Formation of Online Contract || Legal Issues || BCIS Notes

Formation of Online Contract || Legal Issues || BCIS Notes


A valid contract is formed by the free consent of competent parties for a lawful object and consideration. This Act does not prescribe any specific provision for communicating offer and acceptance. It may be made in writing or by word of mouth or inferred from the conduct of the parties and the circumstances. The formation of an online contract by completing the website form provided for availing goods or services offered by the seller on the website for example air tickets. Express contract is said to be expressed and entered into by words spoken or written where the offer and acceptance are expressly agreed upon at the time of formation of the contract. When the contract is inferred from the conduct of the parties, a contract is said to be implied. Such a contract comes into existence on account of the conduct or act of the parties.

There are few processes available for forming an electronic contract such as e-mail by which offers and acceptances can be exchanged. The person who intends to avail of the goods or services offered on the website can place an order on the website by filling the concerned form and communicating such. The goods offered can be delivered directly through electronic means for eg. e-tickets or maybe later for eg. clothes. Another process available for the formation of an online contract is through online agreements by clicking on the button that says ‘ I Accept’ while connecting to software and by clicking on the ‘I Agree’ button while signing up for an e-mail account.

The online contract is formed through new modes of communication such as e-mail, internet, fax, and telephone. The requirement of essential elements such as offer and acceptance in online contract formation is as much essential as it is for the formation of paper-based traditional contracts. Contract formation over websites is quite different from the earlier ways of contract formation. Online contract formation mainly raises issues in relation to the applicability of the offer and acceptance rule. It is the website that acts as the retailer and responds as per the consumer’s action. When a consumer is interested in downloading songs, videos, or movies from a retailer’s website in lieu of payment, the consumer will have to agree to the standard terms of the retailer’s website by clicking the particular option button. Once the terms are agreed by the consumer and the acceptance is expressed, it is the responsibility of the website to deliver the service to the consumer. And lastly, on making the appropriate payment, the contract is completed between the consumer and the retailer’s website for the particular transaction.

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