UNIT 7

E-commerce taxation is a complex issue because online transactions don’t follow

traditional business and tax rules. Here’s why it is challenging:

1.​ No Physical Presence – A company can sell products to customers in another

country without having a physical store or office there. This makes it hard to
determine which country has the right to tax the sale.
2.​ Changing Web Server Locations – Websites used for selling products or
services can be hosted on servers located anywhere in the world. This makes it
difficult to track where the business is actually operating from.
3.​ Tax Havens – Many businesses move their operations to countries with very low
taxes (tax havens) to avoid paying high taxes in their home country.
4.​ Confusion Over Tax Rules – There is no clear agreement between countries on
who should collect taxes from online sales, leading to disputes and loopholes.
5.​ Tax-Free Digital Goods – Digital products like software, music, and online
courses are often not taxed in the same way as physical goods, leading to
revenue loss for governments.
6.​ No Customs Duty – Digital goods can be sent across borders without paying
customs duties, unlike physical goods that go through strict import/export tax
regulations.
7.​ Bypassing Banking Rules – Online transactions often don’t require traditional
banking documents, making it easier to hide transactions and avoid taxes.
8.​ Easier for Small Businesses to Trade – E-commerce has reduced barriers to
trade, allowing small businesses to sell globally, but tax laws haven’t kept up
with this change.
9.​ Lack of Proper Accounting – Many online businesses do not follow proper
accounting and auditing practices, making tax enforcement difficult.

To regulate e-commerce taxation, governments need to address all these challenges

and create a fair system that ensures businesses pay their fair share of taxes.
What Counts as a "Physical Presence" in Online Taxation?

Taxing online businesses depends on whether they have a physical presence in a

country. The key question is: What establishes this presence?

1️⃣ Downloading Website Content – Simply accessing or downloading a website does

not create a taxable presence.

2️⃣ Location of Web Server – Just hosting a website on a server in a country may not be
enough for taxation.

3️⃣ "Minimum Contacts" or "Purposeful Availment" – A business is taxable if it

✅
actively engages with customers in a country, such as:​

✅
Selling products/services regularly​

✅
Running targeted ads​
Having a local office/agent

💡 Conclusion: A business is taxed where it has real interaction with customers,

not just where its website or server is located.

OECD Model (Organisation for Economic Co-operation and Development ) –

Permanent Establishment (PE)

1.​ Definition: A permanent establishment (PE) is a fixed place of business

where a company's activities are fully or partially conducted (Article 5(1)).
2.​ Types of PE: Offices, factories, mines, and similar facilities are considered
automatic PEs (Article 5(2)).
 3.​ Exceptions: If a business only carries out preparatory or auxiliary activities
(e.g., storage, display, or delivery of goods), it does not qualify as a PE (Article
5(4)(e)).
4.​ Agents & PE:
○​ Independent Agents (like brokers) do not create a PE (Article 5(6)).
○​ Dependent Agents, who regularly sign contracts for the company, do
create a PE (Article 5(5)).
5.​ E-commerce & PE Issues:
○​ Does hosting a website on a server in another country create a PE?
○​ Is an internet service provider (ISP) hosting a website considered an
agent of the business?
○​ Can automated computer systems (without human intervention) be
classified as a PE?

Permanent Establishment (PE) in the Context of Websites and Servers

1.​ Can a Website Be a PE?

○​ A website is just software and data; it is not a physical entity.
○​ Since it does not have a tangible location like an office or equipment, it
cannot be considered a "place of business" or a PE.
2.​ Can a Server Be a PE?
○​ A server is different from a website; a company owning the website may
not own the server.
○​ If a server is physically located in one place for a significant time, it
can be considered a PE.

Enterprise Hosting Its Own Website – Permanent Establishment (PE)

●​ If a business owns and operates the server that hosts its website, the location of
the server may be considered its Permanent Establishment (PE).
●​ A PE can exist even without employees at the server location, as long as the
enterprise controls and operates the computer equipment there.

Permanent Establishment (PE) and Computer Equipment

A business may be considered to have a Permanent Establishment (PE) in a country

if it carries out substantial business operations through computer equipment located
there. However, if the activities performed by the computer equipment are only
preparatory or auxiliary, it may not qualify as a PE.

Examples of Preparatory or Auxiliary Activities:

 ●​ Acting as a communication link (similar to a telephone line) between suppliers
and customers.
●​ Advertising goods or services.
●​ Relaying information via a mirror server for security and efficiency.
●​ Collecting market data and providing information.

However, if the computer equipment is used to perform essential and significant

business activities, or core functions of the company, and it is a fixed place of
business, then it may constitute a PE.

When a Company is a Resident in India

For individuals, residential status is determined based on their physical presence in

India.​
For companies, it depends on where the control and management of its affairs is
located.

Criteria for a Company to be a Resident in India (Section 6(3) of the Income Tax
Act):

1.​ If it is an Indian company (registered under the Companies Act, 2013).

2.​ If its control and management is wholly in India during the relevant financial
year.

Even if an Indian company is controlled from outside India, it is still considered a

resident for tax purposes.

Taxation of Income in India

Income earned by a person or company in India is categorized into:

●​ Salary
●​ Income from House Property
●​ Business Income
●​ Capital Gains
●​ Income from Other Sources

Under Section 14 of the Income Tax Act, total income is calculated based on these
heads. The definition of income under Section 2(24) is inclusive, not exhaustive,
meaning it covers a wide range of earnings.
Actual Receipt of Income:​
Income is considered received when the recipient actually has control over the
money, not just on paper.

Income Accruing or Arising in India (Section 9)

●​ Income is said to accrue or arise when the recipient has a legal right to
receive it.
●​ Once this right is vested in the person, the income is taxable in India.

Taxing E-Commerce in India

Income Deemed to Accrue or Arise in India – Section 9(1)

Under the Income Tax Act, certain types of income are considered to arise in India and
are taxed accordingly:

1.​ Income from Business in India – If a business has any connection in India and
earns income directly or indirectly from it.
2.​ Income from Property – If the property generating income is located in India.
3.​ Income from Assets or Sources in India – Any earnings from assets or
sources situated in India.
4.​ Income from Capital Gains – If a capital asset (such as land, shares, or
property) is sold in India.
5.​ Income from Salaries – If the salary is earned in India, it is taxable in India.
6.​ Salaries Paid by the Indian Government – If the Indian government pays a
salary to an Indian citizen, it is taxable in India even if services are rendered
abroad.
7.​ Dividend Income – Dividends paid by an Indian company are taxable even if
received outside India.
8.​ Interest Income – Interest paid by the Indian government or an Indian entity may
be taxable under certain conditions.
9.​ Royalty Income – Royalty payments from the Indian government or an Indian
entity are taxable.
10.​Income from the Use of Equipment – Income from the use or right to use
industrial, commercial, or scientific equipment in India is taxable (except for
specific mineral oil businesses under Section 44BB).
11.​Fees for Technical Services – Payments for technical services provided to the
Indian government or an Indian company are taxable in India.

