Contracts Created By Electronic Means: Understanding The E-contract Formation Process

Comparison of E-contracts with Traditional Commercial Contracts

Discuss about the Research Assignment for Contracts Created by Electronic Means.

Now a day, it is a common preference of modern generation people to buy required products through e-commerce facilities rather than going to shops for the same purpose. That is the reason implementation and utilisation of e-commerce facilities for the customers is day by day increasing in almost every different business industry across the world. Even, e-commerce shopping is becoming greater preference to the modern generation customers over physical visits to the shops. As products and services are being sold through e-commerce medium it is very obvious that sales contracts are being formed between customers and organisations who are selling their products and services through e-commerce systems. That is the context where the use of e-contracts is the maximum[1]. Even, electronic contracts are formed for various other purposes but its general definition remains the same. An e-contract could be defined as the form of contract which is formed, specified, executed and deployed through utilising electronic or digital systems and software. In the context of e-commerce e-contracts could be defined as the form of contract which is formed in the course of e-commerce depending on the interactions of two or more parties or individuals utilising electronics software and systems like emails, computer programs and e-commerce business websites of concerned parties. The main topic of the below provided essay is contracts created by electronic means and the main aim of the study is to achieve better understanding about the creation of contracts by electronic means.

By means of basic concept and elements e-contracts are very similar to the paper based traditional commercial contracts. The process and purpose for commercial contracts are also more or less same in both traditional and e-contracts. In both form of contracts vendors offer their products or services with specific prices and term and in response potential buyers select their options according to their product and service needs, negotiate about prices and terms if options are available, provides their acceptance through placing orders and make their payments[2]. All these processes are nearly same in e-contracts and traditional commercial contracts but the main difference between these two forms of contracts is that the former one is entirely performed by the contracting parties by means of electronic systems and software but the later one is generally formed through contract papers in the presence of two contracting parties. Hence the uniqueness of the formation process of e-contracts raises some newer and interesting technical and legal challenges which are the considered as a topic of discussion in this study.

The Formation Process of E-contracts

For the better recognition of the process of e-contract formation it is important to illustrate the process in terms of general contract elements. The first and the most significant element which initiates the need for the development of traditional commercial contract is offer. Offer in e-contracts is similar to traditional commercial contracts in terms of purpose as it is utilised by vendors or individuals to offer specific products or services to the potential customers with specified price and terms[3]. The difference is that offers are made through electronic means like e-commerce websites. However, product or service offerings made by online vendors through e-commerce websites may or may not be considered as legal offers as they are targeting any specified individual. The general concept of contract law considers an offer to be legally valid if an only if two specific parties intend to form a contract and show their positive intentions for performing the contractual duties. In case of e-contracts, advertisement for a product or service in an e-commerce website generally treated as invitations as they are open for every customer whoever wants to buy that specific product or service[4]. Hence in case of e-contracts the legally valid offers are considered through analysing the intentions of the customers for providing general or certain information to respond to the product offers made through e-commerce websites or other electronic means. Thus, in case of e-contracts the offers are made by the customers through filling up specific online forms provided in online vendors’ e-commerce websites which is considered as their affirmative response to the product offers. Product advertisements in e-commerce websites are made through providing all specific details about the products and terms for purchasing implied by the vendor so that consumer could make their offers without any confusion. Now the vendors could provide acceptance to the offers made by the customers through expressing confirmation or through conduct as well[5].

For the creation of a valid e-contract unequivocal and unconditional interaction of acceptance has to be made in terms of the offer. In case of e-contract the general receipt rule considers the delivery as the ultimate form of acceptance however there is not such conclusive rules for the settlement. The applicable rule of communication in terms of acceptance in e-contracts is majorly dependent on the possibility opt certainty for the message being received by the vendor party. If two contracting parties are directly connected to each other without depending on any server then both of the parties are able to detect the failure or partial transmission of the offer message and subsequently they could retransmit the full offer message for getting the valid acceptance for the offer[6]. However, in case of e-contracts contracting parties are connected to each other depending on common servers which make the actual point of receipt of the acceptance a significant factor to be considered for determining a legally valid e-contract. If the validity of the acceptance in e-contracts would be judged on the basis of postal rule then it is better to consider the trusted servers only because servers which are not trustable have greater possibilities for failure of offer message transfer or performance of the contract duties based on the acceptance. An online vendor could provide their acceptance for the offers made by the customers on their e-commerce website through showing acceptance or confirmation message to them but the performance of the contract liabilities ends with the delivery of the concerned products to the customers[7].

