E-CONTRACTS/COMMERCE

1.     Significance of E-Transactions/E-Commerce

E-Transactions and E-Commerce have brought major changes in how businesses operate and people shop. They save time, cut costs, and make global trade easier. Let us explore their importance with detailed points and examples:

Global Reach : Businesses can now sell their products worldwide without opening physical stores.

• Example: A local craftsperson in Jaipur can sell handmade jewellery to customers in the USA using platforms like Amazon or Etsy.
• Explanation: The internet removes the need for geographical proximity and allows businesses to connect directly with international customers.

Cost Savings : Companies save money on rents, electricity, and store staff by operating online.

• Example: Flipkart operates through warehouses instead of maintaining retail shops. This reduces expenses and allows them to offer discounts.

Convenience for Customers : Customers can shop at any time, avoiding travel and waiting in queues.

• Example: A person can book movie tickets or order groceries late at night using apps like BookMyShow or BigBasket.

Speedy Transactions : Payments and orders are processed instantly, allowing faster delivery.

• Example: Using UPI (Unified Payment Interface), people can transfer money directly to others in seconds.

Variety : Consumers can compare multiple brands, read reviews, and select the best deals.

• Example: A customer looking for a mobile phone on Amazon can compare prices, features, and reviews before making a purchase.

Safety and Record-Keeping : Digital platforms automatically generate receipts and store transaction details.

• Example: After an online shopping transaction, an email confirmation is sent with a receipt, which can be used as proof of purchase.

 

2.     Nature, Formation, and Legality of E-Transactions

E-transactions follow certain rules and steps to ensure they are safe, valid, and legal. Let’s break this down:

Nature : E-transactions are entirely digital, involving the exchange of information, contracts, and money.

• Example: Booking a train ticket on IRCTC involves selecting a train, entering details, making the payment online, and receiving an e-ticket.
• Explanation: There is no need for paper tickets or standing in long queues at booking counters.

Formation : For an e-transaction to be valid, these steps must occur:

1. Offer: The seller makes an offer (e.g., listing a product online).
2. Acceptance: The buyer accepts the offer (e.g., adding the item to the cart and making payment).
3. Consideration: Payment is made, completing the transaction.

• Example: A customer purchasing a laptop on Flipkart adds it to the cart, pays using a credit card, and receives confirmation. This is a complete e-transaction.

Legality : The IT Act, 2000, ensures that e-transactions are legally valid.

• Example: An online agreement signed using a digital signature is recognized as valid in court.
• Explanation: This means contracts no longer need handwritten signatures or physical presence.

 

3.     Recognition of E-Records (Sections 11-13 of IT Act, 2000)

Attribution of E-Records (Section 11)

An electronic record is valid if it is sent by:

• The person themselves.
• A person authorized by them.
• An automated system set up by the person.
• Example: If an online shopping platform sends an order confirmation email, it is attributed to the platform’s automated system.
• Explanation: The system ensures the message is valid and identifies the sender.

Acknowledgment of E-Records (Section 12)

Acknowledgment means confirming that the record was received.

• Example: After making a payment online, the customer receives a notification or email stating the payment was successful.
• Explanation: This acknowledgment reassures the sender (buyer) that their transaction is complete.

Dispatch and Receipt of E-Records (Section 13)

• Dispatch: The record is considered sent when it leaves the sender’s system.
• Receipt: The record is received when it enters the recipient’s system and is accessible.
• Example: If a bank sends a loan approval email, it is considered dispatched when the email is sent from the bank’s server and received when the customer can access it in their inbox.

 

4.     Digital Signatures (Meaning, Functions, and Certificates)

Meaning

A digital signature is an electronic way to sign documents. It ensures that the document is genuine and hasn’t been tampered with.

• Example: When signing an online rental agreement, a digital signature is used to confirm the tenant’s and landlord’s identities.

Functions of Digital Signatures

1. Authentication: Confirms the signer is genuine.
• Example: A government employee signing a tender application digitally proves their identity.
2. Integrity: Ensures the document hasn’t been changed after signing.
• Example: A signed PDF contract remains valid only if no alterations are made.
3. Non-Repudiation: Prevents the signer from denying that they signed the document.
• Example: A vendor signing a digital invoice cannot deny their involvement later.

 

5.     Digital Signature Certificates (Sections 35-39)

• Certifying Authorities (CAs) issue certificates that verify the identity of the signer.
• Example: Aadhaar-based e-sign is a form of digital signature widely used for government documents.

·        Legal Issues in E-Contracts and Data Protection

E-Contracts

E-contracts are agreements made online, such as accepting terms and conditions.

• Example: Clicking "I Agree" while signing up for a new email account forms an e-contract.
• Issues:
1. People may not read the full terms before agreeing.
2. Disputes may arise if one party denies their consent.

Personal Data Protection (Section 43A)

This section ensures that businesses handling personal data protect it from misuse. If they fail, they must pay compensation.

• Example: If an e-commerce website leaks customer credit card details, the affected customers can claim damages.
• Explanation: Protecting personal data builds trust between customers and businesses.