Business Connection & Finance Act, 2003

The Finance Act, 2003 clarified what qualifies as a "business connection" for taxation
purposes. It added Explanations 2 & 3 to Section 9(1)(i) of the Income Tax Act,
effective from April 1, 2004.

According to Explanation 2, a business connection exists if a non-resident conducts

business in India through:

1.​ An Authorized Agent in India – A person who regularly signs contracts in India
on behalf of a non-resident, except when only purchasing goods.
2.​ Stock Maintenance in India – A person who does not sign contracts but
maintains a stock of goods in India and delivers them on behalf of a non-resident.
3.​ Order Procurement in India – A person who habitually gets orders in India for a
non-resident business or a group of non-resident businesses under common
control.

Exceptions: A business connection does not include activities conducted by

independent brokers, general commission agents, or any agents acting independently in
the ordinary course of business.

Establishing Permanent Establishment (PE):

1. Understanding Permanent Establishment (PE)

A Permanent Establishment (PE) refers to a fixed place of business through which a

foreign company operates in India. If a foreign company has a PE in India, it may be
liable to pay tax here.

2. Key Legal Provisions

●​ Section 44DA of the Income Tax Act: This section was added to specify
taxation rules for foreign entities earning income from services or business
activities in India through a PE.
●​ Definition under Section 92F(iii): The term "enterprise" includes any person
or business entity involved in:
○​ Producing, storing, supplying, or distributing goods and services.
○​ Holding rights over patents, trademarks, copyrights, or business licenses.
○​ Providing services or financial investments.
○​ Managing shares, securities, and debentures of other companies.
○​ Operating through subsidiaries or divisions, whether in the same location
or elsewhere.

3. Role of Agents in Establishing PE

 ●​ An agent (a representative of a foreign company) may create a business
connection and also be considered a PE under Indian tax laws.
●​ Example: Call Centers (BPOs) handling outsourced work from foreign
companies.
○​ If a foreign company outsources its operations to an Indian BPO, it may
not automatically be considered a PE.
○​ However, if the BPO has authority to conclude contracts for the foreign
company, it acts as a dependent agent and establishes a PE in India.

Taxing Digital Goods in India

Definition of Goods in Indian Law

●​ Constitution of India (Article 366(12)): Defines "goods" as all materials,

commodities, and articles.
●​ Sale of Goods Act, 1930: Defines "goods" as all movable property (except
actionable claims and money) and includes stock, shares, crops, and things
attached to the land that will be separated before sale.
●​ Central Excise and Salt Act, 1944: Defines "goods" as marketable articles that
can be bought and sold.

Understanding Marketability of Goods

●​ Indian Cable Co. Ltd. v. CCE: Goods must be marketable to be subject to

excise duty.
●​ Bhor Industries Ltd. v. CCE: Goods should be known and accepted in the
market as commercial commodities.
●​ Quality Steel Tubes (P) Ltd. v. CCE: For excise duty, an article must:
1.​ Be classified as "goods."
2.​ Be marketable.

Tax on Sale or Purchase of Goods in India

●​ Article 286(2): Parliament can set rules to determine when a sale occurs.
●​ Article 269(3): Defines taxation principles for inter-state trade.
●​ Central Sales Tax Act, 1956: Governs sales tax on inter-state transactions.

Authority of Taxation

●​ Intra-State Sales (within a state) → Taxed by State Government.

 ●​ Inter-State Sales (between states) → Taxed by the Central Government.
●​ State Taxation Restrictions:
○​ Cannot tax sales during imports or exports.
○​ Cannot tax sales outside the state.
○​ Parliament can impose restrictions on taxing essential goods.

Expanded Definition of 'Tax on Sale of Goods' (Article 366(29-A))

Tax on sales includes:

1.​ Transfer of goods without a sale contract (for cash, deferred payment, or any
other form).
2.​ Goods used in a works contract.
3.​ Goods delivered under a hire-purchase or installment system.
4.​ Right to use goods transferred for a specific or indefinite period.
5.​ Goods supplied by an association to its members.
6.​ Goods supplied as part of a service (e.g., food in a restaurant).

Determining Where a Sale Happens (Situs of Sale)

●​ Central Sales Tax Act, 1956: Defines when a sale is classified as inter-state,
intra-state, or export/import.
○​ Section 3: Defines inter-state trade.
○​ Section 4: Defines sales occurring outside a state.
○​ Section 5: Defines sales occurring during import/export.
●​ Where sale location is unclear:
○​ The place where ownership of goods transfers determines the tax liability.
○​ Delivery location alone does not determine tax liability.

Taxing Digital Goods

1. Is Software Considered Good Under GST?

In the case of Tata Consultancy Services vs. State of Andhra Pradesh, the key
question was whether branded software, which is intangible, qualifies as a "good"
under GST.

●​ The test is not whether the item is tangible or intangible.

●​ Instead, it depends on whether the item can be:
○​ Abstracted (identified separately)
○​ Consumed and used
○​ Transferred, delivered, stored, or possessed
 ●​ Since software meets all these criteria, it qualifies as a "good" for taxation.

2. When is Digital Goods Taxable?

As per the Supreme Court ruling in Century Finance Corporation Ltd. vs. State of
Maharashtra, the taxable event is not the actual delivery of goods but the transfer of
the right to use them.

Key points:

●​ The goods must be in existence at the time of the transfer.

●​ The place where the goods are physically located does not matter.
●​ What matters is where the right to use the goods is transferred.
●​ Article 366(29A)(d) states that tax applies to the transfer of the right to use
goods, not the actual use of goods

3. Taxing Digital Goods Like Software, Music, and E-Books

●​ If a written contract exists between parties, the taxable event is the execution of
the contract.
●​ If the right to use is transferred orally or impliedly, the taxable event occurs when
the goods are delivered.
●​ Digital goods that can be transferred via electronic networks (e.g., software,
MP3s, e-books, videos) are also taxable under "deemed sale."

4. Challenges in Taxing Online Transactions

●​ Traditional tax principles (like "minimum contacts," "business connection," and

"permanent establishment") were designed for physical goods and services.
●​ With e-commerce, new tax rules are needed to match the digital nature of
business transactions.
●​ The OECD Model Treaty attempts to provide solutions for digital taxation.

5. Important Questions to Ponder

Software Installed on a Server in India (USA-based Company):

●​ If the server creates a permanent establishment (PE) in India, then India can tax
the income.
●​ If no PE exists, taxation depends on the India-USA tax treaty and business
connection rules.

Facebook/Google Earning from Indian Advertisers:

 ●​ Under India’s Equalisation Levy, digital ad revenues earned from Indian
businesses are taxable.
●​ If the company has a significant economic presence (SEP) in India, it may also
be subject to income tax.

Indian User Downloading an App from a US Company:

●​ If the purchase is classified as import of digital goods/services, GST may apply

under the reverse charge mechanism.
●​ India may also impose Equalisation Levy if it qualifies as a cross-border digital
service.

