E-CONTRACTS

Shrink-Wrap, Click-Wrap and Browse-

Wrap
 Essentials of e-contract

In an e contract the offer, invitation to offer,

counter offer or acceptance etc. are all by
electronic means and such a communication
leads to an agreement.
 Essentials of e-contract
The Indian Contract Act, 1872 defines contract as an agreement
between two or more parties for the buying/selling of goods or
services for a valid consideration. The essentials to a valid contract
are also some of the essentials to an e-contract which are:

• An offer and acceptance has to be made.

• There should be a lawful consideration.
• There should be a free consent between the parties to a contract.
• The object of the agreement should be lawful.
• Parties must be competent enough to contract.
• The contract must be enforceable by law.
 Recognition of E-contracts
• Section 10 of the IT Act, 2008 gives legislative authority to E contracts. It says that,
“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 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.”

• For any contract to be valid, signatures from both the parties are required. In the case of an e-
contract, an electronic signature comes to play. An electronic signature is defined by the
Information Technology Act, section 2(p) as the authentication of any electronic record by a
subscriber by means of the electronic technique specified in the second schedule and it includes
a digital signature.
• Further, section 5 of the Information Technology Act says that where any law requires that
information or any other matter be authenticated by affixing a signature or any document signed
by or bear the signature of any person, then such requirement shall be deemed to have been
satisfied. Electronic signature serves the same purpose as a handwritten signature. Section 85 c
of The Indian Evidence Act states that as far as a digital signature is concerned, the courts
presume that the information provided in that certificate is true and correct.
 Recognition of E-contracts
The 2 main parties to an e-contract are- The Originator and the Addressee.

Originator according to the IT Act, 2008 is a person who sends, generates,

stores or transmits any electronic message to be sent, generated, stored
or transmitted to any other person and does not include an Intermediary.
( In the present context, the person who initiates the process of making
an e-contract to send it to the other party.)

An Addressee according to the IT Act, 2008 is a person who is intended by

the originator to receive the electronic record but does not include any
Intermediary.(In the present context, the party which receives the e-
contract made by the other party.)
 Kinds of e-Contracts
• There are several different categories of these online agreements:

1.Click-Wrap: Where a user is must click a box (or do something similar) to indicate acceptance of terms and
conditions; These agreements require the user to give his consent to the terms and conditions which are
known as end user agreement and governs the licensed usage of the software by clicking “Ok” or “I agree”
button. There are certain kinds of check which ensures that the terms of the agreement are binding upon the
contracting parties. The user has to click either ‘Accept’ or ‘Decline’ to accept or reject the agreement
respectively. These agreements lack a certain amount of bargain power. Choosing to make payments online or
choosing to reject it is an example of using a click wrap agreement. These are as follows:

• The user agreement or the terms of service must be specifically conveyed to the party. By simply inserting a link
to the terms on the website without drawing any attention of the user shall not be considered as the intimation
to user. Therefore, if the user continues to use the website after the intimation of the terms shall be considered
as the acceptance of the contract.
• The terms of the agreement should not be changed if the user has given his assent for the particular action.
• The changes made to the terms of the agreement must be specifically intimated to the user which providers a
user to give a fresh consent for the modifications in the terms. In case the user does not agree to the changes
then he has the option to leave the website at that very moment.
• Users may need to take an online agreement in order to be able to avail of the services e.g. clicking on “I accept”
while connecting software or clicking on “I agree” while signing up for an email account.
 Click-Wrap Example
• Due to the regulations of Bar Council of India, Indian Law Firms are not allowed to
advertise or solicit work. By accessing this website (www.indialawoffices.com), you
acknowledge and confirm that you are seeking information relating to India Law Offices
of your own accord and that there has been no form of solicitation, advertisement or
inducement by India Law Offices or its members. I acknowledges the following:

• there has been no advertisement, personal communication, solicitation, invitation or inducement of

any sort whatsoever from us or any of our members to solicit any work through this website;
• the user wishes to gain more information about us for his/her own information and use;
• the information about us is provided to the user only on his/her specific request and any
information obtained or materials downloaded from this website is completely at the user's volition
and any transmission, receipt or use of this site would not create any lawyer-client relationship.
• The information provided under this website is solely available at your request for informational
purposes only, should not be interpreted as soliciting or advertisement. We are not liable for any
consequence of any action taken by the user relying on material / information provided under this
website. In cases where the user has any legal issues, he/she in all cases must seek independent
legal advice. https://www.jsalaw.com
 Browse-Wrap Example
• The seller can offer goods or services (e.g. air
tickets, software etc.) through his website. The
customer places an order by completing and
communicating the order form provided on
the website. The goods may be actually
delivered later (e.g. in case of clothes, music
CDs etc.) or be directly delivered electronically
(e.g. e-tickets, software, mp3 etc.).
 Browse-Wrap Contracts