Acceptance in E-contracts

There is a wider range of considerations for the performance of the contractual liabilities in case of e-contracts. Some of the most significant and common considerations for the performance of e-contract liabilities are discussed in this segment of the study. It is mandatory for an e-commerce vendor to provide a list of key points for the targeted customers through including all needed specifications about the products they are offering so that offers could be made by the customers without having any confusion. The confirmation message to the consumers in response to their offers is a must for initiating the e-contract by primary acceptance[8]. The right of withdrawal is provided to the customers in e-contracts based on which they could avoid or cancel a deal even after making an offer if adequate information about the products or services is not provided. However, it should be mentioned that this withdrawal power of the customers is called as cooling-off period and it exists for 7 days from the day they have responded to a product or service advertisements in any e-commerce domain. Within the cooling-off period consumers in e-commerce business can withdraw deals, return the goods and reclaim the paid service charges based on solid reasons. Unless a consumer is allowing an e-commerce vendor for delayed delivery of the ordered product the validity of a legal e-contract lasts for 30 days from the day of offering made by the customer and within these 30days the vendor is bounded to deliver the ordered product. In case of fraudulent use of consumer credit cards through specific e-commerce websites the concerned online vendor would be responsible for the reimbursement of the capital to the customer[9]. On the other hand, there are many other considerations for the protection of the sellers or e-commerce vendors in e-contracts as well.  The recommended approaches for the protection of e-commerce vendors are implementation of ‘change back clauses’ and legal allowance for claiming prepayment form the buyers for establishing the online deals. Hence it could be said that the Directive in e-contracts for protecting the customers from non-trustable e-commerce vendors and also for protecting trustable e-commerce vendors from unknown buyers as well[10].

A party breaching the contract liabilities in e-contracts may face various consequences and liabilities based on the contract laws. Due to the uncertain nature of digital systems and networks utilised in e-commerce vending the sellers in e-commerce domain are liable to reimburse the paid capital to the customers or redeliver the exact ordered product if any misconduct occurs due to programming error and unintentional or deliberate mistakes of the employees. According to the Information Technology Act, 2000 additional security mechanism are also employed in e-contracts for ensuring better information security and other controls and also for limiting the exposure of liability as well[11]. Some of the examples in this regard are engagement of audit and control programmers, consideration of technical competence and accreditation for e-commerce websites, insurance for both vendors and buyers, compliance of the e-commerce vending process with recognised guidelines and practices and so on[12].

Performance of E-contract Liabilities

Now it is a matter to discuss that whether a party or buyer in an e-contract is able to withdraw a mistaken offer. The answer for this question could be both negative and positive. A buyer in an e-commerce business is always able to withdraw a mistaken offer within the cooling-off period of 7days as this period gives the costumers with the right for cancelling an e-commerce offer. It should be mentioned that consumers could withdraw their mistaken offers within the cooling-off period with specific reasons for the cancellation, such as inadequate sharing of product information, unjustified pricing or anything else. However, the right for the withdrawal of a mistaken offer in e-commerce deals is not provided to the customers after the expiry of the cooling-off period[13]. There is no requirement of solid clauses to the buyers for the withdrawal mistaken offers in e-commerce deals within the cooling-off period but after the end of this period mistaken deals cannot be withdrawn. Consumers could ask for the exchange of goods or reimbursement of the service changes from the e-commerce vendors only with valid reasons and the reasons should also have to comply with the ‘change back clauses’ implied by individual e-commerce vendors as well[14] .

Now depending on the above discussions some specific issues could be identified with the procedure, formation and considerations in e-contracts. First of all there is no such strategy available for the customers to identify valid and trustable e-commerce vendors from other fraud parties who use e-commerce vending system for unethical trading practices. It is easy for anyone to pay valid money for the development of an e-commerce website and it could be utilised for both fair and unfair trading[15].

Hence, it could be concluded from the above study that the present legal considerations and liabilities for the formation of valid e-contracts is adequate enough for the smooth growth and development of the e-commerce vending sectors. However, there is lack of more strict rules for the prevention of fraudulent acts and misconducts made by buyers and sellers in e-commerce vending. The security for buyers and sellers is less compared to traditional commercial vending as there is no uncertainty for the valid formation of a contract[16]. The uncertain nature of the electronic systems and networks utilised for e-commerce vending is the main issue for the restricting smooth offering and acceptance process in e-contracts. However, the present growth and development of the technology and increasing importance of e-commerce vending to the modern generation customers could valid reasons for expecting more effective development of the procedures in near future.

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