E-contracts: Does clicking ‘I agree’ really work?

Electronic contracts, which govern the relationship of parties vis-à-vis an online transaction, are among the most important legal aspects of e-commerce. E-contracts, as they are known, are formed by the interaction of two or more individuals and/or computer programmes using electronic means, such as e-mail, instead of entering into a physical contract. While this has made things simpler and quicker, it has also given rise to legal challenges and issues, including whether such contracts will be valid and enforceable.

E-contracts are commonly entered into through e-mail exchange, and click-wrap, browse-wrap and shrink-wrap agreements (explained below). Offer, acceptance, consideration and free consent, which are essentials of a valid contract as per the Indian Contract Act, 1872 (Contract Act), all take place electronically. The Information Technology Act, 2000 (IT Act), and the Indian Evidence Act, 1872 (Evidence Act), also need to be analysed to ascertain the validity of e-contracts.

The IT Act clearly recognizes e-contracts and documents signed by way of a digital signature. The IT Act also deals with related aspects of e-contracts (receipt, time and place of dispatch, security issues, etc.). Further, as per the Evidence Act, e-documents signed by way of digital signatures are admissible in a court. However, issues of validity/enforceability arise where no digital signature has been affixed on e-contracts, as is the case with shrink-wrap, browse-wrap and click-wrap contracts.