INTRODUCTION

Communications through electronic means are generally instantaneous, the reason why the majority of the individuals or businesses have discarded traditional offline modes of communication and have turned to electronic means for not only communicating but also for entering into contractual obligations. One such preferred mode of entering into a contract is via email. The text of an email is simply the digital equivalent of a letter. One may attach things to it, it needs to be addressed and sent to the desired recipient.

FORMATION OF E-CONTRACTS

Formation of Contracts in Cyberspace or Online Contracts have evolved as new communication methods. Under the traditional common law of contract, there are four essential requirements to an offline contract namely; (i) Offer; (ii) Acceptance of the offer; (iii) Consideration (iv) Intention to create legal relations. In cyberspace, these terminologies are popularly known with a prefix ‘e’. In online valid contract, the four essential requirements are: (i) e-Offer, (ii) e-Acceptance (iii) e-Consideration; (iv) Intention to create legal relationship. On the path of e-Commerce contract formation, the first step is customer registration. This is adapted both in Business to Business and Business to Consumer environments. This allows the vendor and customer to establish a formal relationship where it is presumed that the customer has read and agreed to adhere to security warnings, payment conditions, terms of use and privacy policies of the e-Commerce website owner.  In online shopping, the consumer enters into e-contracts with the vendor through different modes like e-Contracting through e-Mail, Contracts formed through World Wide Web (www.), Click Wrap Agreements and Shrink Wrap Agreements. 

In case of email contracts, anyone interested in communicating business details through email needs to have an email address for which he has to register himself/herself with Internet Service Provider. Once the registration is complete, by filling up the electronically made available form, an electronic mailbox (inbox) along with the address is available to the user. The person wishing to send an offer to another, type the desired contents of the offer on his system with an email address of the party to whom he/she intends to send the offer. The message is electronically transmitted by pressing “the send button” to the service provider of the sender and is then forwarded to the recipient’s provider who puts it in the recipient’s mailbox where it is saved.

TYPES OF E-CONTRACTS

1.    E-Contract by Click-Wrap Agreements

Click-Wrap agreements are terms set out on a web page on something similar in which the other party is requested to indicate acceptance of the terms set out by clicking on a box on the screen. It presents a choice to the consumer who is free to read the terms of the license and decide whether she/he wants to abide by its terms. Because ‘Click -Wrap’ agreements are interactive and demand a response from the consumer, they are enforced. Click-Wrap license must meet the criteria for enforceability of a unilateral form of contract.

2.    E-Contract by Click-Wrap Agreements

The typical “Shrink-Wrap License Agreement” is a single piece of paper containing the license terms wrapped in cellophane or transparent plastic along with the computer software installation diskettes or the owner’s manual. Sometimes the license is simply put in the box along with the software and the owner’s manuals. End users will be bound and will be considered to have agreed with the license if they have tear open the package or they have used the software.

WHAT ARE EMAIL CONTRACTS?

E-mail contracts can be simply defined as ‘contracts entered into via email are termed as email contracts.’ It includes all the necessary elements of a contract, namely, offer acceptance of that offer, consideration and an intention to enter into a legally binding relationship. The person making an offer, commonly known as the offeror can simply type the desired contents of the offer; enter the email address of the offeree and send the offer to the intended person. 

VALIDITY OF EMAIL CONTRACTS

Email contracts are easier to enter into, it saves a lot of time and efforts. However, the major issue that concerns email contracts is their validity. There have been conflicting views on the validity and enforcement of e-contracts. Sending an email to the offeree does not mean that he has automatically received the message. The offer is said to be received only when the recipient opens the particular mail sent by the offeror and not when it is placed in the inbox. The time and place of the contract also play a crucial role while determining the jurisdiction in case of a dispute.

Essentials of a valid contract

Section 10 of the Indian Contract Act,872 states the essential requirements of a valid contract. According to the Section, the parties entering into a contract must give their free consent, there should be lawful consideration, the parties should be competent and there should be a lawful object. the contracts entered via email should fulfil all the necessary conditions specified by the Indian Contract Act, 1872. The validity of an email contract is also governed by the Information Technology Act, 2002 and the Indian Evidence Act, 1872.

Information Technology Act, 2000

Section 10A of the Information Technology Act talks about the validity of contracts formed through electronic means. According to the section, “Where in a contract formation, The communication of proposals, the acceptance of proposals, the revocation of proposals and  acceptances, as the case may be, are expressed in electronic form or by means of an electronic record, such contract shall not be deemed to be unenforceable solely on the ground that such electronic form or means was used for that purpose.”  This section states that during the formation of a contract,  if the communication of a proposal, its acceptance and revocation are expressed in an electronic manner, such contract shall be valid. Therefore, according to Sec 10A of Information Technology Act, 2002, email contracts are valid contracts. Indian Contract Act, 1872 does not talk about the validity of the contracts formed in an electronic manner. However, the Information Technology Act fills this lacunae.

Indian Evidence Act, 1872

The Indian Evidence Act, 1872 lays also lays down provisions for using email records as admissible evidence in courts. Sec 85A of the Indian Evidence Act, 1872 states that “The Court shall presume that every electronic record purporting to be an agreement containing the (electronic signature) of the parties was so concluded by affixing the (electronic signature) of the parties.” 

It was held by the Supreme Court in Trimex International FZE Limited, Dubai v. Vedanta Aluminium Ltd.  that after the conclusion of a contract, it is not necessary to implement a formal contract.

CONCLUSION

Contract law does not, as a general rule, set any requirements for the form of a contract in order for a contract to be valid. Both oral and written contracts are legally valid. Only certain types of contracts are required to be made in writing. In contract law, entering into an electronic contract is considered equivalent to entering into a written contract. This means that even an offer sent by e-mail and approval received in response is considered a legally valid contract that binds the parties. The terms of such a contract are based on the email correspondence between the parties and on the laws applicable to the type of transactions.

Author:

eStartIndia Team