UNIVERSITY INSTITUTE OF LAWS

PANJAB UNIVERSITY REGIONAL CENTRE

LUDHIANA

LAW RELATING TO CYBER SPACE AND E-

COMMERCE

Topic: Electronic Contracts

SUBMITTED TO: SUBMITTED BY:

Dr. Vaishali Thakur Name : Harshdeep Sambi

Class : LLM sem 2
Roll. No. : 8/24
 ACKNOWLWDGEMENT

In performing this assignment, I had to take the help and guideline of some respected people,

who deserve my greatest gratitude. The completion of this assignment gives me much pleasure

providing me ounces of knowledge. I would like to show my gratitude to Dr. Vaishali Thakur,

Panjab University Regional Centre, Ludhiana, for giving me a guideline for this assignment

throughout numerous consultations. I would also like to extend my deepest gratitude to all

those who have directly and indirectly guided in writing this assignment.
 INDEX

S.no. TOPIC Pg. no.

1. INTRODUCTION 1
2. LEGAL RECOGNITION OF ELECTRONIC CONTRACTS IN INDIA 2
3. ESSENTIAL ELEMENTS OF A VALID ELECTRONIC CONTRACT 6
4. TYPES OF ELECTRONIC CONTRACTS 10
5. JUDICIAL APPROACH TO ELECTRONIC CONTRACTS IN INDIA 16
6. CONCLUSION 19
8. BIBLIOGRAPHY 21
 1

INTRODUCTION

In the contemporary digital landscape, traditional notions of contract formation have undergone

a significant transformation. With the exponential growth of e-commerce, digital

communication, and technological advancements, electronic contracts (e-contracts) have

emerged as a vital component of modern commercial transactions. An electronic contract refers

to any agreement created, signed, and executed electronically, without the necessity of physical

paperwork. These contracts are usually formed through digital means such as emails, websites,

mobile applications, or other online platforms.

Electronic contracts, while similar in nature to conventional contracts in terms of their legal

obligations and enforceability, differ in terms of the mode of communication, execution, and

performance. The parties to an e-contract often never meet in person, and consent is typically

given through clicking checkboxes, typing responses, or digital signatures. Despite this virtual

formation, such contracts are binding if they fulfill the essential criteria laid down under the

Indian Contract Act, 1872 and gain recognition under the Information Technology Act,

2000.

The relevance of electronic contracts in the digital age cannot be overstated. As individuals and

businesses increasingly rely on digital platforms for their day-to-day operations, the role of e-

contracts has expanded tremendously. From online retail purchases and software downloads to

service agreements and employment contracts, e-contracts facilitate a quick, efficient, and

paperless method of conducting transactions.

In the Indian context, the legal framework has gradually evolved to accommodate the rise of

electronic transactions, ensuring that such contracts are not only legally valid but also

enforceable. This transition underscores the importance of understanding how electronic

contracts function, the types that exist, and how they are treated under Indian law.
 2

LEGAL RECOGNITION OF ELECTRONIC CONTRACTS IN

INDIA

The emergence of electronic contracts raised important questions about their validity,

enforceability, and compliance with traditional legal standards. In response to the growing

need for a robust legal framework, India introduced significant legislative reforms, particularly

through the Information Technology Act, 2000 (commonly known as the IT Act), to align

Indian law with digital advancements. This section examines how Indian law validates and

regulates electronic contracts1.

2.1 Provisions under the Information Technology Act, 2000

The Information Technology Act, 2000 was enacted to provide legal recognition to electronic

transactions and to facilitate the growth of e-commerce in India. It was modeled on the

UNCITRAL Model Law on Electronic Commerce (1996), which emphasizes the functional

equivalence of electronic communications with paper-based records.

Key provisions of the IT Act related to electronic contracts include:

 Section 4: Recognizes that any information or document that is required by law to be

in writing shall be deemed valid if it is rendered in electronic form.

 Section 5: Provides legal recognition to electronic signatures, stating that if a document

is signed digitally and complies with prescribed procedures, it shall be deemed legally

signed.

 Section 10-A: Specifically addresses the validity of contracts formed through electronic

means2.

