Now communication is no more restricted due to the constraints of geography and time. Advancements in the areas of computer technology, telecommunications technology, and software and information technology have resulted in changing the standard of living of people in an unbelievable way. New techniques of exchanging information and transacting business are transforming many aspects of economic organization. These modern technologies are being combined, especially through the Internet, to link millions of people in every corner of the world. E-contract is a contract modeled, specified, executed and deployed by a software system. E-contracts are conceptually very similar to traditional (paper based) commercial contracts. Vendors present their products, prices and terms to prospective buyers. Buyers consider their options, negotiate prices and terms (where possible), place orders and make payments. Then, the vendors deliver the purchased products.

Validity and enforcement of the contract:

An agreement between parties is legally valid if it satisfies the requirements of the law regarding its formation, i.e. that the parties intended to create a contract primarily. This intention is evidenced by their compliance with 3 classical cornerstones i.e. offer, acceptance and consideration.

Offer:

Advertisement on website may or may not constitute an offer as offer and invitation to treat are two distinct concepts. Being an offer to unspecified person, it is probably an invitation to treat, unless a contrary intention is clearly expressed. The test is of intention whether by supplying the information, the person intends to be legally bound or not. When consumers respond through an e-mail or by filling in an online form, built into the web page, they make an Offer. The seller can accept this offer either by express confirmation or by conduct.

Acceptance:

Unequivocal unconditional communication of acceptance is required to be made in terms of the offer, to create a valid e-contract. The critical issue is when acceptance takes effect, to determine where and when the contract comes into existence. The general receipt rule is that acceptance is effective when received. For contracting no conclusive rule is settled.

Communication through internet is virtually instantaneous despite insignificant delays. The applicable rule of communication depends upon reasonable certainty of the message being received. When parties connect directly, without a server, they will be aware of failure or partial receipt of a message. Such party realizing the fault must request re-transmission, as acceptance is only effective when received. When there is a common server, the actual point of receipt of the acceptance is crucial in deciding the jurisdiction in which the e-contract is concluded.

If the server is trusted, the postal rule may apply, if however, the server is not trusted or there is uncertainty concerning the e-mail’s route, it is best not to apply the postal rule. When arrival at the server is presumed insufficient, the ‘receipt at the mail box’ rule is preferred.

Consideration:

Contracts result only when one promise is made in exchange for something in return. This something in return is called consideration.The present rules of consideration apply to e-contracts. There is concern among consumers regarding Transitional Security over the Internet. The e-directive on Distance Selling tries to generate confidence by minimizing abuse by purchasers and suppliers. It specifies-

A list of key points, must be supplied to the consumer in ‘a clear and comprehensible manner.’

Written confirmation, or confirmation in another durable medium available and accessible to the consumer, of the principle points.

The right of withdrawal enabling consumers to avoid deals entered into inadvertently or without sufficient knowledge, providing for seven day cooling-off period free from penalty or reason to return the goods or reimburse the cost of services.

Performance should be delivered within thirty days of order unless otherwise expressly agreed.

Reimbursement of sums lost to fraudulent use of credit cards. It places the risk of fraud on the credit card company, requiring them to take steps to protect their position.

On the other hand, there is also need to protect sellers from rogue purchasers. For this, the provision of ‘charge-back clauses’ and encouragement of pre-payment by buyers is recommended.

Thus, this Directive adequately protects rights of consumers against unknown sellers and sellers against unknown buyers.

Liablity and Damages:

A party that commits breach of an agreement may face various types of liability under contract law. Due to the nature of the systems and the networks that business employ to conduct e-commerce, parties may find themselves liable for contracts which technically originated with them but, due to programming error, employee mistake or deliberate misconduct were executed, released without the actual intent or authority of the party. Sound policies dictate that parties receiving messages be able to rely on the legal expressions of the authority from the sender's computer and this legally be able to attribute these messages to the sender. In addition to employing information security mechanisms and other controls, techniques for limiting exposure to liability include: -

1.Trading partner and legal technical arguments,

2. Compliance with recognized procedures, guidelines and practices,

3. Audit and control programmers and reviews,

4. Technical competence and accreditation,

5. Proper human resource management,

6. Insurance,

7. Enhance notice and disclosure mechanisms and

8. Legislation and regulation addressing relevant secure electronic commerce issuing.

E-Contracts reduces costs, saves time, fasten customer response and improve service quality by reducing paper work, thus increasing automation.