e CONTRACTS : NEED TO KNOW BASIS

The e Contract may be defined as a contract which is duly executed by the parties by attesting their signature, not by their own hand but digitally / electronic means. E Contracts are the valid contracts as they are executed bearing all the principles of the Contract Act, 1972.

How does it work…. as the signature is a mark identifying the person signing, in the same way the digital signature is in the technical form identifying not only the person but may also specify the date / designation of a person signing the contract. The digital signature depends on the Programme adopted.

What about its Validity and Enforceability?

  • Information Technology Act, 2000; Contract Act, 1872; Indian Evidence Act, 1872, Indian Stamp Act , 1899

Now let us understand how the aforesaid Acts validates/enforce “e Contracts.”

Information Technology Act, 2000 

  • Section 2 (d) defines “affixing  [electronic signature]” means an adoption of any methodology or procedure by a person for the purpose of authenticating an electronic record by means of digital signature. Thus, digital signature is required to authentic an electronic record.
  • Section 2(t) defines electronic record means data, record or data generated, image or sound stored, received or sent in an electronic form or micro film or computer generated micro fiche. Thus includes things generated in electronic form through computer system, but can the printouts be considered as an electronic record? The answer is “No”.
  • Section 2(t(ta)) defines “electronic signature” means authentication of any electronic record by a subscriber by means of the electronic technique specified in the Second Schedule and includes digital signature;
  • Section 3 – Authentication of electronic records: any subscriber may authenticate an electronic record by affixing his digital signature. The authentication of the digital signature is prerequisite and shall use of asymmetric crypto system and hash function;
  • Section 3A – Electronic signature means to authenticate of any electronic record by such electronic signature or electronic authentication technique, (a) which is considered reliable; and (b) may be specified in the Second Schedule. Thus, Subscriber shall keep the signature creation data or the authentication data under his control.
  • Section 5 – Legal recognition of electronic signatures: Where any law provides that information or any other matter shall be authenticated by affixing the signature or any document shall be signed or bear the signature of any person, then, notwithstanding anything contained in such law, such requirement shall be deemed to have been satisfied, if such information or matter is authenticated by means of digital signature affixed in such manner as may be prescribed by the Central Government. Thus affixing electronic signature authenticates the electronic record and is deemed to have satisfied the requirement.
  •  Section 10A – Validity of contracts formed through electronic means: 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 records, such contract shall not be deemed to be unenforceable solely on the ground that such electronic form or means was used for that purpose.
  •  Section 11 – Attribution of electronic records: An electronic record shall be attributed to the originator, if it was sent by the originator himself, thus sec 11 recognizes by fixing identity of sender and receiver.

Thus IT Act. 2000, recognizes, authenticates, validates, enforce and attribute e Contract

Indian Contract Act, 1872: 

The e Contracts should fulfil the essential requirements under the Contract act: 

1) offer and acceptance; 2) free consent 3) competent to contract 4) lawful purpose 

Indian Evidence Act, 1872 

  • Special provisions as to evidence relating to electronic record: this is an enabling section which say that the contents of electronic records may be proved in accordance with the provisions of section 65B. 
  • Section 65B – Admissibility of electronic records:, any information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer shall be deemed to be a document, and shall be admissible in any proceedings, without further proof or production of the original, as evidence or any contents of the original or of any fact stated therein of which direct evidence would be admissible. Though admissible as an evidence without proof, at the time of giving the statement as evidence, the Certificate is required under subsection 4.
  • Presumption as to electronic agreements: The Court shall presume that every electronic record purporting to be an agreement containing the [electronic signature] of the parties was so concluded by affixing the [electronic signature] of the parties.
  • Section 85B – Presumption as to electronic records and electronic signatures

Thus Section 85A and 85B provides states that the electronic records duly authenticated is admissible under the Indian Evidence Act unless contrary is proved or until the facts are disapproved, the Court shall presume that every electronic record containing the electronic signature is concluded. 

Stamp Act: Yes, e contract are liable to be stamped in accordance with the State specific stamp laws. 

INDIAN STAMP ACT, 1899: Section 2 – Definitions 

“Duly stamped”, as applied to an instrument, means that the instrument bears an adhesive or impressed stamp of not less than the proper amount and that such stamp has been affixed or used in accordance with the law for the time being in force in [India]; 

“Executed” and “execution” used with reference to instruments mean “signed” and “signature” [and includes attribution of electronic record within the meaning of section 11 of the Information Technology Act, 2000 (21 of 2000)];

“Stamp” means any mark, seal or endorsement by any agency or person duly authorised by the State Government, and includes an adhesive or impressed stamp, for the purposes of duty chargeable under this Act;

The Central Government has appointed the Stock Holding Corporation of India Limited (SHCIL) as the Central Record Keeping Agency (CRA) for all e-stamps used in the country. 

Conclusion: Aforesaid Acts gives the Legislative authority to “e Contracts” and also comes with all the Operational benefits. 

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Disclaimer: The views and thoughts expressed in this Article belong solely to the author. They are for general guidance and shall not be considered as a Legal opinion or any advice.

Author Bio

Qualification: LL.B / Advocate
Company: Adani Enterprises Ltd
Location: Ahmedabad, Gujarat, IN
Member Since: 15 Dec 2020 | Total Posts: 2
Handling Litigation and Drafting documents as per the business requirement. Being instrumental in analyzing Legal risk of the Business. View Full Profile

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