NOTES ONLY FOR CLASS REFERENCE ONLY:

I. SPECIFIC RELIEF ACT, 1963: BRIEF OVERVIEW

Brief Overview of the Specific Relief Act

The Specific Relief Act, 1963 often referred to as a cornerstone of civil remedies, is a legal
statute that provides remedies in particular cases of specific performance, rather than general
relief or damages. In essence, it offers a solution where compensation in the form of money is
inadequate or insufficient. The act ensures that rights are enforced and protected, and any
violation of these rights is remedied in a specific manner.

Relation to Contract Law Principles

At its core, the Specific Relief Act is intricately linked to contract law principles. Contract law,
as we know, governs agreements between parties, ensuring that promises made are promises
kept. However, there are instances where merely compensating a wronged party is not enough.
This is where the Specific Relief Act comes into play.

For instance, consider a scenario where a unique piece of art is sold. If the seller breaches the
contract, merely compensating the buyer might not suffice, as the artwork is irreplaceable. In
such cases, the Specific Relief Act can mandate the specific performance of the contract, i.e.,
the delivery of the artwork to the buyer.

The act serves as a bridge, ensuring that the principles of contract law are not just theoretical
but are enforced in real-world scenarios. It ensures that contracts are not just about monetary
transactions but about upholding the very essence of agreements and the trust between parties.

Objectives of the Specific Relief Act

Protecting Civil Rights

One of the primary objectives of the Specific Relief Act is to safeguard civil rights. Civil rights,
in this context, refer to the rights of individuals to receive equal treatment and to be free from
unfair treatment or discrimination in various settings. The act ensures that any infringement or
violation of these rights is addressed promptly and adequately. By doing so, it upholds the
principles of justice, equality, and fairness in society.

Ensuring Specific Performance

The Specific Relief Act goes beyond the realm of mere compensation. While monetary
damages might be suitable for some breaches, they might not always provide adequate relief.
This is especially true in cases involving unique goods or services, where compensation cannot
replace the actual performance of the contract. The act, therefore, ensures that contracts are
specifically performed, making sure that parties get what they were promised.

Remedying Civil Wrongs

Civil wrongs, unlike criminal offenses, do not necessarily involve an intention to harm. They
might arise from negligence, breach of contract, or other failures to uphold a duty. The Specific
Relief Act aims to remedy these wrongs in a manner that restores the aggrieved party to the
position they would have been in had the wrong not occurred. By doing so, it ensures that
justice is not just about punishment but also about restoration and rectification.

Types of Specific Reliefs

a. Recovery of Possession of Property

Property, in legal terms, is not just about ownership but also about possession. The right to
possess property, whether acquired legally or through inheritance, is a fundamental civil right.
The Specific Relief Act provides remedies to ensure that this right is protected.

Immovable Property

Immovable property refers to land, buildings, and any attachments to the land, like trees or
structures. The act ensures that if a person is dispossessed of their immovable property without
their consent, they can recover it. The law mandates that the possession should be restored to
the person who was in possession, irrespective of the question of the actual title of the property.

Movable Property

Movable property includes goods, ornaments, money, and other tangible items that can be
moved from one place to another. The Specific Relief Act ensures that if a person is wrongfully
dispossessed of their movable property, they have the right to recover it. This provision ensures
that personal belongings, which might have sentimental or monetary value, are protected
against wrongful dispossession.

b. Specific Performance of Contracts

Specific Performance is a remedy that mandates a party to perform a particular act, usually
what is stipulated in a contract. Unlike damages, which provide monetary compensation for a
breach, specific performance requires the breaching party to fulfill their original obligations.

