Three hundred and sixty degree view on Cyber Contracts in India: A Discourse

Abstract:

During the journey of knowledge acquisition, it is an ideal dream of every knowledge seeker to achieve three hundred and sixty degree view on the domain of a particular subject matter. In this article an effort towards such approach is adopted to strengthen the travelling thoughts on the subject of cyber contract that owes its origin to invention of computer, internet and its accessory dependents on the concepts like algorithm, coding and protocol. Today, the social change and cultural developments encapsulate the new forms of communication models with use of smart phone and emergence of social media creating sufficient syllabus for stakeholders of law to explore certain new emerging legal concepts. Such new legal concepts as part of essential ingredients in the formation of cyber contract like prescribing the mode of execution unknown to traditional law of contract (read it as UNCITRAL model) in alignment with the current and future generational requirements of our society. It is true that the twenty first century has created a landscape of global village, digital economy and electronic governance. This situation now demands alignment of the legal system and suitable legal approach to support activities driven by the technology enabled tools. This article will envisage certain important legal aspects that are necessary to understand the overall coverage of the cyber contract law in India.

Introduction:

“Neither Ancient Law nor any other sources of evidence discloses to us society entirely destitute of the conception of Contract”

-Sir Henry Sumner Maine[1]

Mini History of Cyber:

The term “Cyber Space”[2] for the first time was referred in an imaginary science fiction novel. Thereafter in the social arena the term “Cyber” generally meant to refer matters pertaining to internet[3]  ,  web[4]   and  network  that  are  associated   with  communications  between  machines controlled by human for different purposes. The machine at the end-point referred to popularly as “computer” with its accessories for storage, etc. this new system puts in place a unique model that can handle enormous amounts of data and information that was necessary for social interactions not limited to entertainment , education , research but also extended to assist government, commercial transactions of the business. This situation encouraged more investments, increasing user growth encompassing different domains of human life to set up the digital infrastructure both by State-entities and non-state entities at all levels. This resulted in a fantastic point of using technology (i.e. internet as humankind wonder) leading to enjoy the advantages that can handle various activities in the society without the traditional obstacles of time distance or geographies. With appropriate and adequate training, awareness and orientation of Cyber introduced by the stakeholders like developers; the dependence on internet has now become inevitable for maintenance of competitive standard and quality of life in the 21st century.  Constant   improvement   in Cyber technologies[5] has resulted in convergence of resources, multi-features/purposes/functions combined with increase in speed and handling of humongous data or information that in all sectors and social lifestyles.

Contract covered in Cyber ambit:

Specific legal aspects of agreement[6] is addressed by specific legislation to ensure fair market practices[7]   and  to  ensure  protection  on  certain  subject  matters  like  anti -trust[8] ,   intellectual property  rights[9].  The provisions regulating the cyber contracts[10] in India is provided under the Information Technology Act, 2000[11] . In furtherance of the General Assembly of  the United Nations (UN) by resolution AJRES/5 1/162, dated the 30th January,1997 has adopted the  Model  Law on Electronic  Commerce  (E-Commerce)  adopted  by the United  Nations.

Commission on International Trade Law (UNCITRAL) the Indian Information Technology Act, 200 was enacted and it came into force on 17th October, 2000[12]  • As per the UNCITRAL model  approach  i.e.  First Core Principle is functional equivalent that means layers of existing requirements in paper-based environment the attention given to existing hierarchy of form

Requirements, providing distinct levels of reliability, traceability and un-alterability (RTU) with respect to paper-based documents.  There is no strict equivalent to paper based environment such as data in written form (which constitutes a “threshold requirement”), signed writing, signed original authenticated legal act (Seal & Stamp), storage requirements. The second Core Principle is “technology neutrality” (“TN”) means that the law does not discriminate between different forms of technology.

Basic Aspects-Cyber Contract:

Broadly the legal aspects relating to cyber contracts are covered under the Information Technology Act, 2000[13]  by covering under the following aspects: (i) Recognition (section 4), (ii) validity of e-contracts (section 10A[14]), (iii) attribution  (section 11), (v) acknowledgement (section 12), and (v) dispatch (section 13). The attributes of an “electronic record” are its lifetime, preservability, accessibility, readability, comprehensibility in respect of linked information, evidentiary value in terms of authenticity and integrity and controlled destructibility and augment ability[15].

