Author- Amrendra Nath, Law student, Sai Nath University, Ranchi
Introduction
In recent years, the use of online transactions has increased rapidly in our country. Online transactions are happening through various payment platforms like G-Pay, Paytm, PhonePe, etc. From the year 2017 to 2022, the number of online transactions increased from 2071 crores to 9192 crores. This era of digitalization electronic contracts (e-contracts) and e-commerce transactions have become an important way of conducting faster businesses and payment options in India. The Indian Contract Act of 1872 serves as the legal backbone that governs various types of contracts, including electronic digital contracts.
Concept of E-contract and E-commerce transaction
Electronic contracts commonly known as E – Contracts is an agreement, made or entered, or executed through digital means. Such digitally generated contracts can be made in various ways like Email, websites, mobile applications, etc. E-commerce transactions which is also an E-contract, involves buying and selling of products and services online through electronic platforms like Filpkart, Amazon, eBay, Alibaba, etc. With the rapid increase of e-commerce, customers and businesses are entering into electronic agreements on a very large scale. This shift of businesses from the local level to digital has improved customers’ comfort, accessibility, and reach of the market. But this drastic digitalization of businesses presented many unique legal challenges for our legal system which need to be addressed effectively.
Laws in Indian Contract Act, 1872 for E-contract and E-transactions
The Indian Contract Act, 1872, provides a framework for e-contracts and e-commerce transactions. Several key provisions from the Act play a significant role in regulating these digital dealings:
1. Offer and Acceptance: Section 2(a) of the Indian Contract Act, 1872 deals with the formation of a contract through a valid offer and acceptance. In e-contracts, the offer can be made through email, website forms, or even through electronic signatures. The terms and conditions are accepted when a new application opens in the phone which is also an example of e-contract.
2. Consideration: Section 2(d) of the Indian contract Act 1872 deals with the consideration in which it states that consideration must be present in any contract to make it legally enforceable. In e-commerce transactions, the consideration can be seen in the form of online payments, virtual currency like crypto, or other valuable assets like stocks etc. exchanged electronically.
3. Communication of Proposals: Sections 3 to section 9 of the Indian contract Act, 1872 deals with the communication of proposals, acceptance, and revocation of offers. In the digital ecosystem, communication is facilitated through electronic means, and which has led to the emergence of new challenges related to instant messaging, data privacy, and the validity of electronic signatures.
4. Capacity to Contract: The Act of Indian Contract discusses about the parties entering into a contract must have the capacity to do so, meaning they must be of sound mind and not disqualified by law. Verification of individual for checking their capacity to contract is not possible in E- contract as it is difficult through online means.
5. Free Consent: Section 14of Indian Contract Act, 1872 states the necessity of free consent in a contract. In the digital ecosystem, ensuring that parties genuinely give consent to the terms and conditions.Because in digital environment where click and wrap system of agreement and terms and conditions exists, it’s very easy for someone to fall in the trap of fraud.
6. Performance of Contract: Sections 37 to 67A of the Indian contract act deals with the performance of the contracts. Performance of contract means following all rules from the mentioned terms and conditions of the contract. In e-commerce transactions, the on time, safe and accurate delivery of goods and services is crucial.Following these provisions is essential in gaining customers trust on digital marketplace.
Challenges Posed by the Increasing Use of Technology in Commercial Transactions
While the Contract Act of 1872 provides a strong foundation for regulating e-contracts and e-commerce transactions, the digital landscape brings forth several challenges that need to be addressed:
1. Data Protection and Privacy: With the increase in sharing of personal and financial information online, data protection and privacy become a crucial need for all of us. There is a need to align e-contracts with data protection laws to safeguard sensitive customer data. This would provide more confidence to the people doing e-commerce and e-contracts
2. Cybersecurity Threats: The rapid increase in cyber threats like hacking, phishing, and identity theft, poses significant risks to e-commerce transactions. Businesses must adopt robust cybersecurity measures to protect their systems and customers data from any big digital loss.
3. Electronic Signature Validity: Verification of authenticity and validity of electronic signatures is necessary for the enforceability of e-contracts. With introduction ofmore effective electronic signature practices could help inestablishment of a secure and reliable means of authentication.
4. Cross-Border Transactions: E-commerce allows businesses to interact with customers worldwide, which leads to the cross-border transactions. The Contract Act must address jurisdictional issues and harmonize contract laws to providea smooth cross-border enforceability during transactions.
Conclusion
The Indian Contract Act of 1872 forms a great framework for regulation of electronic contracts and e-commerce transactions. However, these rapidly changing and evolving technologies create challenges for the Act and as solution of these challenges constant adaptation and updates to existing laws are required. Addressing the issues like data protection, cybersecurity, electronic signature validity, and cross-border transactions will ensure the Act remains effective in governing digital commerce. As e-commerce continues to shape the business market, the relationship and combination between law and technology will play a crucial role in creating a secure and efficient digital marketplace in India.