Soon after internet creeping its way
into being a daily necessity, its birth-child E-commerce became the next
big-thing.The toil of travelling miles to get that one desired good, has
reduced to a click on an e-commerce website. In such a situation, the free and
quick shipment and wider choice of products, along with the ease of shopping
online as compared to in-store shopping, is also helping E-Commerce gather
momentum.[1]
into being a daily necessity, its birth-child E-commerce became the next
big-thing.The toil of travelling miles to get that one desired good, has
reduced to a click on an e-commerce website. In such a situation, the free and
quick shipment and wider choice of products, along with the ease of shopping
online as compared to in-store shopping, is also helping E-Commerce gather
momentum.[1]
Despite the popularity, these
e-commerce websites have attracted additional lime-light as manufacturers deter
purchases through e-commerce websites by denying the manufacturer’s warranty. Consumer
electronics manufacturers like Sony, LG, HP, Nikon, Lenovo, Dell, etc. have
clearly mentioned on their websites that they cannot vouch for the genuineness
of products sold on these e-marketplaces, as they do not consider the
e-marketplaces like Flipkart, Amazon India, Snapdeal, eBay India as ‘authorised
resellers”. On the other side of the story, it is the contention of the
e-commerce website owners that when the products are original, and is backed by
an official invoice with all taxes paid, warranties cannot be denied to the
consumer.
e-commerce websites have attracted additional lime-light as manufacturers deter
purchases through e-commerce websites by denying the manufacturer’s warranty. Consumer
electronics manufacturers like Sony, LG, HP, Nikon, Lenovo, Dell, etc. have
clearly mentioned on their websites that they cannot vouch for the genuineness
of products sold on these e-marketplaces, as they do not consider the
e-marketplaces like Flipkart, Amazon India, Snapdeal, eBay India as ‘authorised
resellers”. On the other side of the story, it is the contention of the
e-commerce website owners that when the products are original, and is backed by
an official invoice with all taxes paid, warranties cannot be denied to the
consumer.
1. “Click-Wrap” Agreements:-
In
e-commerce, the sale and purchase of the goods takes place through an
e-contract which is equivalent to the form of a “click-wrap” agreement, wherein
the consumers are made to click “I Accept” before downloading any
software, registration of an online service or purchasing certain goods. In
such a situation, as one of the parties making the contract of sale is an
inanimate website, the choice of negotiating or modulating the terms such as
warranty, policy of return is in-exercisable. This backed situations such as
denial of manufacturer’s warranty, service etc., eventually lead to consumer
disputes.
e-commerce, the sale and purchase of the goods takes place through an
e-contract which is equivalent to the form of a “click-wrap” agreement, wherein
the consumers are made to click “I Accept” before downloading any
software, registration of an online service or purchasing certain goods. In
such a situation, as one of the parties making the contract of sale is an
inanimate website, the choice of negotiating or modulating the terms such as
warranty, policy of return is in-exercisable. This backed situations such as
denial of manufacturer’s warranty, service etc., eventually lead to consumer
disputes.
There are basically two types of
click-wrap agreements:
click-wrap agreements:
i.Type and Click.: wherein,
a party must type “I accept” or other specified words in an on-screen
box and then click a “send” or similar button to signal acceptance of
contractual terms.
a party must type “I accept” or other specified words in an on-screen
box and then click a “send” or similar button to signal acceptance of
contractual terms.
ii. Icon Clicking: wherein, a
party simply has to click an “I accept,” “I agree,” or
similar icon to signal acceptance of the terms in the click-wrap agreement.
Users not wishing to enter click a “No” or “I do not agree”
icon.
party simply has to click an “I accept,” “I agree,” or
similar icon to signal acceptance of the terms in the click-wrap agreement.
Users not wishing to enter click a “No” or “I do not agree”
icon.
