The very rapid emergence of industrialisation, globalisation and technicalities formed a great basis for the growth of technology and the rise of this computer age. Electronic commerce is one of its products seeing that it is a major economic significance of the 21st century. Thus, internet is a new culture that has undoubtedly come to stay and while it remains, changes our own style. The wide range of activities performed with the use of internet has proven to outweigh the old fashioned way of doing same activities. I can say that the creators of computer must not have imagined how super useful their creation stands globally today. The internet has a great deal of impact on business and its practices, local markets will be mostly replaced by global markets. This change will lead to new business models and of course, the birth of E-commerce. One of such E-transactions includes Internet contract, which is E-contract.


Generally, E-commerce is a way to conduct commerce in totality using the internet as a medium. According to Hemant Goel’s book on Law and Emerging Technology, Cyber law, E-commerce is “the conducting of transactions using network of computers and telecommunication i.e. internet”. He also says “It is an exchange of goods and services over internet and a financial consideration for them”.

E-commerce refers to all forms of commercial transactions involving organizations and individuals that are based upon the processing and transmission of digitized data, including text, sound, and visual images[1].

E-commerce (electronic commerce or EC) is the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the internet. These business transactions occur either as business-to-business, business-to-consumer, consumer-to-consumer or consumer-to-business.[2]


Since the internet is no more secluded for just mere communication or computing and analysing of data, online contracts are now the order of the day and there are no differences between online and offline contracts. Hence, online contracts are still contracts and all the rules of contracts will still apply.

The online contract formation uses a communication technology which involves numerous intermediaries such as Internet Service Providers (ISPs). Imagine a contract that an Indian exporter and an American importer wish to enter into. One option would be that one party first pulls up two copies of the contract, signs them and couriers them to the other, who in turn signs both copies and couriers one copy back. The other option is that the two parties meet someplace and sign the contract.

In the electronic age, the whole contract can be completed in seconds, with both parties simply attaching their digital signatures to an electronic copy of the contract. There is no need for delayed couriers and additional travelling costs in such a situation. There was initially a hesitation amongst the legislatures to recognize this modern technology, but now many countries have passed laws to recognize electronic contracts.


E-contract is any kind of contract formed in the course of e-commerce by the interaction of two or more individuals using electronic means, such as e-mail, the interaction of an individual with an electronic agent, such as a computer program, or the interaction of at least two electronic agents that are programmed to recognize the existence of a contract[3].

E-contract is a contract modelled, specified, executed and deployed by a software system[4].

The 2 main parties to an e-contract are- The Originator and the Addressee.

– Originator according to the IT Act, 2008 is a person who sends, generates, stores or transmits any electronic message to be sent, generated, stored or transmitted to any other person and does not include an Intermediary.

An Addressee according to the IT Act, 2008 is a person who is intended by the originator to receive the electronic record but does not include any Intermediary


1. The parties do not, in most cases, meet physically.
2. There are no physical boundaries.
3. No handwritten signature and in most times, no hand writing is required.
4. Since there is no utmost security, risk factor is very high.
5. Jurisdictional issues are a major setback on e-contracts in case of breach.
6. There is no single authority to monitor the whole process especially in shrink wrap contracts.
7. Digital Signatures are used and electronic records are used as evidences in court n when need arises.
8. The three main methods of contracting electronically are e-mail, World Wide Web (www), and Cyber contracts (Click to agree/online contract).
9. The subject matter includes:

(A). Physical goods, where goods are ordered onlineand paid over internet and physical delivery is made.

(B). Digitised products such as software which can also be ordered for.

(C). Services like electronic banking, sale of shares, financial advice etc.


Since electronic contracts are presently taken as seriously as offline contracts, the same principles which apply to a valid contract will apply here. The law already recognizes contracts formed using facsimile, telex and other similar technology. An agreement between parties is legally valid if it satisfies the requirements of the law regarding its formation, i.e. that the parties intended to create a contract primarily. This intention is evidenced by their compliance with 3 classical cornerstones i.e. offer, acceptance and consideration.


Under section 2(a) of The Indian Contract Act, speaks of offer. “When one person signifies his willingness to do or to abstain from doing anything with a view to obtain assent of that other to such act or abstinence, he is said to make a proposal[5] ”. Advertisement on website may or may not constitute an offer as offer and invitation to treat are two distinct concepts. Being an offer to unspecified person, it is probably an invitation to treat, unless a contrary intention is clearly expressed. The test is of intention whether by supplying the information, the person intends to be legally bound or not. When consumers respond through an e-mail or by filling in an online form, built into the web page, they make an Offer. The seller can accept this offer either by express confirmation or by conduct. When dealing with business websites, it is important to establish whether the content of that business website amounts to an “offer” or merely an “invitation to treat”. An invitation to treat is not capable of being turned into a binding contract by simply accepting its terms. Rather, it is an invitation to others to make an offer of their own. By contrast, an offer is an expression of willingness to enter into a binding contract with another party[6].

The question which arises is, does it apply in electronic contracts? Is it when it enters the computer resource as provided under Section 13 of the IT Act or when the offeror receives acknowledgement as in section 12 of the IT Act?

It is clear that a message can enter into a person’s mailbox without him seeing it, thus, the element necessary for determining communication of offer in case of posts cannot be the same in electronic communication. The communication of offer is complete when it comes to the knowledge of the offeree and acknowledgement is received by him.

The offeror is able to revoke the offer any time before the communication of acceptance is complete as provided in section 5 of Indian Contract Act and has not been altered by IT Act.