Scope of Specific Relief

The scope of specific relief is broad and covers a wide range of contractual and civil disputes.
It applies to cases involving contracts for the sale or lease of property, partnerships, intellectual
property rights, specific performance of trusts, and breach of contract, among others.
A. Contracts: Specific relief can be sought in cases involving breach of contract, where the
court may order the defaulting party to perform their contractual obligations.
B. Property Disputes: Specific relief can be granted in cases concerning the ownership or
possession of property, where the court may order the restoration of possession or specific acts
related to the property.
C. Trusts and Trustees: Specific relief is available in cases involving trusts and trustees,
allowing the court to enforce the duties and obligations of trustees.
Limitations of Specific Relief
The Specific Relief Act, 1963 imposes certain limitations on the grant of specific relief. These
include cases where monetary compensation is an adequate remedy, cases involving personal
service contracts, contracts dependent on the personal qualifications of the parties, and cases
where the performance of the contract involves continuous supervision by the court. Following
are some points of limitations also:
A. Adequacy of Damages: Specific relief may not be granted if monetary damages would be
an adequate remedy for the aggrieved party.
B. Personal Services: Specific performance of personal services is generally not enforceable
by the court.
C. Continuous Supervision: Specific relief requiring continuous supervision may not be
feasible for the court to enforce.
D. Discretion of the Court: The court has the discretion to deny specific relief if it deems it
inappropriate or unjust in a particular case.
• Specific relief is a legal remedy provided by the court to enforce specific performance or
prevent the breach of obligations.
• The Specific Relief Act, 1963, governs the granting of specific relief in civil cases.
• Specific relief can take the form of specific performance or injunctions.
• The scope of specific relief covers various areas, including contracts, property disputes,
trusts, torts, and intellectual property.
• However, there are limitations to the availability of specific relief, and its granting is at the
discretion of the court.

*****************************************************************
 II. Understanding the concept of breach of contract
Defining Breach of Contract in India
Breach of contract, under the Indian Contract Act, 1872, refers to a situation where one or more
parties to a legally binding agreement fail to fulfill their contractual obligations.
This failure can take various forms, such as non-performance, partial performance, or defective
performance of the terms agreed upon. A breach of contract may lead to legal consequences,
including penalties and remedies, which can involve the payment of damages, specific
performance, or injunctions.

Types of breach of contract

A. Actual breach of contract

An actual breach of contract occurs when a party fails to perform their obligations as specified
in the contract at the time performance is due.
Examples of actual breach include non-payment, incomplete performance, or delivering
substandard goods or services.

In the case of R. Venkataraman v. Hindustan Petroleum Corporation Ltd. (1998), the court
found that there was an actual breach when the defendant failed to provide a petroleum
dealership to the plaintiff.

B. Anticipatory breach of contract in India

An anticipatory breach of contract, also known as a constructive breach, occurs when a party
indicates their intention not to perform their obligations before the performance is due. This
can happen through clear communication or actions that make it impossible for them to fulfill
the contract.

In India, anticipatory breach is recognized under Section 39 of the Indian Contract Act, 1872.
The case of Hari Shankar v. Anant Ram (1999) is an example where the court found an
anticipatory breach of contract when the defendant refused to complete a sale of property.

C. Material breach of contract

A material breach of contract occurs when a party's failure to perform their obligations is so
significant that it defeats the entire purpose of the contract.

This type of breach usually justifies the non-breaching party's termination of the contract and
the pursuit of legal remedies.

In the case of State Bank of India v. Mula Sahakari Sakhar Karkhana Ltd. (2006), the
court determined that the defendant's failure to repay a loan was a material breach, entitling the
bank to enforce its security interest.

D. Repudiatory breach of contract

A repudiatory breach is a serious breach of contract that allows the aggrieved party to either
accept the breach and terminate the contract or affirm the contract and continue with its
performance.

This type of breach typically occurs when one party refuses or is unable to perform their
contractual obligations.

In the Indian case of Indian Oil Corporation Ltd. v. Amritsar Gas Service (1991), the court
ruled that the defendant's refusal to pay outstanding dues constituted a repudiatory breach,
allowing the plaintiff to terminate the contract.

Factors determining the breach of contract

A. The terms of the contract

The terms of the contract play a significant role in determining whether a breach has occurred.
The explicit and implicit obligations of the parties, as well as the conditions and warranties
stipulated in the contract, are essential in assessing a breach.
In the case of M/S. Alopi Parshad & Sons Ltd. v. Union of India (1960), the court
emphasized the importance of considering the parties' intentions when interpreting contract
terms. The court stated that the interpretation of a contract should be based on the parties'
intentions and the circumstances under which the contract was formed.

B. The extent of the breach

The extent of the breach is another crucial factor in determining the appropriate classification
and remedies for a breach of contract.
The severity of the breach is typically assessed in terms of the non-breaching party's
expectations and the degree to which the breaching party has deviated from their contractual
obligations.
In the case of State Bank of India v. Mula Sahakari Sakhar Karkhana Ltd. (2006), the
court determined that the defendant's failure to repay a loan constituted a material breach,
entitling the bank to enforce its security interest.

C. The impact of the breach on the parties involved

The impact of a breach on the parties involved is also a significant factor in determining the
breach's classification and the remedies available.
Courts consider the non-breaching party's loss and the breaching party's actions to assess the
appropriate remedy.

