Legal Implications of Website Terms and Conditions

Overview

Do you find the many pop-ups and requests for permission that show up when we are using the websites to work, browse, or browse suspicious? Generally, websites for banks, payment processors, news, and a long list of other businesses experience this. Do you pause to consider your options before selecting "Yes, I agree"? So, for what reasons do they need our permission? Can they be enforced legally? Most of these questions have simple answers that we must first address.

The internet is a dynamic environment, and one must be prepared to adjust to it. The days of making physical contracts and conducting business amongst natives are long gone. These days, the world is full of possibilities and potential waiting for us to strike a new contract, buy or sell something, or just connect with people online. Power entails responsibility, and culpability follows responsibility. It is important for users to be aware of what they are doing online, particularly when they allow websites to use personal information like their address, phone number, and photo ID. By granting authorization, we open ourselves up to future legal action for any violations of the terms and circumstances of the agreement that we either knowingly or unknowingly entered into. Let's explore national legal statutes that apply to e-contracts, forum shopping, minimum contact theory, and online jurisdiction.

Instant Download Online Jurisdiction

The internet doesn't have any limits. It has its pros and cons. When you have an e-contract, it can be hard to figure out which forum to use. The Code of Civil Procedure says that the lawsuit hearing can happen in either (a) the defendant's home or (b) the place where the cause of action happened, (c) part cause of action as well (As per Section 20 CPC). In traditional contracts, there is an agreement about the trial because physical contracts spell out the date and place of execution. This means that the court in that area has the power to hear the case. E-contracts, on the other hand, are finished digitally, so territorial jurisdiction doesn't apply to them.  

It is very important to find out where the company was founded because it will have to follow those rules. It's hard to enforce these e-contracts because each country's rules are very different. Indian websites are governed by the Indian Contract Act of 1872, the Code of Civil Procedure of 1908, the Information Technology Act of 2000, and other rules that deal with electronic contracts. When someone breaks the law, it's different for civil and criminal crimes. Websites that work in India are called intermediaries under the amended IT Rules, 2000. As such, they are required to pay close attention to cyber laws.

The Information Technology Act of 2000 (IT Act) says that electronic contracts are okay. In the important case of Trimex International FZE Limited, Dubai vs. Vedanta Aluminium Ltd. (2010) 3 SCC 1, the Supreme Court said that deals made by email would be valid as long as they met the basic requirements of the Indian Contract Act. Section 13 of the IT Act specifies the rules for when and where an electronic record is sent and received, as well as talking about deemed authority in electronic contracts.

E-Contract Types

• Click-Wrap Agreements: To give consent, click the "I Agree" or "I Disagree" box. These are promises made over the internet that happen right away.

• Compact-Wrap Contracts: These are the rules that are written on the covers of products, like CDs. So, when the user opens the product, they quickly agree to that condition. For those who don't like the terms and conditions, the user can send it back. This right is given by Section 13(2) of the IT Act, 2000. In this case, an offer or acceptance made through a web click is fully expressed when the other person gets the electronic record.

• The exchange of electronic data (EDI): These are used in trade deals to make it easier for computers to share data. This means that the whole trading cycle can be done online with very little paperwork. This exchange is between two computers instead of a person and a computer, which is different from the other methods.

Theoretical Framework for Minimum Contacts

The "Minimum Contact Theory" governs suits involving internet contracts. According to this principle, the state may trial suit participants who do not reside in a certain local jurisdiction. This idea is applicable when one or both parties appear to be from a place outside the court's territorial jurisdiction. The minimum contact hypothesis has been adopted in India thanks to a broad and lenient reading of section 20(c) of the Code of Civil Procedure, 1860. The courts have the authority to hear cases pertaining to territory, money, or subject matter that fall under their purview. The internet has no boundaries, making it challenging to place e-contracts in some states. For instance, if the contract violation occurs in Chennai but the website's headquarters are in Delhi. Which court should the harmed party thereafter file a complaint with?

Users will be considered to be bound by terms and conditions when e-agreements are upheld, just as they would be if they had signed a paper agreement—that is, provided they had a reasonable chance to do so.

E-agreements Enforceability 

If the terms are not readable or hard to find on the website, the court will not take them into consideration.

The user's ability to rationally understand that they are entering into a legally binding agreement will also be considered by the court. Websites that employ "submit" or "continue" buttons for contracts run a significant risk of losing the trial since the court will likewise be deemed to have accepted the agreement that the user voluntarily made by selecting "Yes" or "I Agree."

Provisions that are illegal, such as usurious finance charges, are unenforceable because they are null and void and contrary to public policy.

Terms and conditions containing provisions about unfair commercial practices are likewise non-binding and may result in fines for the website owners.

The user's sufficient opportunity to evaluate the terms and conditions prior to being deemed bound by them is another factor the court considers.

Internet application of national contract laws

There is a contractual obligation between the parties whenever there is a professional exchange of data, services, or goods. The Indian Contract Act of 1872 establishes the following requirements for this kind of agreement: offer and acceptance, (b) legal consideration, (c) free consent given by both parties, (d) a lawful object, (e) the parties' competence to enter into a contract, (f) the parties' intention to enter into a legal relationship, and (h) compliance with all formalities required by the laws that govern the contract.

