Contract and E-contract Under English Law And Indian Law

Introduction:

A contract is an agreement that governs and recognizes the rights and duties of two parties.

It is legally enforceable because it meets the requirement and approval of both parties. An agreement usually involves the exchange of goods, services, money, promises of anything. If there is a breach of contract, the law provides legal remedies such as damages and cancellation to the injured party.

Contract Under Indian Law

The Indian Contract Act, 1872 defines the term CONTRACT under section 2(h) as Any agreement enforceable by law. In other words, it can be said that anything that is agreed between two parties over any exchange of things and enforceable by the law of the land is known as Contract.

This definition gave rise to 2 major elements in it – “Agreement” and “enforceable by law”. To understand these two pivots we will discuss this further:

Agreement

The Indian Contract Act, 1872 defines “agreement” under section 2(e), as ‘every promise or every set of promise, leading to the consideration for each other’. Now we know that Act defines the term “agreement” with reference to promise, there may be some ambiguity regarding the definition of promise.

Promise

This ambiguity is removed by the Act itself under section 2(b) which defines ‘promise’ as when any person to whom the proposal is made gives his assent, therefore, the proposal is said to be accepted by consent. When it is accepted it becomes a promise.

In other words, an agreement is fulfilled by the acceptance of the promise, accepted by all the parties involved in the agreement or affected by it. Thus, this definition introduces a sequence of steps that need to be followed or established in order to draft a contract. These steps are as follow:

• There is a requirement of a person to whom a proposal could be made.
• The person/parties in the above step should be of sound mind to fully understand the terms and conditions of a proposal.
• The person should accept or agree with the proposal after fully understanding it.
• Once the “parties/person” accepts the proposal, the status of proposed changes to ‘accepted proposal’
• This ‘accepted proposal’ is known as “promise” but just a proposal to a person is not considered as ‘promise’. For a proposal to become the promise, it should be accepted first. 

Therefore, in other words, an agreement is formed from a proposal made by one or more participants affected by the proposal, is accepted by all the parties/participants mentioned in the agreement. It could be represented by the equation below:

Agreement = Offer + Acceptance

An agreement is considered as a wider term with respect to the contract. It is considered that every contract is an agreement but every agreement is not a contract.

An agreement becomes a contract when the following conditions are fulfilled under section 10 of the Indian Contract Act, 1872:

• There should be some consideration.
• The parties should be competent to contract.
• There should be free consent.
• Their object should be lawful
• The terms and conditions must not be uncertain.
• The agreement must not be declared void.
• The agreement must be capable of performing.

Contract Under English Law

English Contract Law is a body which regulates contracts in England and Wales. English law places a high value on ensuring their people have consented to the deals that bind them in court. An agreement that is enforceable in court is considered as a contract because a contract is a voluntary obligation with respect to paying compensation for a tort or restitution to reverse unjust enrichment. It also shares a heritage with Commonwealth countries like India, Australia, Canada, and to some extent the United State.

The English Contract Law also shares some common features with some other law jurisdictions such as the United States, New Zealand, and Australia, although people from those countries should seek appropriate legal advice.

1. Privity of contract

It is important to understand that only the participants/parties to the contract may enforce the terms of the agreement. No third party can interfere with the contract or enforce the contract.

2. Consideration

The contract must contain a mutual promise or obligation between the parties. There must be some consideration to form the contract. If there is no obligation then it is not a contract. It cannot rely on past consideration as well as it must have some economic value in order to be a valid contract.

3. Formalities

Agreement requires few formalities in order to be a legal contract. Some things have been changed like there is no requirement for all contracts to be signed as deeds, as well as, sealing and delivery of deeds has been abolished. It is not essential that the contract is in written form, the contract can be formed orally by agreeing the terms on either on telephone or face-to-face. There is some disadvantage of an oral agreed contract as it might be misunderstood or misremembered by any of the parties. It is considered to be a contract in a written form.

4. Contract which must be in written form

There are several kinds of contracts that must be in written form like contracts containing any type of guarantee or contract related to transfer, lease of land or sale, for certain intellectual property rights.

5. Authorized Persons and Authorised Signatures

One of the mistakes that is made by certain people while forming a contract is in obtaining the signatures of the correct person. To bind any person, it must be signed by a person who has the authority to do so. An equally important arises that name of the company/person must be written in the correct manner in both the agreement and on the invoice submitted.

6. Capacity

A contract made with the minor, drunks, the mentally ill person or certifiably insane person cannot be enforceable, the contract would be declared as void by the court. It is best not to practice any kind of business with such individuals as it will cause unnecessary issues and costly legal dilemmas.

7. Breach of Contract

When any of the parties does not perform or fulfill their obligations as per contract then it is said to be a breach of contract. In other words, it is a failure to perform the contract as per the terms and conditions mentioned. The non-breaching party must place a written notice before issuing court processing.

e-Contract

The essential requirement to form an electronic contract in compliance with pre-requisites conditions mentioned under the Indian Contract Act, 1872. E-contracts are valid under section 10-A Information Technology Act, 2000. It gives legal recognition to an E-Contract in India. It is formed after the recognition of growing dependence on electronic means to reach a commercial agreement through the Information Technology Act, 2008. It is applied to contract which are formed, communicated, and accepted electronically.

  Section 1(4) of IT ACT does not apply on the following:

•  Wills
• Negotiable Instrument
• Trust Deeds
• Sale or Transfer of Immovable Property
• Power of Attorney

Types of e-Contract

E-contract can be divided into three categories:

1. Shrink-wrap Agreement

It is a contract usually formed for a licensing agreement for software purchases. These contracts are only enforceable by the Buyer of such software products.

2. Web-Wrap Agreement

These contracts are formed only by the user’s consent or consent through I ACCEPT TERMS BUTTON. The user has to accept the particular conditions of the software.

3. Browse-Wrap Agreement

It is an agreement binding upon the two or more parties through the use of certain websites. The users have to accept certain conditions and other website policies for continuous use.

Conclusion

The Contract Act explains elements that need to be fulfilled to form a valid contract along with certain exceptions and afterward, it deals with the sections that give remedies for both the parties in case the contract has been breached or will be void-ab-initio if any condition is not fulfilled. It is also important for normal day-to-day trading and regular dealing to be a valid and effective contract. There are various forms of contracts like the contract of indemnity, contract of agency, contract of guarantee, etc. We need strict laws also for the protection of our personal information and binding ourselves in irrelevant liability.