In the case of Food Corporation of India v. M/S. Kamdhenu Cattle Feed Industries (1993),
the court highlighted the significance of timely performance in contracts. The defendant's delay
in supplying cattle feed caused the plaintiff substantial loss, and the court awarded damages
accordingly.
Breach of contract : penalty
A breach of contract penalty refers to the consequences imposed on the breaching party for
failing to fulfill their contractual obligations. Penalties can take various forms and are typically
aimed at compensating the non-breaching party for their losses or preventing further breaches.

A. Purpose of penalties in contract law

In contract law, penalties are typically designed to protect the interests of the non-breaching
party and deter future breaches.
They are often stipulated in the contract itself in the form of liquidated damages clauses or
other provisions outlining the consequences of a breach.
Courts may also impose penalties based on the principles of equity and justice, considering
factors such as the extent of the breach, the impact on the parties involved, and the nature of
the contract.

B. Common types of penalties

1. Liquidated damages:

Liquidated damages are a predetermined amount of compensation that parties agree upon in
the contract to be paid in the event of a breach. These damages are meant to reflect a genuine
pre-estimate of the non-breaching party's loss due to the breach. In the case of Fateh Chand
v. Balkishan Das (1963), the Supreme Court of India held that liquidated damages must be
reasonable and not penal in nature. In the case of ONGC v. Saw Pipes Ltd. (2003), the court
upheld the enforcement of liquidated damages for the defendant's failure to deliver goods on
time.
2. Specific performance:

Specific performance is a court order that compels the breaching party to fulfill their
contractual obligations as originally agreed upon. Specific performance is generally granted
when damages are inadequate to compensate the non-breaching party, or the subject matter of
the contract is unique or irreplaceable. In the case of R.L. Kalathia & Co. v. State of Gujarat
(2011), the Supreme Court of India ruled that specific performance could be granted when the
contract involved immovable property or when monetary compensation would not provide
adequate relief. In case of Shree Hanuman Cotton Mills v. Tata Air Services (1970), the
court granted specific performance to the plaintiff as the defendant had failed to supply a unique
type of machinery, which could not be easily procured from another source.
3. Injunctions:
An injunction is a court order that prohibits a party from committing a breach or compels a
party to take certain actions to rectify a breach. Injunctions may be granted to maintain the
status quo, prevent irreparable harm, or protect the non-breaching party's rights. In the case of
Gujarat Bottling Co. Ltd. v. Coca-Cola Co. (1995), the court issued an injunction to prevent
the defendant from entering into a competing agreement, which would have breached its
existing contract with the plaintiff.

Remedies for breach of contract

The choice of remedy in breach of contract cases depends on several factors, including the type
and extent of the breach, the impact on the parties involved, and the specific terms of the
contract. Indian courts carefully consider these factors when determining the appropriate
remedy for each case. Usually party want damage or repudiate the contract itself

A. Damages in contract law

1. Compensatory damages
Compensatory damages are monetary awards intended to compensate the non-breaching party
for the loss suffered due to the breach.

In the case of Hadley v. Baxendale (1854), which is a landmark English case that has been
adopted in Indian law, the court established the principle that damages should be limited to
losses that were foreseeable at the time the contract was formed.

2. Consequential damages
Consequential damages, also known as special damages, are awarded for losses that result
indirectly from the breach, provided that these losses were reasonably foreseeable.

In the case of Hotel Leela Venture Ltd. v. Airports Authority of India (2014), the court
awarded consequential damages to the plaintiff for the loss of business due to the defendant's
breach.

3. Nominal damages
Nominal damages are small monetary awards granted to the non-breaching party when a breach
has occurred, but no actual loss has been suffered.

In the case of R.K. Upadhyay v. State of Bihar (1995), the court awarded nominal damages
to the plaintiff, as it found a breach of contract but no evidence of substantial loss.

4. Punitive damages
Punitive damages, also known as exemplary damages, are awarded in rare cases to punish the
breaching party for particularly egregious conduct. Indian courts are generally reluctant to
award punitive damages in breach of contract cases.

B. Repudiation of contract

Repudiation of contract occurs when one party communicates to the other party that it intends
to terminate the contract or refuses to perform its obligations. The non-breaching party can
either accept the repudiation and terminate the contract or continue with its performance. Under
the Indian Contract Act, 1872, repudiation of contract is considered a breach of contract, and
the non-breaching party is entitled to pursue legal remedies. Section 39 of the Act specifically
addresses anticipatory breach, which is a form of repudiation. It states that if one of the parties
to a contract refuses to perform their obligations or makes it impossible to perform, the other
party may consider the contract as void and claim damages for any loss suffered.
In the case of Muralidhar Chatterjee v. International Film Co. Ltd. (1943), the court
recognized the right of the plaintiff to repudiate the contract due to the defendant's failure to
pay royalties.