One difficult task about entering electronic contract is to know when an agreement has been reached. Once an offer is accepted, a contract is concluded except the postal acceptance rule applies. The postal acceptance rule is an exception to the general rule that acceptance of a contract must be communicated to the offeror before a contract can be in existence. Under the rule, acceptance of a contract is said to occur at the time the acceptance is posted. Hence, the communication of acceptance is complete against the proposer when it is put in the course of transmission to him and as against the acceptor when it comes to the knowledge of the proposer, that is, when the acknowledgement enters into the into the designated computer resource. There is no disparity between Indian and Common law in this regard as seen in Lalman Shukla v. Gaurie Datta Sharma[7] where in spite of the fact that he found the boy whose uncle had promised Rs. 501 to anyone who finds was denied the reward seeing that he came to know only after finding the boy.

Both offer and acceptance can be generally done through email, website forms, and online agreements.


The Information Technology Act of 2000 is not a complete one and as a result, the Indian Contract Act of 1882 is still in use even for electronic contracts. However, the both Acts still complement each other.

Section 5 which speaks of revocation will not be applicable as there will be no much time or time lag in case of electronic contracts, the dispatch and receipt of mail happens within split of minutes and simultaneously.


This is a common law principle that denotes that the acceptance must be a mirror image of the offeror’s offer. This implies that an acceptance which varies in terms as against the original offer is not an acceptance but a counter proposal which will now have to be accepted by the original offeror before the contract can be said to be concluded[8]. The terms of the contract will now become the terms of the counter proposal and it is called Last Shot doctrine which implies that the terms of the final document in the series leading to the conclusion forms the contract.[9]


The Indian Contract Act of 1872 reads that “

In the present scenario, once an item has been supplied and the price has been paid, the consideration is executed and the requirement is satisfied. Problems may arise at a time when the consideration is merely executory[10]. This arises when the seller’s computer has done no more than “promise” to supply that item. A key intention that lies behind such promises is, of course, the intention to be bound by that promise in other words, the intention to create legal relations. The Contract law cannot entirely apply in e-contracts as in sometimes when an autonomous computer is used.


The purpose of such contract must be a lawful one. Courts will not enforce contracts that are illegal or violate public policy. Such contracts are considered void. An agreement which calls for the commission of a crime is illegal and therefore void. For example, a person could not enforce an agreement with another party to burn a house down. Also, an agreement that calls for the commission of a civil wrong (such as a tort) is illegal and void.


It is generally accepted that both natural persons and legal persons are capable of entering contracts, Computers are clearly not natural persons ,and neither American nor English contract law, at present, deem them to be legal persons. Computers, therefore, are not capable of being parties to contracts. In our scenario, both the buyer and the seller are natural persons, and consequently, are capable of being parties to the transaction. The autonomous computer, however, clearly cannot be a contractual party as the law now stands.


The consent of the both parties must be free from any deceit, mistake, fraud etc. E contracts can be broadly categorized into:

– Shrink Wrap Agreements
– Click Wrap Agreements

Shrink Wrap agreements are those which can only be read and accepted by the consumer after the opening of a particular product. The term is described after the shrink wrap plastic wrapping that is used to cover software or other boxes. Installing software from a CD into your PC is an example of a shrink wrap agreement.

Click Wrap agreements are mostly found in the software installation process. The user has to click either ‘Accept’ or ‘Decline’ to accept or reject the agreement respectively. These agreements lack a certain amount of bargain power. Choosing to make payments online or choosing to reject it is an example of using a click wrap agreement.

Either ways, the consent to such must be free. This is quite difficult to determine because sometimes the margin used to determine the strict rule of free consent gets narrower.


Keeping a record of the contract as agreed is vital. This can be difficult if there have been several email exchanges (perhaps each attaching documents intended to form part of the terms of the contract) including counter offers and negotiations between the contracting parties. As noted above, it may be difficult in such a scenario to determine who is the offeror and who has accepted the final offer, which may determine which party’s terms and conditions apply. In any event, it is important to ensure that the parties are clear on the content of the final contractual terms.



1. A Click Wrap Agreement comes into force when an online buyer or user clicks on the I AGREE button on a webpage to purchase or download a program. The term is derived from the fact that such agreements most times require clicking an on-screen icon to signal acceptance.


[1] Georges Ferne, Electronic Commerce, a new economic and policy area, ISBN 92-64-15512-0) The Sacher Report (OECD, 1997), avalaible at, last seen on 17/02/2017.

[2] E-commerce/ElectronicCommerce, Techtarget website, avalaible at, last seen on 11/02/2017.

[3] E-contract law and legal definition, Us legal website, avalaiible at, last seen on 12/02/2017.

[4] Vasudha Tamrakar & Pratibha Pal, E contracts and its legality, legal Service India,, last seen on 12/02/2017.

[5] The Indian contract Act 1882.

[6] Cavell Leitch, Electronic Contract-when has an agreement been reached, Cavell leitch law firm, avalaible at, last seen on 12/02/2017.

[7] (1913) M.L.J. 489.

[8] Haji Mohammad Haji Jiva v.E. Spinner and others, (1900) 24 Bom. 510 p.523. Nihal Chand v. Amar Nath, A.I.R. 1926 Lah. 645.

[9] Simbia Steel and Building Supplies v. James Clerk and Eaton Ltd., (1986) 2 Lloyd’s Rep. 225.

[10] Consideration for a promise or an act, which consideration has not yet been performed and which the party who is to perform is either bound by contract to perform or not.