2. The existing legal framework:-
The essence of e-commerce law is based
on the validity and the formation of contracts. The Indian Contract Act, 1872
gives a statutory effect to the basic common law contractual rule that a contract
will be considered valid if it is made by free consent of the parties who are
competent to contract, for a lawful consideration and object.[2]
Taking into consideration the provisions, it is clear that the Act does not
prescribe any particular way of communicating the offer and acceptance. It may
be done by writing, verbal, or even by conduct.[3]
Thus, there is no requisite of writing for the validity of contracts except
specifically mentioned by law.[4]Apart
from certain limited provisions in the Information Technology Act, 2000, India
does not have a separate legislation governing e-contracts.Therefore, it can be
construed that the IT Act avoids incorporating any specific provision giving
validity or otherwise to online contracts.[5]
In light of this, even in the absence of any specific legislation governing
online contracts, its validity cannot be challenged solely on such technical
grounds.[6]
on the validity and the formation of contracts. The Indian Contract Act, 1872
gives a statutory effect to the basic common law contractual rule that a contract
will be considered valid if it is made by free consent of the parties who are
competent to contract, for a lawful consideration and object.[2]
Taking into consideration the provisions, it is clear that the Act does not
prescribe any particular way of communicating the offer and acceptance. It may
be done by writing, verbal, or even by conduct.[3]
Thus, there is no requisite of writing for the validity of contracts except
specifically mentioned by law.[4]Apart
from certain limited provisions in the Information Technology Act, 2000, India
does not have a separate legislation governing e-contracts.Therefore, it can be
construed that the IT Act avoids incorporating any specific provision giving
validity or otherwise to online contracts.[5]
In light of this, even in the absence of any specific legislation governing
online contracts, its validity cannot be challenged solely on such technical
grounds.[6]
3. Loop-Holes in the Law:-
The Delhi High Court in the case of Societe Des Products Nestle S.A. And
Anr.vs.Essar Industries AndOrs.[7]noted
that “Rapid rise in the field of
information and technology in the last decade of 20th Century and the
increasing reliance placed upon electronic record by the world at large
necessitated the laying down of a law relating to admissibility and proof of
electronic record.” Despite the increasing technological awareness in the
legal framework, the existing laws are far from being amended.
Anr.vs.Essar Industries AndOrs.[7]noted
that “Rapid rise in the field of
information and technology in the last decade of 20th Century and the
increasing reliance placed upon electronic record by the world at large
necessitated the laying down of a law relating to admissibility and proof of
electronic record.” Despite the increasing technological awareness in the
legal framework, the existing laws are far from being amended.
i. Identification
of parties: In case of Click-wrap agreements, unlike traditional
agreements where the individuals or the company meet and negotiate the terms of
the contract, the parties are not able to meet and hence lack the sense of
security.
ii.
Jurisdiction:
The Information Technology Act, 2000
states that the in case of electronic contracts such as click-wrap agreements,
the place of dispatch and the place of receipt will be the place where the
originator and the acceptor have their respective offices.[8]
This has led to a great controversy as it is contradictory to the provisions of
the Civil Procedure Code states[9]
that a suit may be brought up where the defendant has his place of business or
where the cause of action arises. Owing to the nature of the internet the laws
of contract governing the transaction may have certain variations in cases
where an international element is present in the transaction, like the
procedural formalities etc. may be different in separate jurisdictions.
Therefore, ascertaining the correct jurisdiction is of great consequence to the
outcome of the case.
iii.
Legal
recognition of transaction:As the Indian law does not explicitly lays down provisions
regarding Click-wrap agreements; refuge can be taken in few section of the
Indian Evidence Act. Presumptions as to electronic records are vividly covered
under section 85A, 85B, 85C, 88A, 90A of the Act, whereas its admissibility is
dealt under section 65B of the same act. However, the evidentiary value of such
contracts is still disputed as there is always a possibility that such
contracts may have been subjected to tampering thus forcing the legal machinery
to disregard the same.
Legal
recognition of transaction:As the Indian law does not explicitly lays down provisions
regarding Click-wrap agreements; refuge can be taken in few section of the
Indian Evidence Act. Presumptions as to electronic records are vividly covered
under section 85A, 85B, 85C, 88A, 90A of the Act, whereas its admissibility is
dealt under section 65B of the same act. However, the evidentiary value of such
contracts is still disputed as there is always a possibility that such
contracts may have been subjected to tampering thus forcing the legal machinery
to disregard the same.
iv.