1
Akhileshwar Pathak, Contract Law in India, Oxford University Press, 2008, p. 112–11
2
The Information Technology Act, 2000, § 10-A, No. 21, Acts of Parliament, 2000 (India)
 3

2.2 Section 10-A of the IT Act: Validity of E-Contracts

Section 10-A of the IT Act was inserted through an amendment in 2008 and is considered the

cornerstone for the legal recognition of e-contracts. The section states:

“Wherein 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 record, such contract shall not be deemed to be unenforceable

solely on the ground that such electronic form or means was used for that purpose.”

Key implications of Section 10-A:

 Ensures that electronic contracts are not denied enforceability merely because they were

formed electronically.

 Brings electronic communication (emails, website agreements, digital platforms)

within the ambit of legally valid contract formation processes.

 Complements the Indian Contract Act, 1872, by extending its core principles to digital

formats.

2.3 Applicability of 3the Indian Contract Act, 1872

While the IT Act provides recognition and facilitation for electronic modes of

communication, the Indian Contract Act, 1872 remains the substantive law governing the

formation and enforceability of contracts—whether paper-based or electronic.

Under the Contract Act, a valid contract must satisfy the following essentials:

 Offer and acceptance (Sections 2 & 3)

 Lawful consideration (Section 2(d))

 Free consent of the parties (Section 14)

3
Yashdeep Singh, “Validity and Enforceability of Electronic Contracts in India,” Journal of Digital Law
& Policy, Vol. 3, Issue 1, 2021
 4

 Lawful object (Section 23)

 Parties competent to contract (Section 11)

 Not expressly declared void (Sections 24–30)

These essential elements must be satisfied in an electronic contract as well. For instance:

 An offer made through an email and accepted via another email can constitute a valid

contract.

 Consent can be given by clicking "I Agree" on a website (click-wrap), which, if done

freely and with knowledge, is legally binding.

Thus, while the Indian Contract Act does not explicitly mention "electronic contracts," its

principles are read in conjunction with the IT Act, making e-contracts valid and enforceable

if the essential elements are present.

2.4 Role of Digital and Electronic Signatures (Sections 3 and 5 of the IT Act)

To further validate electronic contracts, the IT Act provides for electronic authentication

through digital signatures and electronic signatures4:

Section 3 – Digital Signature

 This section deals with the use of asymmetric cryptosystem-based digital signatures.

 A digital signature is generated using a private key and can be verified using a public

key, ensuring the authenticity and integrity of the document.

 The Controller of Certifying Authorities (CCA) oversees the issuance of Digital

Signature Certificates.

Section 5 – Legal Recognition of Digital Signatures

 This section confirms that any document signed digitally in accordance with prescribed

security procedures will have the same legal standing as a handwritten signature.

4
Ramaswamy Iyer, Law of Contracts, 12th ed., LexisNexis, 2021, p. 88–93
 5

 Digital signatures help authenticate parties’ intent and prevent disputes over authorship.

Electronic Signature

 After the 2008 amendment, the concept of electronic signatures was also recognized

under the IT Act.

 Electronic signatures include methods such as OTP-based authentication, biometric

verification, or Aadhaar e-KYC based digital signing.

 Rules under the Second Schedule of the IT Act provide the standards for secure

electronic signatures.

Importance:

 These provisions ensure identity verification, non-repudiation, and integrity of the

electronic contract.

 Without authentication, the enforceability of an e-contract could be questioned in court.

 6

ESSENTIAL ELEMENTS OF A VALID ELECTRONIC

CONTRACT

Just like traditional paper-based agreements, electronic contracts (e-contracts) must also fulfill

the essential requirements laid down in the Indian Contract Act, 1872 to be legally

enforceable. The use of electronic modes does not dilute the legal requirements but instead

provides an alternate mechanism of communication, consent, and documentation. The courts

in India have repeatedly emphasized that an electronic contract is valid and binding, provided

it meets all the core elements of a valid contract5.