In the case of S.B.P. & Co. v. Patel Engineering Ltd. (2005), the Supreme Court of India held
that repudiation must be in clear and unambiguous terms, indicating an intention to not fulfill
the contract. The court also held that repudiation may be inferred from the breaching party's
conduct if it demonstrates a clear intention to not fulfill their obligations.

The remedies available to the non-breaching party in case of repudiation of contract include
claiming damages, treating the contract as void, and seeking specific performance. In the case
of S.P. Chengalvaraya Naidu v. Jagannath (1994), the Supreme Court of India held that the
non-breaching party has the option to treat the contract as still subsisting and sue for specific
performance if they can demonstrate that they are ready and willing to perform their part of the
contract.

In an ideal world, business contracts would be signed, both parties would earn profit and be
satisfied with the outcome, and there would be no disagreements. However, in the actual world
of business, delays, financial troubles, and other unforeseen occurrences might obstruct or even
block the execution of a written contract, leading to one party suing the other. Therefore, the
concept of breach of contract holds relevance in the everyday world.
*********************************************************
III. DISCHARGE OF CONTRACT

Discharge of contract means terminating the contractual relationship between the two or more
parties who entered into the contract previously. When the rights, obligations and duties of the
parties come to an end it is known as the discharge of contract. Discharge of contract also
ceases the legally binding power of the contract. Therefore, once a contract has been discharged
the parties are no more obligated to each other and the contract becomes void. The various
ways a contract can be discharged are stated in the article below.

Various modes of discharge of contract

Discharge by performance

A contract can be discharged by performance and it is the most common form of discharge of
contract. A contract will be discharged if the duty stated in the contract has been fulfilled by
the parties. If only one person in a contract performs the promise which is mentioned then he
alone is discharged. There are two types of discharge of a contract by performance.

For example; A and B enter into a contract that A will pay B Rs 1,000 if B delivers a package
to C’s house. B does the agreed part specified in the contract and upon doing it A pays B the
mentioned amount in the contract. Thus, the contract is discharged by performance since both
parties performed the specified task in the contract.

Actual performance

In this case both the parties in a contract must perform their promises. Unless the Indian
Contract Act, 1872 or any law at the time being prohibits the parties from performing their
promises. In case either party dies or is unable to fulfil the promise then the representatives of
such party shall be liable to perform the promise laid down in the contract.

Attempted performance

When the promisor offers to give his performance under the contract, but the promisee refuses
to accept the same, then it amounts to discharge by attempted performance.

Discharge by mutual agreement

In this case, the parties to a contract do not perform the promise stated in the contract if they
arrive at a mutual agreement. This requires substituting or altering the existing contract with a
new one.

Illustration: ‘P’ owes a certain sum of money to ‘Q’ under a contract, but they arrive at a
mutual agreement that henceforth ‘R’ will pay back the money owed to ‘Q’. This results in a
mutual discharge of the contract between ‘P’ and ‘Q’ and a new contract is formed between
‘R’ and ‘Q’.

Novation

It occurs when a contract is substituted for the old contract between the same or new parties.
In order to enforce novation, the following conditions must be followed. It is laid down
in Section 62 of the Indian Contract Act, 1872.

• There must be a valid reason for substituting the contract.

• Consent of all the parties is required.
• The old contract must be substituted before the expiry or breach of the contract.
In the case of Manohur Koyal v. Thakur Das(1888), the defendant failed to pay the agreed upon
sum to the plaintiff on the due date stated in the contract. However, the defendant promised to
pay Rs. 400 to the plaintiff and to execute a fresh kistibundi bond. The plaintiff agreed to this
but the defendant failed to pay that amount consequently, the plaintiff sued the defendant. The
Calcutta High Court stated that since the new bond was created after the breach of the original
contract, therefore the contract cannot be discharged by novation but by breach of contract.
Remission

Remission occurs when parties to a contract accept a lesser amount or lesser degree of
performance than what was initially agreed upon in the contract. Section 63 of the Act states
that a party may;

• Remit the performance stated wholly or in part.

