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Types Of Online Contracts: Enforceability and Validity!

Online Terms and Conditions

With the advance use of electronic commerce and the internet, online contracts have gained value in terms of scope and multiplicity in particular. The online contract or electronic contract is an arrangement that is electronically modelled, signed and enforced, usually over the internet. Conceptually, an online contract is very similar and is drafted in the same way as a traditional paper contract. In the case of an online contract, the seller who intends to sell their products will present to prospective purchasers their products, prices and terms for purchasing those products. In exchange, buyers interested in buying the goods either agree or click on the 'I Agree'/'Click Agree' choice to signify approval of the terms submitted by the seller, or they may sign electronically. Electronic signatures can be done in a variety of ways, such as typing the signer's name in the actual signature space, copying and pasting the signature's scanned version or clicking a choice intended to do so. Once terms and conditions are agreed and payment made, the agreement can be completed. The contact between two computers is done through servers. The online contract is brought to the scenario to help people formulate and implement trade contract policies within internet-driven businesses. An online contract is modelled for selling, buying and providing products and services to both consumers and business associates.

Kinds of Online Contracts

1. Browse Wrap Agreements

This agreement is considered to be a search cover agreement meant to be binding on the contracting party through the use of the website. These include website access policy, and terms of service such as Flipkart or E-bay and are in the form of a "use terms," a "user agreement" or "service terms".

2. Shrink Wrap Contracts

Such contracts are the licensing agreement by which the contract terms and conditions are imposed on the contracting parties and are commonly present on the plastic or in manuals that accompany the software products that the customer purchases.

3. Click Wrap Agreements

Such agreements allow the user to consent to the terms and conditions known as the End User Agreement and control the permitted use of the program by clicking on the button "Yes" or "I agree". There are certain types of checks which ensure the terms of the agreement bound the contracting parties. Those are the following:

a. The user agreement or the terms of service shall be communicated expressly to the party. By simply inserting a link to the terms on the website without attracting the user's attention, the user's intimation shall not be considered. Therefore, if the customer wants to use the website after the terms have been intimated, then the approval of the contract shall be considered.

b. If the user has given his consent for the particular action, the terms of the agreement should not be changed.

c. The changes made to the terms of the agreement must be intimated directly to the customer who provides a user to give a fresh consent to the terms of the changes. If the consumer does not consent to the changes, then at this very moment, he has the option to leave the website.


The Information Technology Act, 2000 made some provisions for the validity and the existence of online contracts, but no specific legislation has been introduced for the validity of online contracts in India. Even if there is no particular provision for the validity of electronic contracts, this cannot be questioned based on technical reasons.

There are few processes available to form an electronic contract, such as e-mail, through which you can exchange offers and acceptances. Completing the website form provided for the availability of goods or services offered by the seller on the website, for example, air tickets, can create an online contract. The person who intends to make use of the goods or services provided on the website may place an order on the website by filling out and communicating the form in question. The offered goods can, for example, be delivered directly by electronic means. E-tickets or may be eventually, e.g. Clothing. Another process available for creating an online contract is by clicking on the 'I Accept' button while connecting to software and by clicking on the 'I Agree' button when signing up for an e-mail account.

Digital contract is created using new communication technologies such as e-mail, twitter, fax and telephone. The provision of essential elements such as offer and acceptance in online contract formation is as necessary as it is for conventional contract forming based on paper. Contract forming over websites is quite different from earlier contract forming methods. Online contract creation poses questions regarding the applicability of the bid rule and the acceptance rule primarily. It is the website that serves as the retailer and is reacting according to the behavior of the customer. If a consumer is interested in downloading songs, videos or movies instead of payment from a retailer's website, the consumer will have to agree to the standard terms of the retailer's website by clicking on the options button. Once the consumer agrees to the terms and conditions, it is the website's responsibility to provide the service to the consumer. And finally, on making the appropriate payment, the contract for the particular transaction is concluded between the consumer and the retailer's website.


The Information Technology Act, 2000, sets out different procedural, administrative guidelines and regulates all kinds of electronic transactions provisions. These include computer data protection, document authentication through digital or electronic signatures. Although the IT Act, 2000 has recognized electronic contracts, most believe it is less secure to enter into any online contracts as there are no concrete legal precedents for online contract validity and enforceability in India. In the case of browse-wrap contracts, we generally accept the contract terms and conditions by clicking the 'I Agree' button and in the case of a shrink-wrap contract or purchase of a software product, the consent is given by the consumer or the purchaser with the wrapper being torn and used. Many are inclined not to read the terms and conditions before agreeing to such. But these actions should be taken consciously and carefully only after adequately reading the terms of the contract, as it leads to a valid contract, and the terms against them can be strictly enforced.


The online contract is designed and implemented to make online transactions safe. It is developed to check fraud to encourage and build trust in legitimate online transactions and to give the idea of digital signature a legal status. Digital contract is a very productive process in the interest of time and money as opposed to the conventional paper and writing contract system. But to keep up with the rapid advance of the technology, a separate electronic or online contract legislation needs to be implemented in India.

By: Vishnu Kesarwani
The author can also be reached at vishnukesarwani@gmail.com


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on 09 March 2020
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