A similar idea is used in online transactions known as electronic contracts. It is an agreement created through electronic commerce through the communication of two or more parties. Examples of real-world applications include mail-order contracts, human-computer interactions, and interactions involving two or more electronic agents that are able to verify and identify the existence of a contract. The Indian Contract Act of 1872 and other laws that apply to electronic contracts shall regulate e-contracts.

Concerns Regarding E-contracts

·         Competency: Since all it takes to accept the terms and conditions of a website is to click the "I Agree/Accept" button, it can be difficult to figure out who has done so. It is frequently noted that adolescents participate in contracts while remaining anonymous, which renders the agreement illegitimate and unenforceable. The attempt by service providers to include a disclaimer regarding parental approval is also overlooked.

·         Authority: The internet is flexible and boundaryless. Determining the precise location of the contractual relationship's establishment and the appropriate jurisdiction might be challenging. When parties are based their arguments on time, it can be difficult to pinpoint the precise moment of receipt and communication of acceptance.

·         Forum: The court has the authority to try the case in the best interests of any party. Users bear the pain when websites unilaterally include this language in their terms and conditions.

·         Electronic Authentication: The legitimacy of an electronic signature is confirmed by UNCITRAL Article 7. When handling this, it's important to remember the following principles: the signature must adhere to the relevant regulations; certifying authority must hold a licence; and the verification process must be successful.

·         Non-negotiable terms: A few websites provide users the choice to either accept their unilateral conditions or deny them access to any services or data. In other words, users are essentially compelled to accept this, or else they would not be able to enjoy the service, even if the conditions could be worked out.

Choosing a Forum for Dispute Settlement

The best option for selecting the preferred jurisdiction to enforce an e-contract is to shop around for a forum. There are two categories for this: international forum shopping and domestic forum shopping. As the term implies, domestic forum shopping involves the plaintiff selecting a court from within the legal system of one nation, whereas transnational forum shopping involves selecting a court from among the legal systems of two or more nations. The Delhi High Court's Division Bench noted the following points in Paragraph 58 of the historic case Banyan Tree Holding (P) Ltd. vs. Murali Krishna Reddy & Anr 2008 (38) PTC 288 (Del).

"Plaintiff would have to establish beyond a reasonable doubt that the Defendant's use of the website was intended to finalise a business deal with the website user and that the Defendant's deliberate targeting of the forum state caused harm or injury to the Plaintiff within the forum state.

For the purposes of Section 20(c) CPC, the Plaintiff must establish prima facie that the aforementioned website—whether euphemistically referred to as "passive plus" or "interactive"—was specifically intended for viewers in the forum state for the purpose of conducting commercial transactions in order to demonstrate that some portion of the cause of action has arisen in the forum state as a result of the Defendant's internet use. In order to establish a preliminary case that the Defendant engaged in a business transaction via the website with a user within the forum state that caused Plaintiff's suffering or injury, Plaintiff would need to plead this and provide supporting documentation.

It is not possible for the commercial transaction the Defendant got into with an internet user who is within the forum court's jurisdiction to be a solitary trap transaction since that would not be an example of the Defendant engaging in "purposeful" availment. It would have to be a legitimate business deal between the Defendant and an individual that wasn't initiated by the Plaintiff. Should the sole proof consist of a sequence of sham transactions, it must be demonstrated that they were acquired by reasonable methods. In order to establish jurisdiction based on these types of transactions, the plaintiff would need to clearly state in the plaint and provide supporting documentation to demonstrate that the transactions in question meet the prerequisites mentioned above.

The Delhi High Court noted in the other case that "having shops in that location in the physical world is virtually the same thing as the availability of transactions through the website at that particular place." For the purposes of this argument, let us assume that the appellant/plaintiff operated a store in Delhi from which it supplied a range of products and services. In that instance, it was undeniable that the Plaintiff maintained an office in Delhi. This is in addition to the possibility that the plaintiff/appellant was considered to have chosen to live in Delhi of their own free will. We do not believe that the appellant/plaintiff would not conduct business in Delhi if the physical shop were to be replaced with a virtual one due to technological advancements.

Concluding Remarks

In India, the e-contracts problem is still being worked out. Certain issues are still up for contention, such as determining a party's ability to enter into a contract, using electronic verification, and choosing the appropriate forum. In order to solve this subject of law, it is necessary to combine and comprehend many statutes. The Indian Contract Act of 1872, the IT Act of 2000, and other similar laws need to be amended in light of the exponential expansion of electronic transactions. Engaging in electronic contracts raises additional concerns about identity theft and data protection. People are more aware of their online conduct as a result of recent cyberattacks. It's also problematic because users have little to no negotiating leverage at their disposal.

The public should be made aware of fundamental internet etiquette and consumer protection. Consumer courts ought to be well-served by professionals in this rapidly expanding subject. Since online contracts and injuries occur instantaneously, the redressal process ought to be prompt and commensurate with the volume of complaints we are now receiving. This industry does have a lot of room to grow, but as Stan Lee so eloquently pointed out, "great power comes great responsibility." For this reason, the laws that currently govern e-contracts and user behaviour need to change to keep up with the needs of the twenty-first century.