At a glance: electronic contracts in India

Contracting on the internet

Is it possible to form and conclude legal contracts digitally? If so, how are digital contracts formed and are there any exceptions for certain types of contract?

Yes, it is possible to form and conclude contracts electronically in terms of section 10-A of the Information Technology Act, 2000 (IT Act). As long as the essentials of a valid contract under the Indian Contract Act, 1872 are met, an online contract is valid and enforceable under Indian law. The IT Act provides validity to a contract where the contract has been accepted in electronic form. Additionally, the Bharatiya Sakshya Adhiniyam, 2023 (replacing the earlier Indian Evidence Act, 1872) governs admissibility of electronic records and contracts, and states that any information contained in an electronic record which is printed on paper, stored, recorded or copied in optical or magnetic media produced by a computer will be deemed a document of proof and will be admissible in any proceedings, without further proof or production of the original; provided certain prescribed conditions are satisfied.

Are there any particular laws that limit the choice of governing law, language of the contract or forum for disputes when entering into digital contracts? Do these distinguish between business-to-consumer and business-to-business contracts?

There are no particular laws that limit the choice of governing law, language of the contract or forum specifically for disputes arising from digital contracts. These questions are often decided in accordance with customary practice and the settled legal position, depending on the specific facts and circumstances surrounding the dispute. In the context of arbitrations, the same is left to determination of the parties, and courts generally give effect to such choice of law clauses. This position is regardless of whether the dispute arises from a traditionally executed contract or from a digital contract.

How does the law recognise or define digital or e-signatures? Must digital or e-signature providers be registered or licensed in your jurisdiction? What type of digital information can be signed and how does the signing take place?

The Information and Technology Act, 2000 (IT Act) provides legal recognition to electronic signatures and lays down the framework that governs their use. It expressly includes ‘digital signature’ as a form of electronic signature, subject to its adherence to the authentication requirements prescribed under the IT Act. An electronic signature may be used at any place where any law provides for the use of a signature for authentication. Usage of digital signature is very common for e-filing of statutory forms with the Ministry of Corporate Affairs, and goods and services tax authorities. An ‘electronic signature’ refers to the authentication of an electronic record by a subscriber by means of the prescribed electronic technique, and includes digital signatures.

As per the IT Act read with the Information Technology (Certifying Authorities) Rules, 2000, an entity proposing to issue digital signatures (as recognised under the law) requires a licence, namely, a digital signature certificate from the Controller of Certifying Authorities. While the IT Act recognises electronic signatures, only an electronic contract with a digital signature certified in terms of the IT Act and the rules thereunder can be admissible as evidence in the court proceedings (akin to a physically signed contract), without the necessity to prove the integrity and authenticity of such electronic contract.

Are any special forums for dispute resolution or remedies available for the breach of digital contracts?

The remedies available under the Indian Contract Act, 1872 for breach of a contract may also be availed for electronic contracts. There are no specific remedies or designated forums for dispute resolution prescribed for the breach of an electronic contract in India.