2. Browse-wrap: An agreement that purports to apply merely through the act of

accessing or using a website or service. This agreement is considered as a browse wrap
agreement which is intended to be binding upon the contracting party by the use of
the website. These include the user policies and terms of service of websites such as
Flipkart or E-bay and are in the form of a “terms of use”, a “user agreement” or “terms
of service”, which can be used as the links at the corner or bottom of website.
Example: The Amazon India home page (https://www.amazon.in) has all sorts of
information for amazon users, including categories of goods, a search engine, links to
services and advice, a site map, and other features that are typical of e-commerce
websites. Also on the home page, down on the bottom, is a statement that says, “Use
of this Web site constitutes acceptance of the amazon india user agreement and
privacy policy.” It is an increasingly common practice of e-commerce and commercial
database Websites to use such agreements–also referred to as “Terms of Use”, “Terms
and Conditions”, “Legal information.” The expectation is that using your Web browser
to go to any part of the Website beyond that front page constitutes legal acceptance of
those terms.
 Shrink Wrap Contracts

These contracts are the license agreement by which the

terms and conditions of the contract are enforced upon the
contracting parties and are usually present on the plastic or
in manuals accompanying with the software products
which the consumer buys. Shrink Wrap agreements are
those which can only be read and accepted by the
consumer after the opening of a particular product. The
term is described after the shrink wrap plastic wrapping
that is used to cover software or other boxes. Installing
software from a CD into your PC is an example of a shrink
wrap agreement.
• Unlike a click wrap agreement (which requires
the user to do something to demonstrate they
accept the terms) browse-wrap and web-wrap
agreements usually don't provide any means
for the user to positively evince acceptance
other than opening and using the software or
service.
 The Uber case
• The Uber cases: Meyer v Kalanick & Uber
Technologies (15 Civ. 9796 and 16-2750)
This is a lawsuit alleging price fixing against Uber and
its former CEO Travis Kalanick. Uber (and Kalanick)
moved to compel arbitration on the basis of the
arbitration clause in Uber’s terms of service. The
district court found that Uber’s sign-up process failed
to effectively form an agreement, so it declined to
send the case to arbitration. The Second Circuit
reverses and orders arbitration.
 The Uber case
The court takes a tour through the familiar landscape
of online agreements, ranging from “browsewraps” to
“sign-in wraps” to “scrollwraps.” This particular
agreement does not appear to fit neatly into any of
those categories, in that at the time of sign-up, the
user is presented with hyperlinks to bold text that
states:

• By creating an Uber account, you agree to the

TERMS OF SERVICE & PRIVACY POLICY.
 The Uber case
• The key question is whether Uber’s presentation of this text and (link) was reasonably
conspicuous. The court says yes. Looking at the question from the perspective of a “reasonably
prudent smartphone” user, and taking into the account the ubiquity of apps, the court
presumes some familiarity with the phone-based contracting process:

• a reasonably prudent smartphone user knows that text that is highlighted in blue and
underlined is hyperlinked to another webpage where additional information will be found.

• The court further says that the sign-in (payment screen) is “uncluttered,” the user does not
need to scroll to see the hyperlinked terms, and the terms are in dark print which contrasts
with the bright white background. The court contrasts the placement of the hyperlinked terms
with those of Nicosia, where the court said that it was debatable whether an Amazon user was
on inquiry notice of the terms.

• The court also distinguishes another case, Schnabel, where the court declined to enforce online
terms (in that instance emailed after the fact). The court says that the notice is “temporally
coupled” with the registration process.
 The Uber case
• The court says the availability of the terms by hyperlink doesn’t
change the analysis:

• As long as the hyperlinked text was itself reasonably conspicuous

‐‐ and we conclude that it was ‐‐ a reasonably prudent smartphone
user would have constructive notice of the terms. While it may be
the case that many users will not bother reading the additional
terms, that is the choice the user makes

• Finally, the court says that the manifestation of assent is sufficient.

The fact that clicking the register button has two functions does
not undermine Meyer’s assent.