Online contracts: Click & bind effect

By Priti Suri and Sunaina Kapoor, PSA, Legal Counsellors

The buying and selling of goods and services online has become routine practice. The effectiveness of e-commerce is based on electronic contracts that were born out of a need for speed, convenience and efficiency. It is quite common for two persons residing at different locations to conclude a contract in electronic form in seconds without them meeting. In view of the advantages that e-contracts offer, many countries have enacted laws to recognize them.

Priti Suri Proprietor PSA, Legal Counsellors
Priti Suri
Legal Counsellors

The Indian Contract Act, 1872, governs enforceability of contracts executed in India. Further, to support the enforceability of e-contracts, the Information Technology (IT) Act, 2000, has been enacted to resolve peculiar issues that arise in the formation and authentication of e-contracts.

The following e-contracts are executed by internet users: (a) Contracts through e-mail come into existence when offer and acceptance is exchanged over an e-mail. (b) Executing forms on web portals leads to formation of a contract when a seller offers goods or services through a web portal and the consumer places an order by completing and transmitting the order form. (c) Shrink wrap contracts are either licence agreements or a contract whose terms and conditions can only be read and accepted by the consumer after opening the product. (d) Click wrap contracts mostly form part of the installation process of software packages and usually are of two types: (i) type and click where the user must type “I accept” or other specified words in an on-screen box and then click a “Submit” or similar button. This displays acceptance of the terms of the contract; (ii) icon clicking where the user must click on an “OK” or “I agree” button on a dialog box or pop-up window or indicate his rejection by clicking “Cancel” or closing the window.

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Priti Suri is the proprietor of PSA where Sunaina Kapoor is an associate.



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