Below is a detailed discussion of these essential elements in the context of electronic

contracts:

3.1 Offer and Acceptance via Electronic Means

A fundamental requirement for any contract is the presence of a lawful offer and its lawful

acceptance (Section 2(a) and 2(b) of the Indian Contract Act). In electronic contracts, offer

and acceptance can occur through various digital means such as:

 Email communication

 Clicking “I agree” on a website (click-wrap agreements)

 Submitting forms online

 Instant messaging and digital platforms

Under Indian law, the modes of communication do not affect the validity, as long as the

intention to enter into a contract is clearly established. For example, if an employer sends an

offer letter via email and the candidate replies with an acceptance, a valid contract is formed

electronically.

5
P. Narayan, Law of Contracts, 7th ed., Eastern Book Company, 2015, p. 115–122
 7

The IT Act, 2000, through Section 10-A, confirms that communication and acceptance

expressed through electronic means are legally valid and enforceable.

3.2 Lawful Consideration and Object

As per Section 2(d) and Section 23 of the Indian Contract Act, every agreement must be

supported by lawful consideration and have a lawful object. This principle applies equally to

e-contracts.

 Consideration refers to something of value (e.g., money, services, goods) exchanged

between the parties.

 In electronic transactions, the consideration could be payment made through digital

wallets, UPI, credit cards, etc.

 The object of the contract must not be fraudulent, immoral, or contrary to public policy

(e.g., selling contraband through an online platform would render the contract void).

Thus, an online sale of a legally permitted item through an e-commerce platform, where a buyer

pays digitally and the seller delivers the product, constitutes a valid e-contract supported by

lawful consideration and object 6.

3.3 Capacity of Parties

As per Section 11 of the Indian Contract Act, only individuals who are:

 Of sound mind,

 Have attained the age of majority (18 years or above), and

 Are not disqualified by any law,

can enter into a valid contract. This rule is applicable to electronic contracts as well.

6
M.P. Jain, Indian Constitutional Law, 8th ed., LexisNexis, 2018, p. 136–140 (for discussion on legal
rights in digital spaces).
 8

For example, if a minor enters into an online subscription service contract, it may be held void

due to lack of capacity. E-commerce websites in India often include terms and conditions

requiring users to confirm their age before entering into a contract to ensure legal compliance.

3.4 Free Consent

As defined in Section 13 and Section 14 of the Indian Contract Act, the consent of parties

must be free and voluntary, without coercion, undue influence, fraud, misrepresentation, or

mistake.

In electronic contracts, this principle becomes complex due to the automated nature of

consent:

 For instance, users may click “I Agree” without reading the terms.

 However, if the terms were available and accessible, courts have held that such consent

is valid and binding (Doctrine of "Constructive Notice").

To ensure transparency and validity:

 Websites must ensure that terms and conditions are clearly visible.

 Users must be given a chance to read them before accepting.

3.5 Lawful Object and Certainty of Terms

As per Section 29 of the Indian Contract Act, the terms of the agreement must be certain

and not vague or ambiguous. In an electronic contract, this means:

 The scope of service,

 Price,

 Duration,

 Responsibilities of the parties,

 Dispute resolution mechanisms, etc.,

 9

must be clearly stated on the website, app, or in the digital document.

Unclear or hidden clauses may lead to disputes and legal challenges regarding enforceability.

For example, in online consumer contracts, failure to specify refund or warranty terms may

lead to a breach of contract claim.

3.6 Intention to Create Legal Obligations

For a contract to be valid, parties must have the intention to create legal relations. In

commercial and e-commerce settings, this intention is usually presumed unless explicitly

stated otherwise7.

For instance:

 A user buying a subscription plan online,

 A freelancer agreeing to deliver services through an online platform,

 A company outsourcing services via an email agreement,

are all examples where there is a clear intention to be legally bound, even if the

communication is informal or remote.

7
Yashdeep Singh, “Validity and Enforceability of Electronic Contracts in India,” Journal of Digital Law
& Policy, Vol. 3, Issue 1, 2021
 10

TYPES OF ELECTRONIC CONTRACTS

Electronic contracts come in various forms, depending on the mode and manner in which they

are formed. The classification is based on how consent is obtained, how information is

presented, and the technological interface involved. Indian courts and legal scholars have

increasingly addressed the validity and enforceability of these types, recognizing their growing

significance in modern commerce.