Courts in India have already started recognizing the mode of executing contracts via electronic mode or form[16]. The amount of commercial and economic transactions that executed on the cyber platform has created challenges of data security[17], anonymity and crimes. These aspect needs to be envisaged under suitable legislation. The future of Cyber contracts with the new legal regime addressing the security aspects will further encourage the business and state entities to increase the mandate of cyber contract as the apt and most preferred mode of engaging into legal obligations amongst and between the parties (both legal and natural persons).


This Article has been written by Shri Prasad NVLN, Cyber Law Consultant & Research Scholar, CMR University, Bengaluru.


References:

[1] Source: Sir Henry Sumner Maine , ” Ancient Law” , Subhash Publications , Bangalore , 1998) 1st edition (refer at Chapter IX – The Early History of Contract at p.182)

[2] William Gibson, “Neuromancer”, Ace Books New York, July 1994 .  Refer Lawrence  Lessig, “The Zones of

Cyberspace’, 48 Stan L. Rev 1403 (1996).

[3] Father of “internet ” is Vinton Cerf. It means in interconnected network i.e. not owned or controlled by any one single entity. Globally the debate on the extent and limit of regulating or deregulating, censorship still has not reached saturation. There is recently a requirement to put in place Magna Carta or Bill of Rights for internet. Few Countries have already put in place Bill of Rights for internet.

[4] Means “World Wide Web” or “WWW “, a web service, Tim Berner Lee is considered as the father of WWW.

[5] Smart Contracts, Remote access and sensors, Artificial Intelligence, Block-chain, Cashless transactions, etc.

[6] According to Section 2(h) of Indian Contract Act, 1872, “an agreement enforceable by law is a contract”. As per

Section 10 of the Indian Contract Act, 1872, “All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Nothing herein contained shall affect any law in force in  India and  not  hereby  expressly repealed by which any contract is required to be made in writing or in the presence of  witnesses, or any  law  relating to  the  registration  of documents.”

[7] Prohibition of certain agreements that are anti-competitive as per Chapter II of Section 3 of the Competition Act, 2002: provided to ensure economic development of the country and prevent practices having adverse effect on competition and promote and sustain competition in markets, protect the interest of consumers and ensure freedom trade is carried by the market participants in India.

[8]As per Section 2(6) of the Competition Act, 2002 the tern “agreement ”  includes  any  arrangement  or understanding or action in concert ,- (i) whether or not , such arrangement , understanding or action is formal or in writing; or (ii) whether or not such arrangement , understanding or action is intended to be enforceable by legal proceedings.

[9] Section 140 of the Indian Patents Act, 1970 provides that renders by avoiding certain restrictive conditions as unlawful and void.  Section  141 of  the Indian  Patents Act,  1970  provides for; detem1ination  of certain  contracts, “(1) Any contract for the sale or lease of a patented article or for licence to manufacture , use or work a patented article or process, or relating to any such sale , lease or licence  , may at any time after  the patent or all  the patents by which the article or process was protected at the time of the making of the contract has or  have ceased  to be in force , and notwithstanding  anything to the contrary in the contract in any other contract,  be determined  by the purchaser, lessee, or licensee , as the case may  be, of the patent on giving three months’ notice in  writing to the other party . (2) The provisions of this section shall be without prejudice to any right of determining a contract exercisable from this section.” For instance, as per Section 17(d) of the Copyright Act, 1957 in the case of a government work, government shall, in the absence of any agreement to the contrary, be the first owner of the copyright therein.

[10] Under the Indian Contract  Act – Hon’ble P.V. Dixit , J. held, ” … The rule that acceptance is incomplete until

Received, heard and understood by the offer or would, therefore, govern contracts negotiated over the telephone no less than those settled in oral negotiations in the physical presence of the parties. If then a contract settled by telephone is complete only when the acceptance is received by the offered, the place where the contract is made would clearly be the place where the acceptance is received.” Reference Kanhaiyala  v. Dinesh Chandra  [(1959)  AIR  M.P234]

[11] in case of conflict between Information Technology Act and Indian  Penal Code existed and  Supreme Court of India recently clarified on this point.  Reference Sharat Babu v. Govt. of NCT [(2017) 2 SCC 18].  Further,  it may be noted that overriding effect of the Information Technology Act as per Section 81 provides  that, ” the provisions  of  this Act  shall  have effect  not withstanding anything  inconsistent  therewith  contained  in any other law for the time being in force. Provided that nothing contained in this Act shall restrict any person from exercising any right conferred under the Copyright Act 1957 or the Patents Act 1970.”(The exception was inserted by way of 2008 amendment.).