• Extend the time for performance.
• Accept any other kind of performance apart from the one mentioned in the contract.
Illustration: Paul owes 10 lakh rupees to Peter but due to some unforeseen circumstances Paul
can only repay 6 lakh rupees to Peter within the stipulated time period. But if Peter agrees to
accept the amount which could be paid by Paul and settle the debt then, Peter’s act of remission
discharges the contract.

Alteration

It means changing one or more contract terms, thereby discharging the old contract and forming
a new one. Alterations to a contract must take place with the consent of all the parties to the
contract. In the case, United India Insurance Co. Ltd v. M.K.J. Corporation(1996), the
Supreme Court held that utmost good faith must be observed by the contracting parties and the
duty of good faith is of a continuing nature even after the completion of the agreement no
material alterations can be made to the contract without the mutual consent of the parties.

Rescission

Rescission takes place when the parties in the contract agree to dissolve the contract. In this
case, the old contract stands discharged and no new contract is formed.

Waiver

The term waiver means the abandonment of a right. A party to a contract may have their rights
specifically stated under the contract which also helps to release the other party from the
contract and the contract is discharged.

Merger

When an existing inferior right of a party, in respect of a subject matter, merges into a newly
acquired superior right of the same person, in respect of the same subject matter, then the
previous contract conferring the inferior right stands discharged by the way of merger.
Discharge by lapse of time

A contract will be discharged if the performance is not completed within the given time period.
This might also result in a breach of contract. In that case, a person might file a suit under the
court of law stating that his rights have been infringed and also claiming to enforce his rights.
The individual whose rights have been breached can file a suit under the Limitation Act, 1963.

For example; A had to deliver fresh fruits to B’s storehouse within a period of two days but
due to A’s irresponsibility, he delivered the fruits after two weeks. Therefore, in this case, the
contract will be discharged as the required performance was not completed within the specified
time.

Discharge by operation of law

This mode of discharge of contract does not allow the fulfilment of the promise laid down in
the contract by the provisions of law. Situations such as death, insolvency, merger, etc. do not
enable the fulfilment of the promise, hence it results in the discharge of the contract.

Discharge by supervening impossibility

Discharge of a contract by supervening impossibility is a contract that has become impossible

or illegal to perform. In these cases the contract becomes void. It is also known as the doctrine
of frustration. Frustration occurs when it is established that due to subsequent changes in
circumstances, the contract has become impossible to perform or it has been deprived of its
commercial purpose. The ways in which it occurs are mentioned below;

• On the destruction of subject matter, a contract will be discharged and no party will
be held liable.
• If the performance of the promise mentioned in the contract becomes unlawful then
the contract will be void.
• A contract tends to be discharged on accounts of death or personal incapacity.
• When the circumstances surrounding a contract change then it will be discharged.

Discharge by breach

When a contracting party refuses or fails to perform or disables himself from performing or
makes the performance of the promise stated in the contract impossible by his conduct, then
the contract is said to be discharged by breach. A party to a contract may discharge it by actual
breach or anticipatory breach.
When a default is committed by a party on the due date of performance it amounts to an actual
breach and when the party commits a default before the due date of performance it amounts to
an anticipatory breach.

Suit for specific performance

In this case, where the damage or loss suffered cannot be measured in terms of money the court,
in such cases directs the defaulting party to perform the contract specifically where the ordinary
remedy by a claim for damages is not adequate compensation. It is a discretionary remedy. The
instances where the court orders discretionary remedy:

• Where the act in itself is such that monetary consolation for its non-performance is
not adequate.
• Where it is not probable that monetary compensation will be available.
• Where no standard is available to ascertain the value of the actual harm caused by
non-performance.

Suit for quantum meruit

In the legal sense, the term quantum meruit means ‘payment in proportion to the work done’.
In other words, quantum meruit means that a person can recover compensation in proportion
to the work done or service rendered by him. It is known as a quasi-contractual remedy. The
claim on quantum meruit arises in the following cases:

• When a party performs a part of the contract, but the other party breaks it in between,
then the injured party can claim compensation for the work done or the service
rendered.
• When something has been done non-gratuitously.
• Where some work has been done and accepted under a contract that is subsequently
discovered to be void, then in such case, the person who has performed the part of
the contract is entitled to recover the payment for the work done.
Exceptional cases when a contract is not discharged
The doctrine of frustration or supervening impossibility does not apply to the following cases
mentioned below.