Article 5: Permanent Establishment (PE)

This article defines when a business from one country (Contracting State) is considered
to have a permanent establishment (PE) in another country, which can impact its tax
obligations there.

1. What is a Permanent Establishment?

A permanent establishment (PE) is a fixed place of business where a company

partly or fully carries out its operations in another country.

2. What are examples of a Permanent Establishment?

✅
The article provides a list of places that qualify as a PE, such as:​

✅
Head offices or management places​

✅
Branches​

✅
Offices​

✅
Factories​

✅
Workshops​
Mines, oil wells, quarries, or any place where natural resources are extracted

3. Construction Sites & Projects

A construction or installation project will be considered a PE only if it lasts more

than 12 months. If it is shorter, it is not considered a PE for tax purposes.

4. What is NOT Considered a Permanent Establishment?

❌
A business does not have a PE in another country if it only does activities like:​

❌
Storing, displaying, or delivering goods​
Holding stock for another company to process​
❌ Buying goods or collecting information​
❌ Carrying out small preparatory or support activities (like advertising or market
❌ A combination of these minor activities
research)​

5. Agents Who Create a PE

If a person regularly signs contracts on behalf of a foreign company, that company

will be considered to have a PE in the country where the agent works. But if the
person is only doing minor activities (like those in point 4), the company does not have
a PE.

6. Independent Agents Do Not Create a PE

A company does not have a PE just because it works with an independent agent (like
brokers or commission agents), as long as the agent is acting in the normal course of
their business.

7. Control of Another Company Does Not Create a PE

Just because one company owns or controls another company in a different

country, that alone does not mean the two companies automatically have a PE in each
other's country.

Why is This Important?This article helps determine whether a foreign business must
pay taxes in another country by defining when it has a taxable presence (PE) there.
If a company does not meet the PE criteria, it may avoid being taxed in that country.

OECD MODEL OF GUIDELINES IN INDIA :

1. Scope of the Convention

●​ The convention applies to persons and entities that are residents of one or
both contracting states.
●​ It covers taxes on income and capital imposed by national, state, or local
governments.

2. Definition of Key Terms

●​ Permanent Establishment (PE): A fixed place of business (e.g., an office,
factory, or branch) through which a company operates in another country.
 ●​ Resident: A person or company liable to tax in a country based on domicile,
residence, or place of management.
●​ Business Profits: A country can tax business profits only if the enterprise has a
PE in that country.

3. Taxation of Income
●​ Income from Property (Art. 6): Taxable in the country where the property is
located.
●​ Business Profits (Art. 7): Taxed only if there’s a PE in the other country.
●​ Dividends (Art. 10): May be taxed in both countries, but the country where the
paying company is located has a limited tax rate.
●​ Interest (Art. 11) & Royalties (Art. 12): Taxed in the country where they arise,
with reduced tax rates for foreign recipients.

4. Avoiding Double Taxation

Two methods are used:

1.​ Exemption Method (Art. 23A): The income taxed in one country is exempted
from tax in the other.
2.​ Credit Method (Art. 23B): The home country allows a tax credit for taxes paid
abroad.

5. Special Provisions
●​ Non-Discrimination (Art. 24): Foreigners cannot be taxed more heavily than
locals.
●​ Mutual Agreement (Art. 25): Countries can resolve disputes through
diplomatic negotiation.
●​ Exchange of Information (Art. 26): Countries can share tax information to
prevent evasion.
●​ Assistance in Tax Collection (Art. 27): Governments help each other collect
taxes from their residents.

Why is this Important?

The OECD guidelines set international standards for taxation, helping countries
coordinate tax rules, prevent tax avoidance, and protect businesses from unfair double
taxation.
Short Notes on Taxation of E-Commerce under GST

1. Key Definitions

●​ E-commerce: Selling goods/services online.

●​ E-commerce Operator (ECO): Manages an online selling platform.
●​ Net Value of Taxable Supplies: Sales through the platform minus returns.

2. GST Registration for E-commerce (Sec 24 CGST Act)

✅
●​ Mandatory for:​

✅
E-commerce operators.​

✅
Sellers on e-commerce platforms (unless exempt under Sec 9(5)).​
Foreign online service providers selling in India.
●​ If ECO has no physical presence, they must appoint a representative in India.

3. When ECO Pays GST Instead of Seller (Sec 9(5))

GST liability shifts to the E-commerce Operator for:​

✔ Cab services (Uber, Ola).​
✔ Hotel bookings (OYO, Airbnb).​
✔ Housekeeping services (UrbanClap).​
✔ Food delivery from cloud kitchens (Swiggy, Zomato).

🔹 Example: Uber collects GST and pays it, not the driver.
4. GST on Food Delivery Apps (Since Jan 1, 2022)

●​ Swiggy & Zomato collect 5% GST directly from customers.

●​ Restaurants must register under GST, even if turnover is low.

5. Tax Collected at Source (TCS - Sec 52 CGST Act)

●​ ECO must collect 1% TCS (0.5% CGST + 0.5% SGST).

●​ Example: If a seller makes ₹50,000 in sales & ₹5,000 in returns, TCS applies on
₹45,000.
●​ Due Date: 10th of the next month.
6. Compliance for E-commerce Operators

📌 GSTR-8: Monthly return for e-commerce transactions & TCS.​

📌 GSTR-9B: Annual summary of all transactions.​
📌 Sellers can claim TCS credit in their GST returns.
7. Tax Deducted at Source (TDS - Sec 194O IT Act)

●​ 1% TDS deducted on gross sales before paying sellers.

●​ Example: If a seller earns ₹10 lakh, Amazon deducts ₹10,000 as TDS.

8. Equalization Levy on Foreign E-commerce

●​ 2% Levy on non-resident e-commerce firms (Amazon, Netflix, Google).

●​ 6% Levy on digital ads & marketing services.

9. Penalties for Non-Compliance (Finance Act 2023)

🚨 ₹10,000 or tax amount (whichever is higher) for:​

❌ Allowing unregistered sellers to sell.​
❌ Interstate sales by ineligible suppliers.​
❌ Failing to file accurate GSTR-8 reports.
10. GST Rules for Online Services (OIDAR)

Applies to:​
✔ Cloud services (AWS, Google Drive).​
✔ Streaming platforms (Netflix, Spotify).​
✔ E-books, digital courses, software downloads.​
✔ Online gaming & advertising (Facebook Ads).

Foreign service providers must register for GST in India.

11. FAQs

1️⃣ How are product returns adjusted? → Tax applies only to net sales.​
2️⃣ Who collects TCS if multiple e-commerce platforms are involved? → The final
payer.​
3️⃣ Do sellers on their own website need to collect TCS? → No, unless they allow
other sellers.​
4️⃣ Is GST applicable to books sold via e-commerce? → No, if books are exempted
goods.​
5️⃣ Are travel agents subject to TCS? → Yes, if operating as ECO.

