With the evolution of technology, the way of executing documents have also evolved. With the increasing demand for modern, convenient methods for entering into binding transactions, electronic agreements and electronic signature have gained a lot of momentum in recent years. Technological developments have not only changed the ways in which these transactions are entered into but the execution process has also revolutionised significantly.
Validity of E- Agreement as per the Contract Act, 1872
Section 10 of the Contract Act lays down as to what agreements are contracts. It states:
“All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.”
Contracts executed electronically are also governed by the basic principles provided in the Contract Act, which mandates that a valid contract should have been entered with a free consent and for a lawful consideration between two majors. The intent of the parties is, therefore, relevant.
In case of click wrap agreements also, if the terms and conditions are provided to the user (offer) and he confirms to the same by ticking on “I Agree” (acceptance), then he shall be held liable to honour the obligations under the contract.
Recognition of E- Agreement and Digital Signature
Section 10A of the IT Act expressly provides for validity of contracts formed through electronic means and states 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.”
An e-agreement subsequent to its execution is stored/recorded with the executing parties in electronic form, and is considered as an electronic record under the IT Act. In this regard, it is relevant to refer to Section 2(1)(t) of the IT Act, which defines an electronic record as
“data, record or data generated, image or sound stored, received or sent in an electronic form or micro film or computer generated micro fiche”.
The terms electronic signature and digital signature have been defined under the IT Act.
In fact, the IT Act quite comprehensively covers the legalities of digital signature certificates (DSCs). Section 5 of the IT Act gives electronic signatures their legal character.
“5. Legal recognition of electronic signatures: Where any law provides that information or any other matter shall be authenticated by affixing the signature or any document shall be signed or bear the signature of any person, then, notwithstanding anything contained in such law, such requirement shall be deemed to have been satisfied, if such information or matter is authenticated by means of electronic signature affixed in such manner as may be prescribed by the Central Government.“
Considering that the IT Act has recognised e-signatures as legal and binding, the same may also form a strong basis for initiating litigation before a court of law.
Admissibility of E- agreements as evidence?
Under the Evidence Act, 1872, an e-agreement has the same legal effect as a paper based agreement. The definition of “evidence” as provided under Section 3 of the Evidence Act includes
“all documents including electronic records produced for the inspection of the court.”
Section 65B(1) of the Evidence Act provides that,
“any information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer shall be deemed to be also a document and shall be admissible in any proceedings, without further proof or production of the original, as evidence of any contents of the original or of any fact stated therein of which direct evidence would be admissible”.
Further, Section 47A of the Evidence Act stipulates that when the Court has to form an opinion as to the electronic signature of any person, the opinion of the Certifying Authority which has issued the electronic Signature Certificate is a relevant fact, and Section 85B of the Evidence Act stipulates that unless the contrary is proved,
“The Court shall presume that-
- the secure electronic record has not been altered since the specific point of time to which the secure status relates;
- The secure digital signature is affixed by subscriber with the intention of signing or approving the electronic record.”
On a reading the national laws, it can be said that e-agreements are valid and enforceable in the courts, however, since the risk associated with e-signatures are high, for high stake transactions, parties still insist on wet signatures on physical agreements.
 Indian Contract Act of 1872, Section 10.
 Information Technology Act of 2000, Section 10A.
 Information Technology Act of 2000, Section 2(1)(t).
 Information Technology Act of 2000, Section 5.
 Indian Evidence Act of 1872, Section 3.
 Indian Evidence Act of 1872, Section 65B(1).
 Indian Evidence Act of 1872, Section 85.