1. When in any case a situation arises that makes the performance of the certain
promise mentioned in the contract very difficult to be performed, then in that
situation, it makes the promise challenging to be fulfilled but the contract is not
discharged.
 2. Commercial hardships make the contract unprofitable but it does not discharge a
contract.
3. Strikes, lock-outs, civil disturbances and riots do not discharge the contract unless
there is a clause in the contract specifying that in such event the contract will be
terminated.
4. A contract is not discharged due to the self-induced incapacity of the parties to a
contract.
5. In a contract where performance is relied upon by a third party, it will not be
discharged due to the failure or default of the third party.

Difference between discharge, rescission and termination of a contract

Discharge of contract takes place when the parties to a contract have fulfilled and performed
their obligations as stipulated and negotiated in the contract. It is an ideal course of action as
the parties to the contract have attained the obligations and performed the agreed upon duties.

When a contract is formed under fraudulent circumstances, the party who was defrauded will
not be expected to fulfil the obligations stated in the contract. The fraud may involve overt,
intentional fraud, a misrepresentation of facts or circumstances, or a material omission. Despite
the type of fraud, the party may end the contract without any consequence. This kind of
termination of a contract is known as rescission.

A contract can be terminated by discharge or rescission however, certain circumstances

outlined in the contract may enable the parties to a contract to terminate the said contract even
if all the duties and obligations stated in the contract have not been fulfilled. Further, sometimes
a contract can be terminated due to a change in circumstances thus making it impossible to
fulfil.

Thus we can understand that discharge of contract refers to the contractual relationship coming
to an end when the obligations and duties have been fulfilled by the parties to a contract. In this
case, the parties are free from the obligations of the contract. As mentioned earlier there are
various modes of discharging a contract but the best way to do it is by performing the promise
within the stipulated time stated in the contract as the other modes are quite unpleasant ways
to release the parties from duties because it leads to damages.