Notice: One of the important points considered
by courts while deciding the enforceability of contracts in the nature of
click-wrap is notice. As held in the case of Specht v. Netscape[10]
, it was held that a click-wrap license was unenforceable because to view the
terms of the license agreement, the user was required to scroll to the bottom
of the webpage.
v.
Stamping
Requirement: Further,
it is essential to get the instrument stamped under the stamp duty legislations
enacted by different states in India whenever right are created or transferred.
The Indian Stamp Act, 1899 does not lay down a procedure for stamping of click
wrap and browse wrap contracts, although e-stamps are available but then the
use of the same is not prevalent. However, e-contracts may be stamped either by
printing the document on a stamp paper or by getting the printed document
franked or by procuring a stamp duty certificate by the process of e-stamping.
vi.
Signature
Requirements and Contracts with Minors:It is not necessary for every contract to be signed under the Indian
Contract Act, 1872, however certain provisions concerning specific contracts
makes it necessary to contain signature as in the case of Copyright Act where
it is mandatory for the instrument concerning transfer of rights to be signed.
However, until today, no suchnotification regarding electronic signatures has
been issued by the Central Government.
In addition to that, it is difficult to ascertain the competency of the
party as a major[11],
i.e., above 18 years of age, as it is impossible to know of the right age of
the person who is actually clicking the “I Agree” button.
party as a major[11],
i.e., above 18 years of age, as it is impossible to know of the right age of
the person who is actually clicking the “I Agree” button.
4. Possible Solutions:-
Apart from bringing in amendments to
the legislations in order to implement specific laws to deal with such
contract, steps can be taken by both the parties to mitigate the adversities.
the legislations in order to implement specific laws to deal with such
contract, steps can be taken by both the parties to mitigate the adversities.
i.
Mandatory
electronic signatures on every page of such agreements prevents the user from
proceeding further or ahead, without going through the content of its
respective previous page.
electronic signatures on every page of such agreements prevents the user from
proceeding further or ahead, without going through the content of its
respective previous page.
ii. The
exit option provided to the user should be present on every page of the
electronic contract.
iii.
Along
with the requirement of having an acceptance option at every page of such
contract, it is pertinent that the user has an access to the contract in an
entirety before the product can be accessed or purchased.
with the requirement of having an acceptance option at every page of such
contract, it is pertinent that the user has an access to the contract in an
entirety before the product can be accessed or purchased.
iv.
For
accountability and documentation of information, the date and time of
Acceptance or Rejection should be taken into account. This may be electrically
recorded and presented as evidence in adjudicating the enforceability of such a
click-wrap agreement.
For
accountability and documentation of information, the date and time of
Acceptance or Rejection should be taken into account. This may be electrically
recorded and presented as evidence in adjudicating the enforceability of such a
click-wrap agreement.
v.
The
user is required to register him so that the details therein provided may be
useful in determining his capacity to contract and thereby validly exercise his
right to consent and shall be responsible in providing accurate information
while registering.
vi.
For
the authentication of the user and improve the ability of the company to
connect to the user with regards to periodic acknowledgements or related
communications, a valid email address should be given of an authorised party
for the acknowledgement of such information provided.
For
the authentication of the user and improve the ability of the company to
connect to the user with regards to periodic acknowledgements or related
communications, a valid email address should be given of an authorised party
for the acknowledgement of such information provided.
vii.
The
documents so provided should be at periodic scrutiny by making the user
acknowledge the documents on annual basis.
The
documents so provided should be at periodic scrutiny by making the user
acknowledge the documents on annual basis.
viii.
It
is important that the terms and conditions of the click-wrap agreement should
not be limited in accessibility by being displayed only during the acceptance
or rejection of the agreement. The conditions therein laid should also be
conveniently present in the product and be made accessible to user post
installation for his future perusal.