As  per  Section  72A of  the Information  Technology  Act ,  “Save as otherwise  provided  in this Act or any other law for the time being in force, any person including an intermediary who, while providing services under the term s of lawful contract, has secured access to any material  containing  personal  information about another person, with the intent to cause or knowing that he is likely to cause wrongful loss or wrongful gain discloses , without the consent of the person concerned , or in breach of a lawful  contract , such  material  to any other person shall be punished with  imprisonment  for a  term  which  may extend  to 3 years , or with a fine which may extend  to 5 lakh rupees , or with both”

[12]This Act was amended vide Notification dated 27th October, 2009 through the “Information Technology (Amendment) Act, 2008.”

[13] Reference can be made to following sources- Patricia L Bellia , Paul Schiff Berman , David G Post, ” Cyber Law­

Problems of Policy and Jurisprudence in !he Information Age” , Second Edition, Thomson West, USA [refer page 657 on control of online contracting refers if clicking can  be considered  as deemed  binding  ):  Robert  SK  Bell , Neil Ray ,”EU Electronic Communications Law” , Richmond  Law & Tax Ltd, UK, 2004 [refers from  pages  18 to 21 on the 5 regulatory principles are – policy with clarity , minimum  regulation  to achieve  policy  objectives , increase legal certainty in changing  market. Technologically  neutral  &  acceptable at glob al, region  and nationally to be practically enforced) ; Edited by Eric Brousseau, Meryem Marzouki and Cecile Meade ), ” Governance, Regulations and Powers on the Internet’ , Cambridge University  Press, UK , 2012 [refer chapter  16 on  the effects of electronic commerce technologies on business contracting  behaviors  by  Bruno  Deffains  and  Jane  K  Winn from pages 344 to 366 on b2c, b2b at  pages  350  & 359);  Dr.  Farooq  Ahmad, “Cyber law in  India (law on Internet}” , New Era law Publications , Faridabad  (Haryana) , reprint 2015 [refer Chapter 8 from  pages 213 to 244 on Electronic Commerce & contracts as electronic data interchange) : John Bagby, ” £ -Commerce law-Issues for Business” , Thomson South Western- Wes t, Canada, 2003 [refer to Chapter III on e-commerce from pages 321 to 508 for origin of UCC as outcome of NCCUSL & US UETA) ; Marc Goodman, ” F11111re Crimes -A  Journey to the Dark Side of Technology – and How to Survive It” , Bantham Press, Penguin Random House , UK, 2013 [refer at page 198 on dark web aspect]: Advocate, Prashanth Mali , ” Cyber Law & Cyber Crimes – Information Technology Act, 2000 with IT Rules, 2011 ” , Second Edition , 20 IS Snow White Publications Pvt Ltd, Mumbai , [reference to Section 16(3) of the Contract Act at page 149 & refers to loopholes in the amended Information Technology Ac t, 2000 like hacking is not defined defamation aspects at pages 292-295) ; N Surya Senthil and S Lakshmi Devi, ” Manual of Cyber Laws (Including the latest IT Amendment Act, 2008) along with All India Supreme Court and High Court cases up to December 2009″ , Aditya Book Company [refer Chapter 5  on Electronic Commerce pages 45 to S7): Justice Yatindra Singh, ” Cyber laws”, Universal Law Publishing Company , Delhi , Fourth Edition, 20 IO ; Prof Vimlendu Tayal, “Cyber Law Cyber Crime Internet and E-commerce” , Bharat Law Publications , Jaipur , 2011 , First Publication [refers to data spoofing  in  electronic  signatures  challenges referred at page I 14 by Farooq ahmad Mir under Chapter 6 – Legal Aspects of E-commerce  in  India];  Rolf  H Weber , Romana Weber , ” Internet of Things – Legal Perspectives” , Springer-Verlag Berlin Heidelberg , 2010 , Schulthess Juristische Median AG , Zurich-Basel- Geneva  [refers  to the Silence of  the chips  EU Commission  at page 39); Faye Fangfei Wang , ” Law of Electronic Commercial Transactions – Contemporary issues in !he EU, US and China” , Routledge Taylor & Francis Group , London and New York, 2010 first published at Oxon [refer Chapter 4 at page 38 – When is an electronic contract made? –  EC  Directive  on  Electronic Commerce  Article  11 refers to electronic battle of forms at pages 70 & 7 1); Ethan Katsh , Oma Rab inovich-E in y, ” Digital Justice­ technology  and the Internet of Disputes” , Oxford  University  press , 2017  [refers  to dedicated  to online dispute related aspects]: Pavan Duggal, ” Cyber Law 3.0″ , Universal  law Publishing Co Pvt. Ltd, New Delhi , 2014 [refers to the idea of SOLOMO social location  mobility refer Section  10A of Information  Technology Act , 2000 at pages 57 and 60 of this book]; Dr.SY Joga Rao , ” Law of Cyber Crimes& Information Technology Law (Policy, Law& Practice along with the Text of Select Global Legislation focusing on Cyber Crimes, etc., etc.)”, First Edition , 2004: Dr.SY Joga Rao, “Computer Contracts & Information Technology law (with Specimen Agreements on Hardware Contracts, Software Contracts, Web ware Contracts, Franchise Agreement , Turnkey Agreement, etc., etc.)” , First Edition , 2003 Part  1-  Treatise , Wadhwa  and  Company,  New  Delhi,  [Refer  Chapter  VI  -law  of contracts : Fundamental Principles at pages 244 to 343]; Apama Vish wanathan , ” Cyber  Law-Indian  & lnternational Perspectives on Key Topics including Data Security, E-commerce, Cloud Computing and Cyber Crimes” , Lexis Nexis , Butterworths , Wadhwa Nagpur , Haryana , First Edition 2012, [refer  Chapter  10 Ecommerce at Section  II-Formation  of e-contracts and  key contractual  issues Pages 277 to 273]; Nandan  Kamath, ” Law relating lo Computers, Internet & E-commerce- A Guide to Cyber laws & the Information Technology Act, 2000 as amended by !he Information Technology (Amendment) Act, 2008 with Rules, Regulations and Notifications” , Universal Law Publishing Co Pvt Ltd , 4th Edition , 2009 [refer Chapter 3.14.2 at page 78 refers to aspects of electronic document] ;Apar Gupta, ” Commentary on Information Technology Ac/ with Rules, Regulations, Orders, Guidelines and Reports” , 2nd Edition , 20 11 , Lexis Nexis , Butterworths  Wadhwa , Nagpur [refer Chapter 3 and 4 of this book].