Below is a detailed analysis of the major types of e-contracts recognized in Indian legal

discourse:

4.1 Click-Wrap Contracts

Definition and Mechanism

A click-wrap contract is one in which the user must affirmatively click “I Agree,” “Accept,”

or a similar button after being presented with the terms and conditions of the contract. This is

commonly used in:

 Software installation processes

 Online services (e.g., Netflix, Google, Amazon)

 Mobile app downloads

Click-wrap contracts require explicit consent, making them the most enforceable form of

online agreement 8.

Enforceability in Indian Courts

Indian courts have generally upheld the enforceability of click-wrap contracts, provided:

 The terms are clearly displayed,

 The user is given a fair opportunity to read them, and

8
Ranjan Barik, “E-Contracts and Indian Law: A Legal Analysis,” International Journal of Law and
Management Studies, Vol. 5, Issue 2, 2020.
 11

 The user voluntarily consents.

Case Law Reference

While direct Indian case law on click-wrap contracts is limited, principles from traditional

contract law apply. Courts have held that clicking a button indicating consent is as binding as

a physical signature. In Trimex International FZE Ltd. Dubai v. Vedanta Aluminium Ltd.

(2010) 3 SCC 19, the Supreme Court recognized contract formation through email and accepted

the idea of assent by conduct in electronic communication.

4.2 Shrink-Wrap Contracts

Definition

Shrink-wrap contracts refer to agreements where the terms and conditions are packaged

within a product—typically software. The user is considered to have accepted the terms by

opening the package or using the product.

Example: Software CDs that come with terms printed inside the box or display a license

agreement upon installation.

Legal Issues and Enforceability

These contracts raise concerns because the user only sees the terms after purchase. The

challenge is proving that informed consent was obtained.

Indian Perspective

Indian courts have not specifically ruled on shrink-wrap contracts, but applying the Indian

Contract Act:

 Consent must be free and informed.

 Courts may question enforceability if the user had no opportunity to read the terms

before being bound.

9
3 SCC (2010) 1
 12

Thus, while such contracts may be upheld if notice was given or terms were made available

pre-purchase, their enforceability is less robust than click-wrap contracts.

4.3 Browse-Wrap Contracts

Definition and Mechanism

Browse-wrap contracts are typically found on websites where the terms and conditions are

available via a hyperlink, but users are not required to click “I Agree.” Consent is presumed

from the user’s continued use of the website.

Example: “By using this website, you agree to our Terms of Use.”

Issues of Notice and Consent

The core issue is whether the user had:

 Actual or constructive knowledge of the terms, and

 A reasonable opportunity to read them.

Since no explicit consent is obtained, courts scrutinize:

 How clearly the link was displayed

 Whether the user’s attention was drawn to the terms

Indian Legal Stance and Precedents

Indian courts have not dealt extensively with browse-wrap contracts. However, drawing from

general principles of free consent (Section 14) and communication of terms, a browse-wrap

contract may be deemed invalid if the user was unaware of the terms or if the terms were not

prominently displayed.

Thus, enforceability is context-dependent, and such contracts are generally considered

weaker than click-wrap agreements10.

10
Yashdeep Singh, “Validity and Enforceability of Electronic Contracts in India,” Journal of Digital Law
& Policy, Vol. 3, Issue 1, 2021
 13

4.4 Email Contracts

Definition and Mechanism

Email contracts are formed through the exchange of offer and acceptance over email. They

are widely used in B2B, employment, and service-based transactions.

Time of Communication and Acceptance

Under Section 4 of the Indian Contract Act, the communication of:

 An offer is complete when it comes to the knowledge of the offeree.

 An acceptance is complete:

o As against the proposer: when it is put in the course of transmission.

o As against the acceptor: when it comes to the knowledge of the proposer.

Email timestamps and delivery reports play a crucial role in determining the exact moment of

contract formation.