It
is important that the terms and conditions of the click-wrap agreement should
not be limited in accessibility by being displayed only during the acceptance
or rejection of the agreement. The conditions therein laid should also be
conveniently present in the product and be made accessible to user post
installation for his future perusal.
5. Conclusion
Despite the grey area, initiatives such
as IRCTC portal are governed by the concept of E-contracts. For interpreting
and implementing developing concepts such as shrink-wrap contracts, the terms,
conditions and the contract as a whole should be seen based on a commercial
background. Countries like USA have not only upheld the validity of such kind
of adhesive contracts but also has implemented them by initiatives such as Mass
Market Transactions and framing laws such as
as IRCTC portal are governed by the concept of E-contracts. For interpreting
and implementing developing concepts such as shrink-wrap contracts, the terms,
conditions and the contract as a whole should be seen based on a commercial
background. Countries like USA have not only upheld the validity of such kind
of adhesive contracts but also has implemented them by initiatives such as Mass
Market Transactions and framing laws such as
The Uniform Computer Information
Transactions Act (UCITA), which was developed to exclusively regulate transactions
in computer information.
Transactions Act (UCITA), which was developed to exclusively regulate transactions
in computer information.
Thereby to draw a conclusion, it can be said that with
effective amendments to the existing laws and intermingling of sectored
regulators, a legal framework can be set up wherein novel concepts such as
click-wrap agreements may be effectively implemented.
Kathakoli Bose
[1] Outlook 15: What Indian niche e-commerce companies plan to do in
2015, Medianamahttp://www.medianama.com/2015/01/223-outlook15-niche-e-commerce/
2015, Medianamahttp://www.medianama.com/2015/01/223-outlook15-niche-e-commerce/
[2]Section
10, Indian Contract Act, 1872
10, Indian Contract Act, 1872
[3]Section
3, Indian Contract Act, 1872
3, Indian Contract Act, 1872
[4]See
Section 10, Indian Contract Act, 1872
Section 10, Indian Contract Act, 1872
[5] However, the UNCITRAL Model Law has a
specific provision regarding validity of contracts: “Article 11. Formation
and validity of contracts.—(1)
In the context of contract formation, unless otherwise agreed by the parties,
an offer and the acceptance of an offer may be expressed by means of data
messages. Where a data message is used in the formation of a contract, that
contract shall not be denied validity or enforceability on the sole ground that
a data message was used for that purpose.”
specific provision regarding validity of contracts: “Article 11. Formation
and validity of contracts.—(1)
In the context of contract formation, unless otherwise agreed by the parties,
an offer and the acceptance of an offer may be expressed by means of data
messages. Where a data message is used in the formation of a contract, that
contract shall not be denied validity or enforceability on the sole ground that
a data message was used for that purpose.”
[6]Some
commentators have viewed otherwise. They have opined that e-commerce in India had
no legal validity before the enactment of the IT Act. See “India’s cyber law comes into force”,
available at: http://www.legalserviceindia.com/cyber/indian cyber law.htm
commentators have viewed otherwise. They have opined that e-commerce in India had
no legal validity before the enactment of the IT Act. See “India’s cyber law comes into force”,
available at: http://www.legalserviceindia.com/cyber/indian cyber law.htm
[7]2006 (33) PTC 469 Del
[8] See Ahmed, Farooq:
“E-commerce: An Indian Perspective”, International Journal of Law and
Information Technology, Vol. 9, No. 2 available at:
http://www3.oup.co.uk/inttec/hdb/Volume 09/Issue 02/pdf/090133.pdf.
“E-commerce: An Indian Perspective”, International Journal of Law and
Information Technology, Vol. 9, No. 2 available at:
http://www3.oup.co.uk/inttec/hdb/Volume 09/Issue 02/pdf/090133.pdf.
[9]See
Section 20 of the Civil Procedure Code, 1908
Section 20 of the Civil Procedure Code, 1908
[10]Case. No. 01-7860 (L)
(2d Cir., October 1, 2002)
(2d Cir., October 1, 2002)
[11]Section 11 of the Indian Contract Act, 1872