Conclusion

✅ GST collection shifted to platforms (e.g., Uber, Swiggy).​

✅ Mandatory TCS & TDS compliance for e-commerce transactions.​
✅ Taxation on foreign digital services via Equalization Levy.
📌 Easy Tip: Learn Sec 9(5), Sec 52 (TCS), Sec 194O (TDS), Equalization Levy for
exams! 🚀

Key Differences Between the EU & US

Aspect EU (VAT System) US (Sales Tax System)

Tax Type VAT (charged at each stage of sale) Sales tax (only at the final
sale)

Tax Rate Fixed by each country (15%-27%) Varies by state (0%-10%)

Tax Sellers must charge VAT based on Sellers collect tax based on
Collection customer’s location state rules

Threshold €10,000 annual sales $100,000 sales or 200

transactions per state

Digital Tax 3% DST on tech companies No federal DST, only

(DST) state-level digital taxes
One-Stop Yes (OSS system for VAT reporting) No (Sellers register
System? separately in each state)
 UNIT 6

Domain Name Disputes in India

The internet, initially developed for the US Defence Department in the 1960s, has
evolved into a global communication and business platform. Every device on the
internet has a unique IP address, but since these numbers are hard to remember,
domain names (like www.google.com) were created.

A domain name serves as an online identity and is linked to an IP address through a

process called domain name resolution. Since businesses and individuals rely on
domain names to build their brand identity, conflicts arise when multiple parties claim
rights over the same or similar domain names.

1. Why Do Domain Name Disputes Occur?

Domain name disputes happen because:​
1️⃣ Limited Availability – Each domain name is unique, creating artificial scarcity.​
2️⃣ Trademarks & Business Identity – Companies want domain names matching their
brand.​
3️⃣ Personal Name Protection – Celebrities and well-known individuals want control
over their name as a domain.​
4️⃣ Cybersquatting – Some individuals register domain names with the intention of
selling them for profit later.

✔️
A domain name can be legally protected through:​

✔️
Trademark registration​

✔️
Long-term commercial use​
Personal reputation or celebrity status

When conflicts arise, courts determine who has the stronger legal claim.

2. Important Judicial Cases in India

(A) Yahoo! Inc. vs. Akash Arora (1999) – First Domain Name Dispute in India

Facts of the Case:

●​ Yahoo! Inc. owned the “Yahoo!” trademark and the domain name
www.yahoo.com.
●​ The defendant created www.yahooindia.com offering similar web-based services.
 ●​ Yahoo! Inc. filed a passing off lawsuit, arguing that the defendant was
misleading users.

✅
Court’s Decision:​

✅
The two domain names were too similar, creating confusion.​

✅
Internet users could mistakenly believe both belonged to Yahoo! Inc.​
The court banned the defendant from using www.yahooindia.com.

📌 Why This Case Matters?​

This case established that domain names are protected under trademark law and
cannot be copied to deceive customers.

(B) Satyam Infoway Ltd. vs. Sifynet Solutions Pvt. Ltd. (2004) – First
Supreme Court Case

Facts of the Case:

●​ Satyam Infoway Ltd. owned the domain names “www.sifynet.net”,

“www.sifymall.com” and “www.sifyrealestate.com”.
●​ The defendant registered “www.siffynet.net” and “www.siffynet.com”,
offering similar services.
●​ Satyam Infoway filed a case, claiming passing off and unfair competition.

✅
Court’s Decision:​

✅
The Supreme Court ruled that “Sify” was a well-known trade name.​
The defendant’s domain names were deceptively similar, likely causing

✅
confusion.​
The lower court’s injunction was reinstated, preventing the defendant from using
the names.

📌 Why This Case Matters?​

This case strengthened trademark protection for domain names and emphasized
that businesses must protect their digital identity.

(C) Arun Jaitley vs. Network Solutions Pvt. Ltd. (Cybersquatting Case)

Facts of the Case:

●​ Arun Jaitley, a well-known politician, attempted to register www.arunjaitley.com

but found that it was already registered by someone else.
●​ The domain owner tried to sell it through an auction service at an inflated
price.
 ●​ Jaitley filed a lawsuit, arguing bad faith registration (cybersquatting).

✅
Court’s Decision:​
The domain name was linked to Jaitley’s personal identity, giving him exclusive

✅
rights.​
Cybersquatting is illegal – registering domain names with the sole intention of

✅
selling them for profit is not allowed.​
The court punished the defendant and ordered the domain name to be
transferred to Jaitley.

📌 Why This Case Matters?​

This case established that celebrities and well-known figures have the exclusive
right to their names in domain registrations.

3. Key Takeaways from These Cases

✔️ Trademark Protection Applies to Domain Names – If a business has a registered
trademark, it can legally prevent others from using a similar domain name.

✔️ Passing Off Doctrine – If a domain name misleads users into believing it is

linked to an existing brand, the original owner can take legal action.

✔️ Cybersquatting is Illegal – Registering domain names just to sell them for profit
violates the Trade Marks Act, 1999.

✔️ Prior Use is Important – A company with a history of using a name has a

stronger claim in a dispute.

✔️ Domain Names Are Digital Assets – Businesses should register their domain
names early to prevent legal issues later.

4. Conclusion
With the rapid growth of e-commerce and online branding, domain name disputes are
increasing in India. Businesses and individuals must be aware of their legal rights to
protect their online identity.

✅
To resolve domain name disputes, India has:​

✅
Trademark laws to prevent passing off.​

✅
Court rulings to penalize cybersquatting.​
Dispute resolution mechanisms for quick settlements.
Businesses should register their domain names early and monitor for potential
violations to avoid legal conflicts in the future.

Intellectual Property (IP) and E-Commerce

1. What is Intellectual Property (IP)?
●​ IP refers to legal rights that protect inventions, trademarks, creative works, and
business secrets.

✅
●​ It includes:​

✅
Patents – Protects new inventions.​

✅
Trademarks – Protects business names, logos, and brands.​

✅
Copyrights – Protects books, music, films, and digital content.​
Trade secrets – Protects confidential business information.

Why is IP Important in E-Commerce?

●​ Many E-commerce businesses are built on IP-based products like music,

software, designs, and online services.
●​ Websites, user interfaces, and software are all forms of IP protected under
various laws.
●​ Trademarks are essential for brand identity, customer recognition, and online
reputation.

2. IP Protection for E-Commerce Businesses

A. Conducting an IP Audit

Before starting an e-commerce business, companies should:

●​ List all patents, trademarks, and copyrights they own.

●​ Identify contracts that affect IP ownership (e.g., consulting agreements, NDAs,
employee agreements).
●​ Check ownership of website designs, databases, and digital content.
●​ Review licensing agreements if using third-party software or technology.