Judicial Interpretation

In Trimex International FZE Ltd. Dubai v. Vedanta Aluminium Ltd., the Supreme Court

upheld that:

 A contract concluded by email exchange was valid and binding,

 No formal signed document was necessary if the terms were agreed upon via email,

 Intention to be bound and clarity of terms were sufficient.

Thus, email contracts are well-recognized and enforceable under Indian law.

4.5 EDI (Electronic Data Interchange) Contracts

Definition and Use

 14

Electronic Data Interchange (EDI) involves the electronic transmission of business

documents (in standardized format) between organizations, often without human intervention.

It is widely used in supply chains, logistics, and B2B commerce11.

Example: Automated purchase orders between retailers and suppliers.

Recognition and Enforceability

While the Indian Contract Act does not explicitly mention EDI, the IT Act, 2000, especially

Sections 4 and 10-A, recognizes electronic records and communications as valid.

 If terms are mutually agreed upon and the system ensures authentication, EDI contracts

are legally valid.

 Section 7 also recognizes retention of electronic records as proof of agreement.

Thus, EDI contracts are enforceable, especially in B2B scenarios where usage and industry

custom support their validity.

4.6 Smart Contracts

Definition

Smart contracts are self-executing contracts with the terms of the agreement directly written

into code. They run on blockchain networks (like Ethereum) and automatically execute actions

when predefined conditions are met.

Example: A smart contract that automatically releases payment once goods are digitally

confirmed as delivered.

Emerging Legal Discussions in India

 Indian law currently does not have specific legislation for smart contracts.

11
Anirudh Rastogi, Cyber Law: Law of Information Technology and Internet, LexisNexis, 2018, p.
162–170
 15

 However, if a smart contract fulfills the essentials of a valid contract under the

Indian Contract Act, and the consent is clear and verifiable, it may be enforceable.

 The IT Act’s provisions on electronic records and authentication support the

technological backbone of smart contracts.

Issues still under discussion include:

 Jurisdiction and governing law in cross-border blockchain contracts

 Recognition of code as intent and consent

 Legal remedies in case of errors or failures in execution

The Indian government has shown interest in blockchain technology (as per NITI Aayog

reports), and the courts may in the future evolve jurisprudence around smart contracts.
 16

JUDICIAL APPROACH TO ELECTRONIC CONTRACTS IN INDIA

Indian courts have consistently recognized the validity and enforceability of electronic

contracts, provided they meet the requirements under the Indian Contract Act, 1872. Through

several rulings, the judiciary has affirmed that the medium—electronic or otherwise—does not

affect the legality of a contract, as long as essential elements like offer, acceptance, lawful

object, and intention to create legal relations are satisfied.

5.1 Trimex International FZE Ltd. Dubai v. Vedanta Aluminium Ltd.

Facts:

Trimex International FZE, based in Dubai, offered to supply bauxite to Vedanta Aluminium

Ltd. in India. The offer and negotiations took place through a series of email communications.

Vedanta confirmed the transaction via email, including the price and delivery terms, and

Trimex began making arrangements for shipment. However, Vedanta later declined to accept

the shipment, claiming there was no formal, signed contract.

Judgment:

The Supreme Court held that a binding contract had indeed been formed through the email

correspondence. The Court observed that when parties agree on all material terms and

conditions, the absence of a formal signed agreement does not negate the validity of the

contract. Offer and acceptance via email satisfied the criteria laid out under the Indian Contract

Act. The decision reinforced that a contract can be formed even through electronic

communications, as long as the parties’ intentions are clear and all essential terms are agreed

upon.
 17

5.2 Shakti Bhog Foods Ltd. v. Kola Shipping Ltd 12.

Facts:

This case involved a commercial shipping dispute, where Shakti Bhog Foods Ltd. questioned

the validity of an arbitration clause that had not been executed in a traditional contract form

but was instead found within electronic communications exchanged between the parties.

Judgment:

The Supreme Court ruled that an arbitration agreement can be validly constituted through an

exchange of emails, letters, telex, or other forms of electronic communication, as long as the

content clearly demonstrates an intention to arbitrate disputes. The court reiterated that under

the Indian Arbitration and Conciliation Act, 1996, and the principles of contract law, there is

no bar to contracts being formed or confirmed electronically.

