Introduction:
With the changing phase of time and enhancement of technologies enactment of necessary laws was the need of the time. With the development of technologies formation of contract have moved to a new passage. The Indian Contract Act, 1872 states that, in order to have a contract in effect, a proposal and an assent must be made to the proposal, which is turned into a promise. A promise accompanied by consideration shall become an agreement and an agreement strictly enforced by law shall be a contract. Likewise, the online contract meets the same pre-requisite as the physical contract. At the basic level, online contract forming involves the online offer/proposal of one party and its online approval by the other party.[1]
Pre-requisites for a legal contract
In order to have a legal contract, the offeror should make a proper offer/proposal [section 2(a)] and acceptance by the offeree [section 2(b)]. The proposal must be accompanied by consideration [Section 2(d)] and the agreement must be signed with free consent of the parties [Sections 13-22].
In addition, it is necessary that the parties must be eligible to enter into contracts [sections 11 and 12)] and that the purpose of the contract should be lawful [section 23-25]. Furthermore, there should be a meeting of minds, consensus ad idem, which means that both sides must agree to the same thing in the same way. There should be no doubt about that.
Valid Offer
Under the Indian Contract Act, there should be at least two parties, legal or natural, competent to enter into a contract. Offer to a contract must have an object that is lawful; it must be conveyed to the person for whom it is intended, and it must be conveyed with a view of obtaining consent.[2]
Furthermore, the terms and conditions of the contract should be definite or capable of being made certain. The goal should be to establish a legal relationship.
Valid Acceptance
The offer must be conveyed to the acceptor and must be made known to the acceptor before it is accepted. The offer must be made to the acceptor by the offeror himself or by his properly designated legal agents. The acceptance must be rendered to the offeror by the acceptor himself or by his properly appointed legal agents. The acceptance must also be made before the lapses of the bid [section 6]. In the eyes of the law, the correspondence of acceptance must be complete. Acceptance can be express or implied, absolute and qualified.
Postal Rule
Postal Rule specifics that the proposer/acceptor has to put the concerned into transmission proposal/acceptance so as to be out of the jurisdiction of the said proposer/acceptor.
Acceptance is done as soon as the letter is deposited in the mailbox, and that is the position where the contract is made. The postal law stresses both the communication of the request and the communication of approval. Contract by post/correspondence shall be concluded at the place where acceptance is made.
Instantaneous Communication Rule
In the event of instantaneous communication, the contract shall be concluded where approval has been obtained. It is now established law that the contract is concluded when the acceptance is received by the offeror and the contract is concluded at the location where the acceptance is received.[3]
The Information Technology Act, 2000: Parties to Communication Process
The Information Technology Act came into force on October 17, 2000. The Act distinguishes three parties to the electronic transmission process: the originator [section 2(1)za)], the agent [section 2(1)w)] and the addressee [section 2(1)b)].[4]
The Originator
Originator, as specified in the Act, means a person who sends, stores, or communicates any electronic message; or enables any electronic message to be sent, produced, stored, or transmitted to any other person, but does not involve an intermediary.
The Intermediary
Intermediary means any person who on behalf of the principal, receives, stores or transmits that message or provides any operation with respect to that message in respect of any specific electronic message.
The Addressee
The addressee, as specified in the Act, means a person who is intended by the originator to obtain an electronic record but does not include any intermediary. The role of the three parties involved in the electronic communication process is distinguishable. There will be an originator, an agent, and an addressee for a given electronic message. Categories such as originator and addressee are dynamic, i.e. for an electronic message, the sender (originator) and the recipient (addressee) of that message would be dynamic, but suppose the recipient replies back to the sender, in which case the recipient would be the originator of that electronic message (reply) and the sender would thus become the addressee.
Interestingly, during the entire exchange of such messages between the parties, the category of intermediary would remain static, i.e. its function would remain the same regardless of the reversal of the role of the originator and the addressee. The function of an intermediary is that of a facilitator, a third-party service provider, like an e-mail service provider, web services provider etc.[5]
The Information Technology Act, 2000: Process of Communication
Attribution of Electronic Records
Section 11 of the Act sets out the conditions under which an electronic record is attributed to the originator as defined in [section 2(1)za)] of the Act. The conditions laid down are specific performance: (a) sent by the originator himself; (b) sent by an authorized person on behalf of the originator; and (c) sent by an information system programmed by or on behalf of the originator to operate automatically.
Acknowledgment of Receipt of Electronic Records
Section 12 of the Act deals with a number of legal issues arising from the use of a receipt. It is based on the assumption that the recognition procedures are to be applied at the discretion of the originator. The procedures range from simple acknowledgment of receipt of the electronic record by the addressee to receipt within a reasonable time of receipt of the acknowledgment received by the originator.[6]
Receipt recognition plays a very important role in the communication process involving the computer, the computer system, and the computer network. Acknowledgment is not acceptance. It only means that the message has been received. Section 12(1) provides for a situation in which the originator has not agreed with the addressee that an acknowledgment of receipt of the electronic record shall be provided in a particular form or by a particular process. An acknowledgment may be rendered either by any contact by the addressee, automatic or otherwise, or by any actions by the addressee, sufficient to indicate to the originator that the electronic record has been received.