💡 Purpose of IP Audit: Helps businesses protect, use, and enhance their IP assets.
B. IP Issues in Website Design & Development

●​ Ownership of Website Content: If you hire a web designer, check contracts to

confirm who owns the design and text.
●​ Third-Party Tools: If using licensed databases, search engines, or
e-commerce systems, verify who owns the software.
●​ Linking to Other Websites: Some laws restrict linking without
permission—always seek approval.
●​ Framing Content: Displaying another website’s content within your own may be
legally risky. Always get written permission.

C. Domain Name & IP Issues

●​ Choosing a Domain Name: Businesses must choose a name that is easy to

remember, legally available, and trademark-protected.

✅
●​ Types of Domain Names:​

✅
Generic Top-Level Domains (gTLDs) – .com, .net, .org, .info​
Country Code Top-Level Domains (ccTLDs) – .in (India), .cn (China), .uk

✅
(United Kingdom)​
Specialized Domains – .biz (businesses), .aero (air travel)
●​ Domain Name Registration: Managed by ICANN (Internet Corporation for
Assigned Names and Numbers).
●​ Avoid Cybersquatting: Do not register trademarks as domain names to sell
them for profit—it is illegal.

3. Copyright & Content Protection on the Internet

A. Copyright Infringement in Online Content Distribution

●​ Digital products like music, films, software, and books are often illegally
copied and distributed.
●​ Unauthorized file-sharing causes huge revenue losses for content owners.
●​ Copyright laws protect original content from unauthorized downloads and
piracy.
B. The Napster Case (Landmark Copyright Infringement Case)

●​ Napster, a music-sharing platform, allowed users to share copyrighted songs

for free.
●​ Music companies sued Napster for facilitating copyright infringement.
●​ Courts shut down Napster because it enabled the illegal distribution of
copyrighted music.
●​ The case set a global precedent for digital piracy laws.

4. Summary & Key Takeaways

✅ IP protection is critical for e-commerce businesses.​
✅ Trademarks protect brand identity in online businesses.​
✅ Domain names should not infringe on existing trademarks.​
✅ Copyright laws prevent unauthorized distribution of digital content.​
✅ Website owners must check legal agreements for ownership of designs and
✅ Piracy and unauthorized downloads violate copyright laws.​
tools.​

✅ Companies should conduct an IP audit to safeguard their digital assets.

💡 Conclusion: IP laws ensure fair competition, protect digital content, and help
anyone involved in e-commerce. 🚀
businesses thrive in the online marketplace. Understanding these laws is essential for

CYBERSQUATTING AND DOMAIN NAME

DISPUTES
1. What is a Domain Name?
●​ A domain name is a unique online address that helps businesses and
individuals establish their identity on the internet (e.g., www.google.com).
●​ It helps users easily find businesses and sometimes indicates the country of
business.
Legal Recognition of Domain Names

●​ The Supreme Court in Satyam Infoway Ltd. v. Sifynet Solutions Ltd. (2004)
recognized domain names as business identifiers, similar to trademarks.
●​ Thus, domain names must be unique and follow the rules under the Trade
Marks Act, 1999 for distinctiveness.

2. What is Cybersquatting?
●​ Definition: Cybersquatting means fraudulently registering a domain name
with the intent to sell it at a high price to the legitimate owner.
●​ Delhi High Court in Manish Vij v. Indra Chugh (2002) defined cybersquatting
as obtaining a domain name in bad faith to profit from it.
●​ It typically involves registering well-known business names or personal names as
domain names and either selling them or earning from web traffic.

3. Notable Cybersquatting Cases in India

(A) Yahoo! Inc. v. Akash Arora (1999) - First Domain Name Case in India

●​ Issue: Defendant registered www.yahooindia.com and offered services similar to

www.yahoo.com.

✅
●​ Court Decision:​

✅
The domain name was deceptively similar.​

✅
It misled users into believing both services were from Yahoo! Inc.​
Defendant was permanently restrained from using the domain name.

(B) Rediff Communication Ltd. v. Cyberbooth (1999)

●​ Issue: Defendant registered radiiff.com, which was almost identical to rediff.com.

✅
●​ Court Decision:​

✅
Recognized domain names as company assets.​
Ordered the infringing domain to be transferred to the plaintiff.

(C) Tata Sons Ltd. v. Manu Kishori (Cybersquatting of Famous Brands)

●​ Issue: Defendant registered multiple domain names, including:

○​ jrdtata.com, ratantata.com, tatahoneywell.com, tatapowerco.com, etc.
 ✅
●​ Court Decision:​

✅
These registrations were in bad faith.​
Ordered the defendant to surrender all domains to Tata Sons Ltd.

(D) Arun Jaitley v. Network Solutions (2009) – Cybersquatting of a Celebrity

Name

●​ Issue: Defendant registered www.arunjaitley.com and asked for high payment

to transfer it.

✅
●​ Court Decision:​

✅
A person's name has legal protection if they have public recognition.​
Domain name registered in bad faith must be transferred to the rightful

✅
owner.​
Punitive damages were imposed on the defendant.

4. Types of Cybersquatting

Type Explanation Example

Domain Name Buying a company's domain siffynet.com vs sifynet.com

Squatting name to extort money (Satyam Infoway case)

Identity Theft Registering an expired A cyber squatter re-registers

domain to steal traffic an expired domain of a
popular brand.

Typosquatting Registering domains with goggle.com (instead of

(URL Hijacking) common spelling mistakes Google) showed malware to
to mislead users users.

Name-Jacking Registering a famous arunjaitley.com was taken for

person's name as a domain resale at a high price.
name
5. Cybersquatting Laws in the USA
Anti-Cybersquatting Consumer Protection Act (ACPA), 1999

●​ Prohibits bad-faith registration of domain names for profit.

●​ Covers domain names that are identical or confusingly similar to trademarks.

✅
●​ Allows:​

✅
Legal action against cybersquatters.​

✅
Transfer, cancellation, or forfeiture of infringing domains.​
Penalties from $1,000 to $100,000 per domain.
●​ Protects legitimate registrants who have a genuine reason to use a similar
name.

6. UDRP (Uniform Domain-Name Dispute-Resolution

Policy) Rules
To win a UDRP case, the complainant must prove:​
1️⃣ Domain name is identical or confusingly similar to their registered trademark.​
2️⃣ The registrant has no legitimate right or interest in the domain name.​
3️⃣ The domain was registered and used in bad faith (e.g., to sell at a high price).

Bad faith can be shown if:

●​ The registrant registered the domain to disrupt a competitor's business.

●​ The domain was registered to sell it to the trademark owner at a profit.
●​ The registrant has a pattern of registering famous brand names.
●​ The domain is used to mislead users for financial gain.

7. Cybersquatting Laws & Policies in India

(A) INDRP – Indian Domain Name Dispute Resolution Policy

●​ India follows UDRP rules since it is a WIPO signatory.

●​ INDRP (Indian version of UDRP) handles domain name disputes for .in
domains.
●​ Arbitration follows the Arbitration & Conciliation Act, 1996.
●​ Arbitrator must provide a reasoned judgment for domain transfers.
(B) Information Technology Act, 2000

●​ Section 336 (Forgery): Punishes forgery related to cybersquatting with up to 3

years in prison and a fine.
●​ Section 66A: Punishes use of offensive or misleading information in
cybersquatting cases.

