Lectures by Dr. Tabrez Ahmad

1. Electronic Contracts
By
Dr. Tabrez Ahmad
Professor of Law
Online Contract
Shrink wrap contract
Click wrap contract
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2. Essentials of a General Contract
The underlying postulate in any legal regime governing
contractual relations is, that the contracting parties must
adhere to the terms of the contract and also get adequate
redressal in the event of breach thereof. The basic issues
involved in any contract are:
1. Intention to enter into legal relation;
2. Proposal;
3. Acceptance;
4. Communication;
5. Consideration;
6. Competency of parties;
7. Remedies for breach of contract
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3. Application of the essential features of
the general contracts in cyberspace.
 In commercial contracts, the requisite
intent is normally presumed to exist and
this presumption may equally apply to
online contracts/cyber contracts/electronic
contracts etc.
 All the essential features of the general
contracts should be examined in
cyberspace
 Some of the essential are well applied but
some features are difficult to be applied
because of the unique nature of the
Cyberspace and Internet.
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4. Definition of Electronic contract or
Internet Contract or Cyber Contract
 An internet contract, is typically a
contract that is entered into through
the medium of the internet either by
suing and of the various constructs
of the world wide web (such as click
wrap contracts) or through the
exchange of e-mail stating offer and
acceptance of the term and condition
of a particular transaction.
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5. Cont…
 It is similar to traditional contracts in that it sets
out the right and duties, obligations and liabilities
of the contracting parties, as well as the services
to be rendered and the consideration to be
received by the parties.
 At the same time it is distinct from the traditional
concept of contracts in that our understanding of
the concepts of offer and acceptance must
necessarily undergo a change consistent with the
nature of the medium while an understanding will
have to be arrived at with regard to the scope of
Jurisdiction of courts in respect of Internet
contacts.
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6. Cont…
 The legal issues and problems arising from cyber
contracts have not so for been addressed or
adjudicated by our courts and so for the
scepticism of the contracting parties regarding
the legal principles to be applied is well founded
despite the fact that the Information Technology
Act 2000 and the allied amendments to Indian
Penal Code, 1860;The Indian Evidence Act, 1872;
The Bankers Book Evidence Act, 1891 and The
Reserve Bank of India Act, 1934 is a timely
legislative attempt to tackle some of the
complicated legal issues and problems.
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7. Kinds
 There may be two major kinds of
electronic contracts
 Click wrap contract
 Shrink wrap contract
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8. Shrink wrap Contract
Trial judge in ProCD v Ziedenberg 980 F
spp. 640 (W.D Wis 1996)
Held that a shrink wrap license violates a
basic notion of contract law that both
parties have to know what they are
agreeing to. This decision was overturned
on its appeal to the U.S. 7th Circuit Court of
Appeals ( 86 F. 3rd 1447) 1996. According
to 7th Circuit, Shrink wrap licenses to be
enforceable because they have the
beneficial effect of reducing the cost of
software for consumers.
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9.  The court of Appeal’s decision also upheld
the validity of the shrink wrap license in
the question in the ProCD case, because
the license allowed the purchaser to return
the software if the terms of license were
un acceptable.
 Indian courts however emphasise
reasonable notice of the terms of the
contract for the terms to be binding.
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10. Click wrap license
 In the case of Caspi v The Microsoft network
L.L.C Supreme Court of New Jersey Appellate
Division 1999 N.J. Super. Lexis 254 (July 2
1998).
Validity of Click wrap license was examined.
Before becoming an MSN member; a prospective
subscriber is prompted by MSN software to view
multiple computer screens of information,
including a membership agreement which
contains the above clause. MSN’s membership
agreement appears on the computer screen in a
scrollable window next to the block providing the
choice “ I Agree” and I Don’t Agree”.
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11. Cont…
Prospective members assent to the terms of the
agreement by clicking on “ I Agree” using a
computer mouse. Prospective members have the
option to click “ I Agree or I Don’t Agree” at any
point while scrolling through the agreement.
Registration may proceed only after the potential
subscriber had the opportunity to view and have
assented to the membership agreement,
including the MSN’s forum selection clause. No
charges are incurred until after the membership
agreement review is completed and a subscriber
has clicked on “I Agree”.
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12.  Thanks and wish you all the best for
your End Semester Examinations
2008
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