Introduction:

Have you ever wondered how you could have signed a deal with a corporation as large as Amazon while sitting in your recliner? Have you ever agreed to the terms and conditions of an app before using it? Have you clicked “I accept” without understanding what the contract entails? During this time, the pandemic has spurred innovation and the development of new business models. Everything is now available with a single click, whether you want to purchase meals from Zomato, electronics from Amazon, or groceries from Grofers. Have you ever been curious about how they sign contracts with you? Contract signing is also a click away these days.

What are e-contracts?

Contracts that went overseas and returned with new electronics and a fancy name are referred to as e-contracts. Electronic contracts are contracts that exist in a digital format and are in high demand these days. E-contracts are quite similar to normal contracts; the only difference is that they take place through an online digital means of communication. E-contracts have eliminated the need for middlemen, and merchants may now reach out to buyers directly. The computer programmes that link the vendor with an electronic agent, i.e. the app, and the buyer with an electronic agent are now the middlemen. Essentially, it provides a venue for the buyer and vendor to meet.

Are e-contracts binding and valid?

In India, the Indian Contract Act, 1872, Section 10 states that “All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.” 

Also, Section 10(A) of The Information Technology Act 2000 states that “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, that such contract shall not be deemed to be unenforceable solely on the ground that such electronic form or means was used for that purpose.”

Electronic signatures are also considered as proof of signing under the Indian Evidence Act of 1882, and Digital Signature Certificates are created when a document is electronically signed, and this certificate is also legally valid and binding under the IT Act of 2000.

Contracts in India are governed by The Indian Contract Act, 1872, and electronic contracts must be legitimate within the law’s interpretation. The following are the fundamentals of electronic contracts:

1. Offer,
2. Acceptance,
3. Lawful consideration,
4. Lawful object,
5. Competent parties to contract,
6. Free consent,
7. Certainty of terms.

E-contracts are favoured over time-consuming paper documents since they are less expensive and more efficient. Electronic contracts, on the other hand, are more efficient to utilize and have a lot faster response time than long paper works. In reality, e-signatures save a significant amount of time and work. As a result, even if they are digitally signed and executed, e-contracts are legally binding and enforceable. However, this is not the case with click-wrap contracts.

Types of e-contracts:

To mention a few, there are shrink-wrap contracts, click-wrap contracts, browse-wrap contracts, source-code escrow contracts, software development and licence agreements, and many more. The following are three distinct types of contracts:

1. Shrink wrap contracts:-

The name of this contract was inspired by the shrink wrap packaging of CD-ROMs, which were used to deliver software. The licence agreements for various software are known as shrink-wrap contracts. These contacts are the licencing agreements, boilerplate, or terms & conditions that come with the product. When a consumer utilises the goods, he has agreed to the terms of the contract. Shrink wrap is the plastic wrapping that is done on the product’s cover. IT businesses are the most likely to utilise shrink wrap. The most intriguing aspect of this contract is that acceptance may be revoked by returning the merchandise. Furthermore, these days, licencing agreements are not supplied with the product, but rather shown before installing the software.

2. Click wrap contracts:-

Have you ever seen the lengthy paragraphs with comprehensive terms and conditions for utilising an app or programme that no one reads? Those are the Click wrap contracts, to be sure. The party is only a click away from signing this contract, as the name implies. To accept the contract, they only need to click a button or check a box. Essentially, the user is compelled to sign the contract or else he would be unable to progress, and therefore they are not negotiable at all. There are certain legal problems that will be addressed later.

3. Browse wrap contract:-

Have you ever seen a sentence that says something like, “By continuing to use these services, you agree to the terms and conditions” or “By signing up, I agree to the terms of usage”?

Browse wrap contracts may be found at the bottom of the page, and acceptance is presumed if the client uses the application. These contracts are often seen on websites, as well as in various mobile apps and software programmes. They can also be accessed via a hyperlink.

Critical analysis:-

Click wrap contracts and shrink wrap contracts are unilateral and presented as fixed contracts, but browse wrap contracts are significantly different in that they do not compel the customer to accept the contract, but rather presume approval when browsing the website.

Contracts such as click wrap and browse wrap are commonly employed by websites that wish to force their customers to adhere to their terms and conditions. The only difference between the two is how they are mandated. While browse wrap does not need consent, click wrap requires customers to click the “I agree” button.

Contracts with customers can be entered into through browse wrap, click wrap, and shrink wrap. Because it was basic and included all of the necessary information, browse wrap is the earliest and typical form of agreement. Shrink wrap was only discovered in the software business, although in a different form.

The agreement is contained inside the packaging of the shrink wrap contract, and the consumer’s approval of the same is indicated by the opening of the package. The terms and conditions and privacy policy for browse wrap contracts are posted on the website and indicated with a link. By default, the customer has consented to this contract. And, in most cases, the phrase reads something like, “Your use of our site implies your acceptance of our Terms of Use and your commitment to be bound by them.” So, if you disagree with the terms and conditions, simply do not use the website.

A click wrap contract, on the other hand, has more criteria than a shrink wrap or browse wrap contract. The two main components that make a significant difference are that, first and foremost, click wrap contracts include a link, but they also include a notice that summarises all of the legal terms and conditions. Second, they request actionable consent via a pop-up window, such as a “I agree” button or a check box. If a website or app employs this contract, it implies that they demand the consumer’s affirmative consent before proceeding. The consumer can also reject the terms and conditions by clicking on a “Cancel” button.

Conclusion:

The Indian Contract Act, 1872 controls all contracts in India, whereas the Information Technology Act, 2000 governs all electronic transactions. The majority of electronic contracts are provided to customers in the form of click wrap and browse wrap. The term wrap is originated from shrink wrap contracts, in which the terms and conditions were shrunk and wrapped in the product packaging. However, click wrap and browse wrap are only employed in digital form. Shrink wrap may be utilized for both digital and physical applications.

Previously, the owner of a website could choose between click wrap and browse wrap, and both were regarded equally legally, such as privacy policies and terms and conditions, but things have changed.

Finally, I’d like to emphasise that while a browser wrap contract can be used for terms and conditions, legal documents such as privacy policies must be accompanied by a click wrap contract to ensure affirmative permission.