8. Legal Actions Against Cybersquatting in India

✔️ File an arbitration case under INDRP.​
✔️ File a lawsuit in Indian courts.​
✔️ Send a Cease & Desist Notice to the cybersquatter.​
✔️ Apply for a "Passing Off" order to protect brand reputation.
Case Example: YouTube LLC v. Rohit Kohli

●​ Defendant registered www.youtube.co.in.

●​ The INDRP ruled in favor of YouTube LLC.
●​ Ordered transfer of the domain to the rightful owner.

9. India’s Initiatives Against Cybersquatting

IRINN – Indian Registry for Internet Names and Numbers

●​ Government agency managing IP addresses & domain registrations in India.

●​ Established National Internet Registry (NIR) in 2012.

NIXI – .IN Domain Management

●​ NIXI manages India’s .IN country-code domain (.in, .co.in, etc.).

10. Challenges in Tackling Cybersquatting

🔴 No mechanism to prevent cybersquatting before it happens.​
🔴 Domain names are not legally registered like trademarks.​
🔴 Easy for cybersquatters to buy domains and demand money from rightful
owners.
11. Recommendations for Better Cybersquatting Laws in
India
📌 New Legislation – India needs specific anti-cybersquatting laws with clear
📌 Recognition of Domain Names as Trademarks – Courts should officially
penalties.​

📌 Establish a Special Tribunal – A dedicated legal body should handle

recognize domain names as trademarks.​

📌 Stronger Judicial Activism – Courts should continue taking strict action against
cybersquatting cases.​

cybersquatting.

Impact of Digital Technology on Copyright

Protection
1. Understanding Copyright
●​ What is Copyright?
○​ Copyright protects original works that are "fixed" in a tangible form (e.g.,
books, music, movies, computer programs).
○​ Ideas, methods, or concepts are not protected unless expressed in a
tangible form.

✅
●​ What Works are Copyrighted?​

✅
Literary works (books, articles, websites)​

✅
Musical & dramatic works​

✅
Paintings, sculptures, and designs​

✅
Films & sound recordings​
Software and digital content

2. Digital Medium & Copyright

●​ In the digital world, every webpage, text, image, video, or sound file is
automatically protected by copyright.
●​ Websites have copyright protection on their "look and feel," meaning their
design, layout, and structure.
3. How Technology Affects Copyright?
The Internet - A Double-Edged Sword

The internet has made content easily accessible but also increases copyright
violations through:

Common Internet Activities That Challenge Copyright

Activity Description Copyright Issue

Caching Stores copies of web pages for Temporary copying may

faster access infringe copyright

Browsing Users view copyrighted content No direct infringement

through browsers

Mirroring Duplicating websites on different May violate reproduction

servers for accessibility rights

Downloading Copying files from the internet to Unauthorized copies may

a device infringe copyright

Uploading Sharing copyrighted content Unauthorized uploads are

online illegal

File Swapping (P2P Directly sharing files between Piracy of movies, music,
Sharing) computers books
4. Copyright Issues in Digital Technology
Key Copyright Owner Rights & How the Internet Challenges Them

✅ Right to Store Information - Storing copyrighted work without permission violates

✅ Right to Reproduce - Copying (downloading, mirroring) infringes reproduction
copyright.​

✅ Right to Distribute - Sharing or selling unauthorized copies is illegal.​

rights.​

✅ Right to Public Display - Displaying copyrighted content (e.g., images, articles)

✅ Right to Create Derivative Works - Editing or modifying copyrighted works without
without permission is an infringement.​

permission is a violation.

Thus, many common online activities may lead to copyright violations.

5. Legal Response to Digital Copyright Issues

Governments worldwide have introduced stronger copyright laws to address digital
issues. Examples:

📜 WIPO Copyright Treaty (WCT), 1996​

📜 WIPO Performances and Phonograms Treaty (WPPT), 1996​
📜 Digital Millennium Copyright Act (DMCA), 1998 (USA)​
📜 Electronic Communication Act, 2000 (UK)​
📜 Various European Union Copyright Directives
These laws help protect digital works, combat piracy, and regulate online copyright
use.

6. Important Copyright Cases in Digital Technology

(A) Kelly v. Arriba Soft Corp. (2002) – Copyrighted Images in Search
Engines

Issue:

●​ Photographer Leslie Kelly owned copyrighted images.

●​ Arriba Soft Corp., a search engine, copied and displayed these images as
thumbnails.
✅
Court Decision:​

❌
Thumbnails were "Fair Use" (small versions do not harm copyright).​
Displaying full-size images violated Kelly’s right to public display.

(B) Playboy Enterprises v. Russ Hardenburgh (1997) – Adult Content on

Bulletin Boards

Issue:

●​ Hardenburgh operated a bulletin board where users uploaded & downloaded

adult content.
●​ Playboy sued, claiming copyrighted images were distributed illegally.

✅
Court Decision:​
Hardenburgh was liable for enabling users to download Playboy’s copyrighted

❌
content.​
Storing and displaying copyrighted content without permission is illegal.

(C) New York Times v. Tasini (2001) – Digital Reproduction of Articles

Issue:

●​ Freelance journalists sued New York Times for including their articles in online
databases without permission.

✅
Court Decision:​

❌
The journalists retained copyright over their articles.​
The New York Times violated copyright by licensing articles without consent.

7. Digital Downloads & Copyright Infringement

📌 Downloading a copyrighted work without permission is an infringement.​
📌 Uploading or distributing unauthorized copies violates distribution rights.​
📌 Websites displaying copyrighted works (like movies, music, and e-books) can
be held liable.

Case: Marobie-Fl Inc. v. National Assoc. of Fire Equip. Distributors

●​ The defendant uploaded copyrighted files to its website.

●​ The court held that making copyrighted files available for download is
copyright infringement.
8. Copyright & Website Design – Look and Feel
Protection
●​ The "Look and Feel" of a website is copyright-protected (layout, fonts, colors,
buttons, graphics).
●​ Copying the design, structure, or arrangement violates copyright laws.

Case: Washington Post v. Total News (1997) – Framing of Web Content

Issue:

●​ Total News copied news articles from other sites and framed them under its
branding.

✅
Court Decision:​

✅
Total News had to stop framing news articles from other sites.​
Websites must get permission before framing or linking content that misleads
users.

9. Linking & Framing – Are Links Copyright Infringement?

📌 Hyperlinks (URL links to other websites) are generally allowed.​
📌 Framing (embedding external content inside another website) may be an
infringement.

Case: Shetland Times v. Dr. Jonathan Wills & Zetnews Ltd. (1996)

Issue:

●​ Zetnews copied headlines from Shetland Times and linked them directly to
Shetland’s articles.