***********************************************************
IV. E-CONTRACTS, TYPES OF E-CONTRACTS
E-Contracts
An e-contract is a contract where the offer and acceptance, and consideration etc., are done
by electronic means. An E-contract is also a valid form of contract but there is just one
important factor involved is that the E-contracts come into force with the help of the Internet
or digital mode of communication. We use electronic contract signing to make such types
of contracts. With the help of e-contracts, now we are able to make contacts worldwide. It
provides the best opportunity for sellers to reach their consumers without any help from
agents or middlemen. The person can buy the goods from the USA by sitting in India just
by doing a few clicks on his electronic gadget.
E-Contract Meaning
The contracts which are not paper-based and are created electronically in nature are known
as e-contracts. Normally, these kinds of contracts are made for speedy entering into a
contract. These types of contracts perform the best role where the parties of the contract live
in the different places of the world and it is very tough to meet in reality due to far distance.
They can make contracts easily and fulfil their requirement online. The e-contracts are not
just saving your time and fast the process but it is also beneficial and easy for parties to store
and manage the documents of the contracts. If either of the party wants to recall the terms
of the contract which they forget, they can easily read it again in just a few clicks.
The e-contract takes its legal authority from section 10A of the IT act. It says that “Where
the formation of the contract, offer and acceptance of the contract, as the case may be, are
expressed in electronic form, such contract shall not be deemed unenforceable mere on the
ground that it was created electronically.” It means the E-electronic contracts, which follow
the essentials of a valid contract and are made electronically, shall be enforceable by law.
In the case of the State of Delhi vs Mohd. Afzal and others, the court held that the electronic
pieces of evidence are admissible as evidence in the court.
There are thousands of e-contract examples that we use in our daily life. Your last product
which you bought from an online shopping website was an E-contract.
Freelancing is very popular in today’s time. Due to the decrease in the number of many jobs,
people are doing freelancing. There are many freelancing platforms such as Upwork and
Fiverr etc. which help a freelancer to do online work for a person who is sitting far away
from that person. But due to the E-contract, you just accept his work offer or give him your
offer for that work, if the person accepts the proposal, you can perform your part and get the
specific amount of consideration.
Similarly, a person drawing his money from an ATM is also an example of an electronic
contract.
The installation of software in your laptop while accepting its terms and conditions is an
example of an e-contract.
Validity Of E-Contracts In India
In the eye of the law, the E-contract is also considered as any other physical contract. This
is also governed by the Indian contract act. Therefore, the validity of an e-contract in India
will depend if it is satisfying all the essentials of a valid contract. Which are:
Formation Of E-Contracts
The e-contract is also consisting an offer and acceptance. Also, it is enforceable by law. The
e-contract is formed online. There are some common procedures that are used for the
formation of E-Contracts:
End-User License Agreements
It happens many times that we click on “I accept” or “I accept the terms and conditions” to
install software or anything while using the electronic device. It is a valid form of contract
because we are accepting the proposal of the company online.
Emails
The parties to the contract may create the offer and acceptance by sending the emails to each
other.
Websites
When we use the e-commerce website to purchase the online product, we will the order
form where we mention our name and how many quantities of the product we want. This
form is an e-contract. We fill the form and place the order. Now the order will be delivered
to the address given by us.
Nature Of E-Contract
In most cases, parties do not meet physically.
No physical boundaries.
No handwritten signature
Most of the time, no handwriting is required.
These types of contracts can be used in court as evidence.
There is no single authority to major the whole process
In case of breach of contract, the jurisdictional issues are major.
The risk factor is high.
Essentials Of E-Contract
The essentials of E- Contracts are almost the same as the essentials of a valid contract. like:
Offer
There must be offered by one party to another party so that they can make the contract
between each other. The offer is defined under section 2(a) of the act. Offer means the will
or expression of one party to come legally into the contract with another party.
Acceptance
There is a rule that the acceptance of the offer should be communicated to the offeror. Once
the offer is accepted by another party. The contract will come into existence.
Revocation of offer and acceptance
The parties should have the power to revoke the offer and acceptance before the time limit
given in the contract.
Lawful consideration
The consideration for the E-contract should be lawful.
Lawful Object
The object of the contract should be lawful. Any contract where the object is against the
public policies, the contract will be void and illegal.
Competent parties
The parties to the contract must be competent to make a contract with each other. The party
should not minor, unsound mind and be forbidden by law to make the contract.
Free consent
The consent taken by all the parties to make the contract must be free consent.
Certainty of Terms
There must be the certainty of terms and conditions between both parties.
Types Of E-Contracts
The main types of E-contracts are:
Click-Wrap Agreements
While using any website or any software, we are very familiar with the “I agree” phase, and
we press the button without thinking twice. However simple it may appear, it may land us
in serious trouble as it gives rise to a legally enforceable valid contract. This type of contract
can be legally enforced against the user.
Click-wrap agreements are generally referred to as those agreements or long blocks which
nobody reads, these blocks contain terms and conditions of the agreement. But it happens
many times that we just click on I agree and continue to the next page.
After clicking on the “I agree” button, it means we accepted all written terms and conditions
of the agreement. Such types of agreements are less negotiable and the user has to accept
this if he really wants to use that software or any other thing related to this agreement.
For example, you have seen two options: either pay or back while sending the money. Or,
while installing software
The terms of services, privacy policies, copyright policies and non-disclosure policies are
commonly used for the click-wrap agreement. Since it is a convenient way with minimal
hassles to enter into a contract, it is gaining a lot of popularity nowadays.
Click-Wrap Contracts
A click-wrap agreement is normally provided in a check box wherein the user is asked to
agree to terms of services and other information asked by the website or the software
concerned. However, sometimes, for dual confirmation, the user had to press the agree
