Chapters-II, III and IIIA

Chapters II and III-No comments.

CHAPTER-III A: ELECTRONIC CONTRACTS


Section 10 A: Section 10 has been deleted as this is covered under section 87 and a new section 10A is added for “Formation and Validity of Electronic Contracts”

Section 10 A reads: Formation and Validity of Contracts

(a) In the context of contract formation, unless otherwise agreed by the parties, an offer and the acceptance of an offer may be expressed by means of an electronic record.

(b) Where an electronic record is used in the formation of a contract, that contract shall not be denied or enforceable on the sole ground that an electronic record was used for this purpose.

An appraisal of some of the definitions in this regard is worth noticing. Section 2(1) provides that in this Act, unless the context otherwise requires,-

(b) "addressee" means a person who is intended by the originator to receive the electronic record but does not include any intermediary. Thus, the liability of the intermediary has been diluted significantly except where he/it was aware about the contravention or offence.

(q) “electronic form” with reference to information means any information generated, sent, received or stored in media, magnetic, optical, computer memory, micro film, computer generated micro fiche or similar device.

(s) “electronic record” means data, record, or data generated, image or sound stored, received or sent in an electronic form or micro film or computer generated micro fiche.

(v) "information" includes data, message, text, images, sound, voice, codes, computer programmes, software and data bases or micro film or computer generated micro fiche;

(w) “intermediary” with respect to any particular electronic record means any person who on behalf of another person receives, stores or transmit that record or provides any service with respect to that electronic record.



(za) "originator" means a person who sends, generates, stores or transmits any electronic message or causes any electronic message to be sent, generated, stored or transmitted to any other person but does not include an intermediary. Again, the liability of intermediary has been reduced to significant extent.

Section 2 (2): Any reference in this Act to any enactment or any provision thereof shall, in relation to an area in which such enactment or such provision is not in force, be construed as a reference to the corresponding law or the relevant provision of the corresponding law, if any, in force in that area.

A close perusal of these definitions and section 10A reveals the following important concepts:

(a) An electronic contract is subject to the “contract to the contrary”. That means if the parties clearly contemplate that an “electronic contract” should not be formed, then even if the basic requirements have been fulfilled, there will be no valid contract.

(b) The offer and acceptance of the contract must satisfy the requirements of the Indian Contract Act.

(c) The requirements of a valid contract must be expressed by means of electronic record. Now there is a significance difference between the expressions “electronic form” and “electronic record” and the distinction though fine and thin is yet real and if ignored may bring absurd results.

(d) A bar or estoppel has been provided from denying an electronic contract merely because it has used an electronic record.

(e) Section 2(2) will provide strength to the analogous use of the provisions of various statutes including Criminal Procedure Code and Contract Act, if any corresponding provision in the IT Act is not in force.

The Objects and Reasons of the proposed Act provides that it is an Act to provide legal recognition for transactions carried out by means of electronic data interchange and other means of electronic communication, commonly referred to as "electronic commerce" which involve the use of alternatives to paper-based methods of communication and storage of information, to facilitate electronic filing of documents with the Government agencies and further to amend the Indian Penal Code, the Indian Evidence Act, 1872, the Bankers' Books Evidence Act, 1891 and the Reserve Bank of India Act, 1934 and for matters connected therewith or incidental thereto.

Thus, the proposed section is a good provision and must be accepted to give strength and momentum to the electronic commerce provisions.


Praveen Dalal
Cyber Law Consultant and Advocate
Delhi High Court
Tele: 9899169611.