✅
Court Decision:​

✅
Headlines are copyrightable literary works.​

✅
Copying and linking without consent infringed copyright.​
Zetnews was ordered to acknowledge Shetland Times in their links.

10. Copyright & Derivative Works

📌 Derivative works are modified versions of original copyrighted works.​
📌 Creating unauthorized derivative works violates copyright.
Case: Louis Galoob Toys v. Nintendo of America (1992)

●​ Nintendo sued Game Genie (a device that altered video game displays).
●​ The court ruled that Game Genie did NOT infringe copyright because it did
not permanently modify Nintendo's work.

Conclusion – Copyright Protection in the Digital Age

✅ The Internet makes copying and sharing easy, leading to higher risks of
✅ Governments introduced digital copyright laws to regulate online content use.​
copyright infringement.​

✅ Website owners, search engines, and online platforms must follow strict
✅ Courts have ruled on several digital copyright cases, shaping modern copyright
copyright rules.​

laws.

🔹 Final Thought:​
To avoid copyright infringement, users and businesses must respect digital content
ownership and obtain proper permissions before using copyrighted materials.

Linking, Inlining, and Framing in Cyberspace

1. Introduction to Copyright on the Internet

●​ Almost all content on the internet is protected by copyright law (text, images,
videos, and graphics).
●​ Websites invest heavily in design and content, making it crucial to protect
against unauthorized use.
●​ Common copyright violations involve linking, inlining, and framing, which
allow content to be accessed in different ways.

2. Linking and Its Legal Issues

What is Linking?

●​ Hyperlinking is a core function of the internet, allowing users to navigate

between different web pages.
 ✅
●​ Links can either be:​

✅
Surface Linking → Links to a website’s homepage.​
Deep Linking → Bypasses the homepage and links directly to an internal
webpage.

Liability for Linking

●​ Generally, surface linking is allowed, but deep linking can be problematic

because:
○​ It bypasses advertisements on the homepage, reducing revenue.
○​ It may violate contractual agreements (if websites charge for linking
rights).

Key Cases on Linking:

📌 Ticketmaster v. Microsoft (USA) – Microsoft deep-linked to Ticketmaster’s ticket

sales pages, avoiding their homepage advertisements. A settlement agreement

📌
stopped Microsoft from deep linking.​
Shetland Times v. Dr. Jonathan Wills (Scotland) – The defendant copied
headlines from the Shetland Times and linked them directly to full articles, bypassing
the homepage. The court barred such deep linking.

Linking Under Indian Copyright Law

●​ Under Section 14 & 51 of the Indian Copyright Act, reproduction, distribution,

or public communication of copyrighted material is a violation.
●​ Deep linking does not directly copy content, but it may aid in unauthorized
distribution.

3. Inlining (In-line Linking) and Copyright Issues

What is Inlining?

●​ Inlining allows a webpage to pull elements (e.g., images, videos) from other
websites without storing them.
●​ The viewer sees the content as part of the new page, even though it remains
hosted on the original site.

Legal Concerns with Inlining

 ●​ Users may not realize they are viewing copyrighted content from another
source.
●​ The original website loses traffic and potential revenue.

Key Cases on Inlining:

📌 Dilbert Comic Case (USA) – A website embedded Dilbert comic strips without
📌 Kelly v. Arriba Soft Corp. (USA) – Arriba Soft, a search engine, created
permission. The owner demanded removal, claiming it was a copyright violation.​

thumbnails of Kelly’s images and displayed full-sized versions through inlining. The

✅
court ruled:​

❌
Thumbnails were fair use.​
Full-size inlining violated public display rights.

Inlining Under Indian Copyright Law

●​ Section 57 of the Indian Copyright Act protects moral rights (attribution &
integrity of work).
●​ Inlining may violate copyright if it misrepresents ownership or modifies
original content.

4. Framing and Its Legal Issues

What is Framing?

●​ Framing allows one website to display another website’s content within its
own layout, keeping its own ads and branding.

Legal Concerns with Framing

●​ Users may be misled into believing the framed content belongs to the framing
website.
●​ Original website owners lose revenue and control over their content.

Key Cases on Framing:

📌 Washington Post v. TotalNews – TotalNews framed news content from major

news organizations and added its own ads. The case was settled, and TotalNews

📌
agreed to stop framing.​
Futuredontics Inc. v. Applied Anagramic Inc. – A dental website framed a
competitor’s content. The court ruled that framing altered the original content’s
appearance and could be copyright infringement.
Framing Under Indian Copyright Law

●​ Framing may violate moral rights under Section 57 (attribution and integrity of
the work).
●​ Courts determine framing legality on a case-by-case basis.

5. Key Takeaways & Legal Protection

📌 Linking: Generally allowed, but deep linking can reduce revenue for the original
📌 Inlining: Can mislead users and violate copyright laws if it misrepresents
website and may violate contracts.​

📌 Framing: May cause copyright infringement by altering the context and

ownership or modifies content.​

misrepresenting content ownership.

Best Practices to Avoid Copyright Issues

✅ Seek permission before deep linking, inlining, or framing copyrighted content.​

✅ Use disclaimers stating that external links do not imply endorsement.​
✅ Follow website terms of use to avoid legal risks.
Washington Post v. TotalNews

In this case, TotalNews was accused of "framing" content from Washington Post and
other news websites—displaying their articles within TotalNews' own website layout
while removing original advertisements.

Court’s Decision:

✅ TotalNews agreed to stop framing plaintiffs' websites.​

✅ They were allowed to link only using plain-text hyperlinks, without using logos or
✅ Any misleading linking or framing violating intellectual property rights was
misleading users.​

prohibited.

This case set an important precedent in digital copyright law, reinforcing that websites

🚀
cannot mislead users by framing or modifying another site's content without
permission.
Short Summary of .IN Domain Name Dispute Resolution Policy (INDRP)

The INDRP is a policy adopted by NIXI to resolve disputes related to .IN and .Bharat
domain names. It follows the Arbitration and Conciliation Act, 1996 (amended in
2019) and provides a legal framework for resolving conflicts between domain name
registrants and complainants.

Key Provisions:

✅ Filing a Complaint: A person can file a complaint if the registered domain name is
identical or confusingly similar to a trademark, the registrant has no legitimate

✅
interest, or the domain is used in bad faith.​
Arbitration Process: Disputes are settled by appointed arbitrators from a panel

✅
maintained by .IN Registry.​
Registrant’s Rights: The registrant must prove legitimate use, such as prior use in

✅
business or non-commercial fair use.​
Bad Faith Registration: Includes cybersquatting (registering a domain to sell it at

✅
a high price) or using it to mislead users.​
Remedies: The complainant can request cancellation or transfer of the domain

✅
name.​

✅
Fees: The complainant bears the arbitration costs.​

✅
NIXI’s Role: NIXI does not intervene in arbitration but executes decisions.​
Policy Changes: The Government of India can modify the policy with 15 days’

✅
notice.​
Jurisdiction: Indian laws apply, and Delhi courts have exclusive jurisdiction.