18  Big Data, Internet of Things  , Jndustiy 4.0 (Smart Factory  ) , Cloud  Computing , Data Analytics , Social  Media , Mobility devices , etc .,

[14]Where in a contract formation , the communication of proposals , the acceptance of proposals , the re-location of proposals and acceptance as the case may be, are expressed in electric form or by means of an electronic  records , such contract shall not be deemed  to be unenforceable  solely on  the ground  that such electronic  form  or  means was user or that purpose.

[15]refer Information  Technology  (Use of  electronic  records  and  digital  signatures)  Rules , 2004 . (Notification New Delhi , the 6th September, 2004 G.S.R.582( E)) (Refer Rule 3). Regarding the electronic evidence, the law is provided under Sections 65A and 658 of the Indian Evidence Ac t, 1972. Refer the recent case in the matter of Shafhi Mohammad vs. the State of Himachal Pradesh. (Supreme Court of India- Jan 30 , 2018)

[16] The relevant  cases wherein  cyber contracts are already  recognized  by  the Courts are –  P.R. Transport Agency

  1. UOI [AIR 2006 All 23]; Trimex International  FZE Limited, Dubai  v. Vedanta  Aluminum  Ltd   2010 (3) SCC I ; Dr. Mandeep Sethi v. Union Bank of India & Others P&H High Court Feb 26th, 2013. It may be noted that the case of ProCD v Matthew Zeidenberg 86 F.3d 1447 (7th Cir. 1996) is a landmark that recognized electronic contract.[refer Brandon L Grusd , ” Contracting Beyond Copyright. ProCD, Inc v. Zeidenberg ” , Harvard Journal of  Law & Technology  (Vol  10, No.2, 1997]

[17] Big Data, Internet of Things  , Industry 4.0 (Smart Factory  ) , Cloud  Computing , Data Analytics , Social  Media ,Mobility devices ,etc.

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