The usage of the Indian Contract Act can be traced back to 1500 BCE during the Vedas and Manusmriti. During that time, the contracts were based on morals and ethics. After the advent of the East India Company, the need to enter into a contract increased and consequently in 1872, the British Indian Contract Act came about. As of the modern era, the contract has become a regular thing, whether buying a pencil to companies entering into a contract, etc. 

What Is A Contract? 

The Indian Contract Act explains a contract as an agreement between two or more parties whether playing to buy or sell goods or services with certain considerations in return. The contract lays down certain essentials of the contract as well as the E-Contract. 

  1. Offer 
  2. Acceptance 
  3. Lawful consideration 
  4. Free consent of the parties 
  5. Competent contract 
  6. The contract must be enforceable by law. 

The contracts can be either expressed, implied in fact or implied in law. They can be either oral, written, bilateral or unilateral. There is a line of distinction between agreement and contract. Every contract is an agreement, while not all agreements are contracts. For an agreement to be a contract, there should be a legal obligation attached to it. 

There is a recent development in the terms of law related to contracts which has been introduced in the parliament i.e. Indian Contract (Amendment) Act, 2022, on 1st April 2022, which primarily aims to clarify the definition of coercion. 

Necessity Of The Contracts

There are various reasons why contracts are important and why is entering into one preferred by parties: 

  1. Once the contract is written, it acts as a rule book for representing the obligations and rights of the person. 
  2. They indicate what is expected by both parties in a contractual relationship. 
  3. They can help in establishing confidentiality between the parties. Except for the parties involved in the contract, neither can anyone come to know about the details of the contract nor can anyone else be the third party to the contract. 
  4. Contracts help in better cooperation and interaction among the parties. 

E- Contracts

With the coming of the digital age, contracts are being signed and executed in the digital arena.  An E-contract or electronic contract is a contract that is drafted, negotiated and executed by the parties completely on the digital platform. Using E-contact has made the traditional pen-paper contracts redundant. The essentials of the E- Contact and the traditional Contract are the same i.e. there is a necessity of an offer, its acceptance, real and lawful consideration, free consent of the parties without any fraud and misrepresentation and a contract that is enforceable by law. E- E-contracts are the best source of speedy execution of agreement. 

There are two types of parties- Originator and Addressee. The originator is the person who sends any kind of electronic message and the addressee is the person who receives any sort of electronic record. 

Types Of E-Contracts 

A person enters into Contracts online without even realising it. When one enters a site and clicks on “agreeing to terms and conditions”, that is an example of E a contract. However, there are various types of E-Contracts: 

  1. Browse wrap agreements: when one clicks on “understood and agreeing to terms and conditions” after clicking on a hyperlink, this is an example of this type of E-Contract. 
  2. Clickwrap Agreements: The prime example of this type of e-contract is where one has to click on “I accept”. This shows that the party is explicitly agreeing to the agreement rather than an implied agreement.  
  3. Scroll wrap agreements: In this kind of example, the customer is to browse through all the terms and conditions and agree to them. 
  4. Sign-in wrap agreements: It collects acceptance as soon as the person enters a site or takes any act of buying or availing of service as consent. This is generally implied consent. 
  5. Electronic signature: when the contracts are signed online. 

Validity Or Recognition Of E-Contracts

The E-Contracts act as an addition to the digital era and have received their legality via Section 10 of the Information Technology Act, of 2008. The section states that where a contract is formed, and all the other essentials i.e. communication of proposal, its acceptance and other essentials are fulfilled via an electronic form or using an electronic record, such contract, shall be considered an E-Contract. 

The question arises, how will the parties sign the contract? The parties can do so via an electronic signature. Electronic signatures are defined under Section 2(p) of the Information Technology Act “as an authentication of any electronic record by a subscriber utilising the electronic technique specified in the second schedule and it includes digital signatures”. Furthermore, Section 5 of the Act, states that E-Signature have the same applicability and enforceability as that handwritten signature. 

In Trimex International FZE Ltd Dubai v. Vedanta Aluminum Ltd, the court held that electronic transactions are valid and e-mails exchanged between parties regarding mutual obligations constitute a contract. 

The Digital Signature (End Entity) Rules, 2015, also lays down the rules and regulations relating to the verification of the authentication of electronic documents. Section 5 of the act lays down the process of verification of digital signature. 

Furthermore, Section 65B of the Indian Evidence Act, of 1872, lays down the validity of the electronic contract. It states that any information that is presented in electronic form is deemed to be a document under the Indian Evidence Act, of 1872. 

In Tamil Nadu Organic Private Ltd v. State Bank of India, the HC observed that contractual liabilities can arise from the way electronic means and are enforceable in a court of law. 


Contracts are agreements that are entered into by the parties after all the requisite conditions are fulfilled. The E- contracts also are considered a valid form of contract that can be entered into by the parties. E-contracts have facilitated business transactions. They aim to replace the traditional contractual method. Hence, E-contracts are a more favoured way of contracting amongst businesses and governmental agencies to simplify the contractual process.

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