Our lives are increasingly intertwined with online platforms and services in today’s digital age. Whether it’s streaming our favorite shows, downloading mobile apps, shopping online, or accessing a plethora of digital media products, we’ve become reliant on the convenience and accessibility of the digital world. But with this convenience comes a critical aspect many of us overlook i.e. e-contract.
In This Article
e-contract is executed during e-commerce, a form of business transaction in which the parties interact electronically rather than by physical exchanges. It covers mainly two types of activities:
- Electronic ordering of tangible goods, delivered physically using traditional channels such as postal services
- Direct electronic commerce includes online ordering, payment, and delivery of intangible goods and services such as Software, Video Content, Audio Books, Mobile apps, eBooks, MP4 audio, Digital photos, Music, Podcasts, Video games and information services etc.
As per the IT Act (2000), in India, it is the provision of legal recognition for transactions carried out using electronic data interchange and other means of electronic communication, to facilitate the electronic filing of documents with government agencies.
What is E-Contract?
E-contract, or electronic contract, form the legal backbone of the digital landscape. These are the agreements we enter into when we sign up for services, download apps, or make online purchases. They outline the terms and conditions governing our interactions with digital platforms. However, the majority of users simply accept these terms and conditions without even reviewing them, creating potential risks and concerns.
An E-Contract is any agreement that is entered on Internet by competent parties, with lawful consideration, and free consent, without any hidden motive and to create a legal relationship. E-Contracts are also referred to as ‘cyber-contract’ or ‘digital contract’ or ‘online contract’.
They are essentially digital agreements between users and service providers. They outline the rights and obligations of both parties when engaging with a digital product or service. These agreements can be found virtually everywhere, from streaming platforms like Netflix to e-commerce giants like Amazon.
The parties involved in e-Contract may include; businesses, consumers, governments, etc. Broadly e-contract can be characterized as below:
- Business-to-Business (B2B)
- Business-to-Consumer (B2C)
- Consumer-to-Business (C2B)
- Consumer-to-Consumer (C2C)
Types of E-Contract
e-Contract usually require the user to scroll through terms and conditions and to expressly confirm the user’s agreement to the terms and conditions by taking some action, such as clicking on a button that states “I Accept” or “I Agree” or some similar statement, before being able to complete the transaction. “Click-Wrap,” “Click-Through,” or “WebWrap” are examples of these types of contracts.
Click-Through contracts are often found in software products or on Web sites.
“Browse-Wrap” contracts are terms and conditions of use that do not require the express agreement of a user. They are often located in software or are posted on a Web site, typically as a hyperlink at the bottom of the screen, and may make some statement that indicates use of the software or Web site constitutes the user’s agreement to the terms. Often, such terms may not have been brought to the user’s attention.
“Shrinkwrap” contracts are license agreements or other terms and conditions that can only be read and accepted by the consumer after opening the product. Usually, a shrink-wrap contract is the prior license agreement enforced upon the buyer when he buys software.
The license shrunk and wrapped in the product, becomes enforceable and taken as consent before the buyer tears the package. This is done to protect the manufacturer’s interest and prevent the reproduction, copying, or unauthorized use of the software.
Examples of E-Contract
1. Netflix Subscription Agreement
When users sign up for a Netflix subscription, they agree to the company’s terms and conditions electronically. Netflix provides an e-contract that users can review and accept during the registration process.
Netflix frequently updates its terms and content library. E-contracts allow for immediate dissemination of changes, ensuring users are promptly informed about alterations in their subscription terms, pricing, or available content.
2. Amazon Seller Agreements
Amazon’s third-party sellers enter into agreements to list and sell products on the platform. These seller agreements are handled electronically. Amazon can update these agreements in real time to reflect changes in policies or fee structures, ensuring clear communication with its vast seller base.
Amazon’s system can send automated reminders to sellers about order fulfillment, shipping, and customer feedback, helping sellers stay on top of their responsibilities and facilitating communication with customers.
3. Apple App Developer Agreements
Apple’s App Store operates with e-contracts for developers. Developers agree to Apple’s terms when submitting apps or updates. Any changes in the terms are communicated electronically, ensuring that developers are promptly aware of new guidelines or requirements.
Apple provides a clear audit trail for developers, showing when apps were submitted, approved, or rejected. This transparency helps developers understand the status of their apps and facilitates communication with Apple’s review team.
4. Google AdWords Contracts
Google Ads, used by businesses to advertise online, employs e-contracts for advertisers. Advertisers agree to terms electronically and can make real-time adjustments to their ad campaigns, budgets, and targeting options.
Google Workspace (formerly G Suite) integrates e-contracts with other collaboration and communication tools. This integration streamlines document sharing and collaboration among teams, enhancing overall communication efficiency.
Importance of E-Contract Review
One of the most significant issues with e-contracts is that users often accept them without a second thought. The lengthy and complex language used in these agreements can be intimidating, leading to a lack of awareness about what users are actually agreeing to. This can have serious implications, especially when it comes to data privacy.