5.3 M/s. Enter Electronics v. S. Ramachandran13

Facts:

This case dealt with a dispute between a supplier and buyer, where the agreement for supply

and terms was communicated primarily through emails. One party later denied the existence of

a binding agreement, arguing that no formal or signed contract existed.

Judgment:

The Madras High Court held that the email exchanges were sufficient to establish a valid

contract. The court emphasized that the form of communication—whether electronic or on

paper—is immaterial, so long as the intention to contract and agreement on essential terms can

be clearly derived from the communications.

12
AIR 2009 SC 12
13
2013 SCC Mad 822
 18

5.4 Andhra Pradesh Power Coordination Committee v. Lanco Kondapalli Power Pvt.

Ltd14.

Facts:

In this case, the dispute arose from power purchase agreements entered into through electronic

bidding processes. The question was whether such electronically executed agreements were

binding and enforceable under Indian law.

Judgment:

The Supreme Court upheld the enforceability of contracts formed through electronic bidding

platforms. It recognized that the process followed was compliant with regulatory norms and

that the essential terms of the contract were agreed upon. The court affirmed that electronic

contracts, especially in the context of government procurement and utilities, are valid when

they follow the statutory procedure.

14
2013 SCC Mad 822
 19

CONCLUSION

Electronic contracts have emerged as a crucial element in the modern legal and commercial

landscape, reflecting the growing digitization of business processes and interpersonal

transactions. This assignment has examined the legal framework governing electronic contracts

in India, particularly under the Information Technology Act, 2000, and the Indian Contract Act,

1872. It has demonstrated that the core elements of a valid contract—such as offer, acceptance,

lawful consideration, and intention to create legal relations—are equally applicable in the

digital domain. Various types of electronic contracts, including click-wrap, shrink-wrap,

browse-wrap, email contracts, electronic data interchange (EDI) contracts, and the increasingly

relevant smart contracts based on blockchain technology, have been identified and analysed

for their enforceability and legal recognition in India.

The recognition and enforceability of various forms of e-contracts are essential to ensure legal

certainty and predictability in digital transactions. As businesses, consumers, and governments

increasingly rely on digital communication, it becomes imperative to establish a robust legal

environment that supports the seamless formation and execution of contracts. To strengthen

this legal infrastructure, it is necessary for the legislature to consider issuing comprehensive

guidelines or model rules for electronic contracts, particularly with regard to consumer

protection, consent mechanisms, and data security. Moreover, judicial training programs and

legal literacy initiatives can enhance understanding of digital contracts among legal

professionals and the general public alike. In the context of smart contracts and blockchain

technologies, India must begin deliberating specific legislation that can address the unique

challenges of automation, decentralization, and dispute resolution in such contracts.

In summary, electronic contracts are no longer merely auxiliary instruments but have become

central to contemporary contractual relations. Their proper legal recognition, combined with
 20

continued judicial support and legislative foresight, is indispensable to ensuring that India's

legal system remains responsive to the needs of a digitally evolving society.

 21

BIBLIOGRAPHY

Books & Bare Acts:

 Akhileshwar Pathak, Contract Law in India, Oxford University Press, 2008.

 Universal’s Bare Act on The Information Technology Act, 2000, Universal Law

Publishing, 2023.

Journal Articles & Online Resources:

 Singh, Yashdeep. “Validity and Enforceability of Electronic Contracts in India.”

Journal of Digital Law & Policy, Vol. 3, Issue 1, 2021.

 Barik, Ranjan. “E-Contracts and Indian Law: A Legal Analysis.” International

Journal of Law and Management Studies, Vol. 5, Issue 2, 2020.

 Legal Service India. “E-Contracts: Validity and Legal Position under Indian Law.”

Available at: http://www.legalserviceindia.com/legal/article-1356-e-contracts-

validity-and-legal-position-under-indian-law.html

Statutes and Regulations:

 The Indian Contract Act, 1872.

 The Information Technology Act, 2000 (as amended in 2008).

 The Arbitration and Conciliation Act, 1996