Section 12(2) specifies that where the originator has stated to the addressee that the electronic record shall be binding only upon receipt by the originator of the acknowledgment of the electronic record, and that the electronic record shall be considered never to have been submitted by the originator, unless the acknowledgment has been so received. It is the duty of the addressee to ensure that the originator has obtained the acknowledgment as sent by him.[7]
Significantly, Section 12(3) provides for an optional protocol to be followed by the originator in the event of non-receipt to obtain an acknowledgment from the originator. In compliance with the statutory requirement, the originator may give notice to the addressee indicating that he has not received acknowledgment and specifying a fair period by which he must obtain the acknowledgment. In addition, if no acknowledgment is obtained within the time period referred to above, the originator may, after giving notice to the addressee, treat the electronic record as if it had never been sent.
Dispatch of Electronic Records
Apart from the confirmation of receipt by the addressee, it is also necessary to determine the time and place of dispatch of the electronic record. Pursuant to section 13(1) of the Act, an electronic record is sent when it reaches a computer resource beyond the control of the originator.[8] The “dispatch” process includes the electronic transfer of the electronic record to the destination. The Act describes the time of dispatch of an electronic record as the time when a computer resource is entered beyond the control of the originator, which may be the computer resource of the addressee (or an intermediary). The electronic record should not be considered to have been dispatched if it has only reached the addressee’s computer resource but has not entered it, i.e. for whatever reason the addressee has not been able to successfully access or retrieve the electronic record from that computer resource.
Receipt of Electronic Records
From a regulatory point of view, the receipt of an electronic record is just as critical as its dispatch. If dispatch takes place at the end of the originator, the receipt shall take place at the end of the receiver. From a legal point of view, it is necessary to remember whether the originator has sent a message to a designated computer resource or to a non-designated computer resource. A designated computer resource requires a computer resource that has already been designated by the recipient to receive all e-mail messages, such as the recipient’s e-mail address, which the recipient has already sent to the originator. A non-designated computer resource is the one not specified by the receiver to the originator for electronic communication purposes.
It is important to note that the Act distinguishes between the reception of electronic records by a designated and non-designated computer resource. Pursuant to section 13(2) of the Act, a receipt shall take place at the moment the electronic record reaches the specified computer resource. However, it can happen that the originator sends an electronic record to a non-designated computer resource, in which case the receipt takes place at the moment the electronic record is retrieved by the addressee.
Dispatch of Electronic Records and Place of Business
In the world of electronic contracts, parties will have access to their e-mails when on the move, and so the crucial question is: how is the cause of the action to be resolved in the case of a dispute?
Section 13(3) of the Act specifies that an electronic record shall be deemed to have been dispatched from the place where the originator has his place of business and shall be deemed to have been received at the place where the addressee has his place of business.
In addition, pursuant to section 13(5), it specifies that:
(a) where the originator or addressee has more than one place of business, the principal place of business shall be considered as the place of business;
(b) if the originator or addressee does not have a place of business, his habitual place of residence shall be considered to be the place of business;
(c) “usual place of residence” means the place where it is registered in relation to a corporate body.
In other words, the location of the computer resource is irrelevant [section 13(4)] and does not in any way affect the applicability of the time and place of dispatch and the reception of electronic records between the originator and the addressee as indicated in the subsection (3).
Conclusion
Technology has made its significant involvement in every sector. The formation of E-Contract has made it more accessible. And with the same, it is necessary to have laws to safeguard the interest of the people. Formation of E-Contract have its own set of rules. Originator, Intermediary and Addressee are the distinguish parties in the form of E-Contract. Section 11, Section 12 & Section 13 give a brief idea about attribution of Electronic Records, acknowledgment of receipt of e record and dispatch of e records and place of business.
References:
[1] Durgavati. [2020]. Communication process. Retrieved from http://www.jiwaji.edu/pdf/ecourse/law/IT%20Act%20communication%20process(attribution,acknowledgement&dispatch%20of%20electronic%20records)-converted.pdf .
[2] Legalvision. [2018]. Contract Basics. Retrieved from https://legalvision.com.au/contract-basics/ .
[3] Entores Ltd. v. Miles Far Eastern Corporation [(1955)2 QB 326].
[4] The basics of contract law. [2020]. Retrieved from https://www.rocketlawyer.com/article/basics-of-contract-law-cb.rl .
[5] Rajdhani collage. [2019]. Attribution, Acknowledgement and Despatch of Electronic Records. Retrieved from https://rajdhanicollege.ac.in/admin/ckeditor/ckfinder/userfiles/files/Ch-28%20Attribution,%20Acknowledgement%20and%20Despatch%20of%20Electronic%20Records.pdf .
[6] Mahalwala,R. [2020]. Attribution, Acknowledgement and Dispatch of Electronic Records. Retrieved from http://www.bhagininiveditacollege.in/pdf/2020/march/26/Dr%20Rachn%20Mahalwala%20-B.Com%20Ist%20yr%20Business%20Law%20Attribution.pdf .
[7] Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas and Co. [1966 S.C. 543]
[8] Attribution Acknowledgement and Dispatch of Electronic records. [2018]. Retrieved from https://www.ourlegalworld.com/attribution-acknowledgement-and-dispatch-of-electronic-records/ .
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