🚀
This policy ensures fair resolution of domain disputes and prevents misuse of domain
names.
 UNIT 1

International Legal Framework &

UNCITRAL Model Law
1. Understanding Legal Interpretation

✅
Legal interpretation uses two types of aids to understand a law’s meaning:​

✅
Internal Aid → Using the law itself for interpretation.​
External Aid → Using external sources like international treaties or precedents.

2. Can UNCITRAL Model Law Be Used for Interpretation?

🔹 The UNCITRAL Model Law on International Arbitration was considered when
🔹 However, in Konkan Railway Corp. Ltd. v. Rani Construction Pvt Ltd., the
drafting the Arbitration and Conciliation Act, 1996 in India.​

Supreme Court ruled:

●​ The UNCITRAL Model Law is not identical to Indian law.

🔹
●​ It cannot be used as a direct interpretation tool for Indian arbitration law.​
Similarly, the Information Technology (IT) Act, 2000 was influenced by:
●​ UNCITRAL Model Law on E-Commerce (1996)

🔹
●​ UNCITRAL Model Law on Electronic Signatures (2001)​
However, international laws only provide guidance, not strict rules for Indian
courts.

3. UNCITRAL Model Law on E-Commerce (1996) – Key

Principles
✅ Principle of Impartiality
●​ Digital documents cannot be rejected just because they are electronic.

✅ Electronic Equivalence (Article 5)

●​ An electronic contract is equal to a paper contract in legal value.
✅ Admissibility of Electronic Evidence (Article 9)
●​ Digital communications cannot be rejected in court just because they are
electronic.

✅ Principle of Equality
●​ Electronic communication must be treated the same as paper-based
communication.

4. Comparison with Indian Law

Principle UNCITRAL Model Indian Law

Law

Non-discrimination Article 6: Digital Section 3 Evidence Act: Electronic

of Electronic records are valid if records are documentary
Records accessible. evidence.

Legal Recognition of Article 11: Section 10A IT Act: Contracts

Electronic E-contracts are valid. formed electronically cannot be
Documents rejected.

Electronic Article 7: Digital Section 3A IT Act: Digital signatures

Signatures signatures must be must be authenticated and secure.
reliable.

Technology Article 2: Technology Section 79A IT Act: Defines

Neutrality must not be electronic evidence broadly to
restricted. include digital files, videos, phone
data.
5. E-Contracts & Digital Signatures
📌 What are E-Contracts?
●​ Contracts created electronically (e.g., through emails, websites, digital
platforms).
●​ Legally valid under UNCITRAL Model Law & IT Act, 2000.

📌 How Are Digital Signatures Validated?​

✅ Article 7 (UNCITRAL Model Law) → An electronic signature is valid if:
●​ It identifies the person signing.

✅
●​ It is secure and reliable.​
Section 3A (IT Act) → Indian law follows similar principles, ensuring:
●​ The signature is under the control of the person signing.
●​ Any changes after signing are detectable.

6. Key Takeaways
✔ UNCITRAL Model Law provides global standards, but Indian courts do not rely
on it completely.​
✔ Electronic contracts and digital signatures are legally recognized in both
international & Indian law.​
✔ The IT Act incorporates UNCITRAL principles, ensuring digital transactions have
equal legal status as physical ones.

Would you like further clarifications on any section? 🚀

E-Contracts & Contract Formation

1. Essentials of a Valid Contract (Indian Contract Act, Section 10)

✅
A contract is legally valid if it has:​

✅
Offer & Acceptance – One party makes an offer, the other accepts.​

✅
Mutual Agreement – Both parties must willingly agree.​

✅
Legal Relationship – The contract must be legally binding.​

✅
Competent Parties – Parties must be 18+ years, mentally sound, solvent.​

✅
Legal Purpose – No illegal activity (e.g., drug sales).​
Consideration – Exchange of money or value.​
✅ Performance Possible – The contract must be practical and executable.​
✅ Definite Terms – The terms should be clear.
2. Types of E-Contracts

📌 Shrink-wrap Contracts
●​ Found in software packaging; terms apply once the package is opened.
●​ Example: Terms inside a software box with a notice on the outside.

📌 Click-wrap Contracts
●​ Online agreements where users click "I Agree" to accept terms.
●​ Example: Clicking "I Agree" before installing software.
●​ Case Law: Groff v. America Online (1998) upheld the validity of click-wrap
contracts.

📌 Browser-wrap Contracts
●​ Users agree to website terms simply by browsing.
●​ No active confirmation needed.
●​ Example: Viewing a blog without reading the Terms & Conditions.
●​ Legal Issue: No court has broadly upheld browser-wrap contracts.

3. Postal Rule & Contract Formation

📌 What is the Postal Rule (Mailbox Rule)?

●​ Introduced in Adams v. Lindsell (1818).
●​ If an offer is accepted by post, the contract is valid as soon as the letter is
posted.
●​ Even if the letter is lost, delayed, or never received, the contract is still valid.

📌 Does the Postal Rule Apply to Emails?

❓ When is an email acceptance considered "received"?
●​ Emails are almost instantaneous but:​

○​ When sent?
○​ When it reaches the receiver’s email server?
○​ When the receiver reads it?
📌 Two Ways of Email Communication:​
1️⃣ Normal Email (via Internet) – Goes through servers; may be delayed.​
2️⃣ Electronic Data Interchange (EDI) – Instant communication between businesses.

4. Key Questions About Email & Postal Rule

🔹 Should emails follow the postal rule? (Unclear – courts have debated this.)​
🔹 What if an email is sent but not read? (Uncertain contract status.)​
🔹 What if an email is delayed? (Legal recognition is still evolving.)
Conclusion

●​ E-contracts (click-wrap, shrink-wrap, browser-wrap) are legally recognized,

but browser-wrap contracts have weak enforceability.
●​ Postal Rule applies to letters, but its applicability to emails is debated.
●​ Emails are almost instantaneous, but the exact moment of "acceptance" is
unclear in law.

Summary of Entores Ltd v Miles Far East Corporation (1955)

📌 Issue:​
Where is a contract made when acceptance is sent via Telex?

📌 Facts:
●​ Entores (England) made an offer via Telex to Miles Far East Corp (Netherlands).
●​ Miles accepted the offer via Telex, and the acceptance was received in London.
●​ The dispute arose over the contract's location, as it impacted jurisdiction and
applicable law.

📌 Court’s Ruling:
●​ Instantaneous communication (Telex) is different from postal
communication.
●​ A contract is formed where the acceptance is received, not where it is sent.
●​ Since the acceptance was received in London, the contract was made in
London.

📌 Key Legal Principle:​

For instantaneous communication methods (Telex, telephone, email), acceptance
is only valid when received by the offeror, unlike postal rules where acceptance is
valid once posted.
📌 Outcome:
🚀
●​ Contract made in England, so English law applies.
●​ Appeal dismissed with costs.