button in addition to marking the check box.
Features of Click Wrap Agreement
These agreements are non-porous i.e., there is no other way to move ahead without clicking
the “I agree” button.
In this type of contract, the acceptance is very clear as the user will either accept or reject
the offer.
On the screen, the user should be informed that this is an enforceable contract and a binding
on him for his action.
The terms and conditions of the agreement shall be in a readable font with sufficient
visibility.
All the terms and conditions of the agreement shall be consistent with Section 10 of the
Indian Contract Act, 1872.
The information fed by the user is generally retained by the consumer to avoid any future
dispute or litigation.
Case Laws on Click Wrap Agreement
Long v. Provide Commerce, Inc. (2016)
The company was running a flower business through their website named [Link].
The plaintiff purchased a flower arrangement from the website, which was advertised as a
“completed assembled kit”. The feature of this item was that the item will be delivered as a
“do-it-yourself” kit and the customer had to assemble it accordingly.
When the plaintiff received the arrangement, he claimed that the company had defrauded
him and sued the defendant company. He claimed that though the terms and conditions were
mentioned on the website, the user was not provided with a chance to go through them.
The court decided the case in the favour of the plaintiff with the reasoning that in the whole
order making procedure, there was no such instance when these terms and conditions
appeared on the screen. There was an issue of accessibility and the consumer shall be
compensated for the same.
The Hotmail Corporation v. Van Money Pie Inc.
It was one of the first cases in which the validity of the Click Wrap Agreement was upheld
by the court. The plaintiff (Hotmail) alleged that the consumer has violated the terms of the
agreement as the messages and e-mails were altered after submitting them once. The
defendant was also accused of violating the Computer Fraud and Abuse Act, breach of
contract, fraud, misrepresentation, etc.
The court after going through the terms and conditions of the agreement clearly held that it
is a valid and enforceable agreement in the eyes of the law. Since the customer has violated
them, he is liable to pay compensation.
For example, you have seen two options either pay or back while sending the money. Or,
while installing software.
Shrink-Wrap Agreements
Shrink-wrap agreements are mostly related to computer software. The software is mostly
distributed in CD-ROMs. When the licensing software is opened by the person for his use,
it means he accepts the terms and conditions of that software company.
The term “shrink-wrap” refers to the plastic wrapping which covers the software boxes. This
wrapping can be understood as the legally enforceable terms and conditions. As soon as the
user removes that wrapping, he is entering into a contract. In simple words, a shrink-wrap
agreement is a boilerplate or license agreement containing some terms and conditions
packaged with the product. The customer automatically gives his consent when he uses the
product.
PC programming organizations are mainly dependent upon this type of agreement. It is a
sort of unsigned undertaking given by the customer while submitting to the terms and
conditions.
Following are the terms and conditions which can be made through the Shrink-wrap
agreements-
License
Fees and payments
Warranties
Limitations of liability
The legality of the Shrink Wrap agreement
The validity of the shrink-wrap agreement came into question in the case ProCd Inc v.
Zeidenberg. In this case, the manufacturer has included a shrink license in its packaged
software. The customer purchased the software but didn’t follow the license restricting its
commercial usage. To enforce the license, the appellant filed for an injunction. The court
denied the injunction while stating that though the terms and conditions are not explicitly
provided, the license was to be treated as an ordinary contract. Thus, it is enforceable.
Browse-wrap agreements
Browse-wrap agreements are probably seen on many websites while searching or reading
anything on websites. They are some kind of pop-ups that ask you to click “OK” or “I
AGREE” though, you can use the website with or without clicking there.
In this agreement, there is a hyperlink or website containing the terms and conditions over
the screen of the website. When the person agrees to the above-stated terms and conditions,
he can access the material available and download the product available therein.
For instance- Electronic commerce websites such as Amazon and Paytm provide a
disclaimer while entering their website stating that by accessing or browsing the website,
the user has consented to all the terms and conditions. The terms and conditions clause is
hyperlinked. However, it is also observed that sometimes the browse wrap clause is hidden
or not explicitly shown on the website page. It may lead to conflict in the future.
Browse-wrap contracts
The legality of Browse Wrap Agreements
The legality of the Browse wrap agreement is not very clear. Unlike the click-wrap
agreement, this type of agreement doesn’t ask for any explicit consent from the user. So, the
court presumed that it is not binding or enforceable against the customer. The Burden of
proof lies on the website owner to demonstrate that the user has complete and actual
knowledge of all the terms and conditions mentioned therein.
Electronic Data Interchange
Electronic Data Interchange means to exchange any type of document of a contract by
electronic means.
For example, Exchange of bills by fax.
E-Mail Contracts
Any type of contract where the offer and acceptance are discussed with the help of email is
called an e-mail contract.
E-Commerce Contracts
The digital contract which is used to buy or sell from the website online is called an E-
commerce contract or online shopping contract.
Buying shoes from Amazon is an E-commerce contract

Difference Between Contract And E-Contract

Contracts E-Contracts
It requires the traditional signatures of the party It needs the digital signatures
The contracts are drafted on the paper These are drafted digitally
Parties are physically present at the time of contract No need to present physically
They took heavy transaction cost Low transaction cost
More time consuming These are time-saving contract
The risk factor is very low, almost secure There is a high risk involved.

Case Laws On Electronic Contracts

• Trimex International FZE Ltd. Dubai v. Vedanta Aluminum Ltd

It was held in the case that the offer and acceptance conveyed through the email are valid.

• Tamil Nadu Organic Private Ltd. and Ors. v. State Bank of India
The HC of Madras has applied the provisions of the IT act and overserved that the
contractual liabilities could arise by the way of electronic means and such contracts are
enforceable by law.

• State of Punjab and Ors. v. Amritsar Beverages Ltd. and Ors

It was observed in this case that the computer outputs in various media, papers and any other
magnetic form are admissible under section 63 of the Indian evidence act.

• P R Transport Agency v. Union of India,

The Court has jurisdiction to entertain and hear this petition since the communication was
received at U.P. by PRTA. The place of contract is one of the determinative factors in
deciding the territorial jurisdiction in an action based on breach of contract.