By | September 16, 2016

Electronic commerce, commonly known as e-commerce, is the buying and selling of products or services over electronic systems such as the Internet and other computer networks. Electronic commerce draws on such technologies as electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web (www) at least at one point in the transaction’s life-cycle, although it may encompass a wider range of technologies such as e-mail, mobile devices and telephones as well.

Contemporary electronic commerce involves everything from ordering “digital” content for immediate online consumption, to ordering conventional goods and services, to “meta” services to facilitate other types of electronic commerce. On the institutional level, big corporations and financial institutions use the internet to exchange financial data to facilitate domestic and international business. Data integrity and security are very hot and pressing issues for electronic commerce.

E-commerce can be divided into:

  • E-tailing or “virtual storefronts” on Web sites with online catalogs, sometimes gathered into a “virtual mall”.
  • The gathering and use of demographic data through Web contacts.
  • Electronic Data Interchange (EDI), the business-to-business exchange of data. 67
  • E-mail and fax and their use as media for reaching prospects and established customers (for example, with newsletters).
  • Business-to-business buying and selling.
  • The security of business transactions.

E-commerce in India

India has an internet user base of over 100 million users. The penetration of ecommerce is low compared to markets like the United States and the United Kingdom but is growing at a much faster rate with a large number of new entrants. The industry consensus is that growth is at an inflection point with key drivers being:

  • Increasing broadband Internet and 3Gpenetration.
  • Rising standards of living and a burgeoning, upwardly mobile middle class with high disposable incomes.
  • Availability of much wider product range compared to what is available at brick and mortar retailers.
  • Busy lifestyles, urban traffic congestion and lack of time for offline shopping.
  • Lower prices compared to brick and mortar retail driven by disintermediation and reduced inventory and real estate costs.
  • Increased usage of online classified sites, with more consumers buying and selling second-hand goods.
  • Evolution of the online marketplace model with sites like ebay, Infibeam, and Tradus.

The Online Travel Industry is the biggest segment in e-Commerce and is booming largely due to the Internet-savvy urban population.

Some of the aspects of Indian e-commerce that are unique to India (and potentially to other developing countries) are:

  • Cash on Delivery as a preferred payment method. India has a vibrant cash economy as a result of which 80% of Indian e-commerce tends to be Cash on Delivery (COD).
  • Direct Imports constitute a large component of online sales. Demand for international consumer products is growing much faster than in-country supply from authorized distributors and e-commerce offerings.

E-commerce websites are Internet intermediaries within the meaning of IT Act, 2000. “Intermediary” with respect to any particular electronic records, means any person who on behalf of another person receives, stores or transmits that record or provides any service with respect to that record and includes telecom service providers, network service providers, internet service providers, web hosting service providers, search engines, online payment sites, online-auction sites, online market places and cyber cafes. The IT (Intermediaries Guidelines) Rules of 2011 regulate the functioning of e-commerce websites. Cyber law due diligence is the main aspect that all e-commerce site owners should comply with.



E-Contracts are conceptually very similar to the traditional paper-based Commercial Contracts. Electronic contracts (contracts that are not paper based but rather in electronic form) are born out of the need for speed, convenience and efficiency. In the electronic age, the whole transaction can be completed in seconds, with both parties simply affixing their digital signatures to an electronic copy of the contract. There is no need for delayed couriers and additional travelling costs in such a scenario. The conventional law relating to contracts i.e. The Indian Contract Act of 1872 is not sufficient to address all the issues that arise in electronic contracts. The Information Technology Act solves some of the peculiar issues that arise in the formation and authentication of electronic contracts. An e-contract is a contract modelled, executed and enacted by a software system. Computer programs are used to automate business processes that govern e-contracts.

Like any other contract, an e-contract also require the following –

  1. Offer to be made – The offer is not made by website displaying the items for sale at a particular price. This is actually an invitation to offer and hence is revocable at any time up to the time of acceptance. The offer is made by the customer on placing the products in the virtual ‘basket’ or ‘shopping cart’ for payment.
  2. Offer to be accepted – The acceptance is usually undertaken by the business after the offer has been made by the consumer in relation with the invitation to offer. Offers and acceptances can be exchanged entirely by e-mail; the seller can offer goods or services (e.g. air tickets, software etc) through his website; users may need to accept an online agreement in order to be able to avail of the services.
  3. Lawful consideration – Contract to be enforceable by law must have lawful consideration, i.e., when both parties give and receive something in return.
  4. Intention to create legal relations.
  5. Parties must be competent to contract.
  6. There must be free and genuine consent.
  7. Object of the contract must be lawful.
  8. There must be certainty and possibility of performance.

Chapter IV of the Information Technology Act, 2000 i.e. sections 11, 12 and 13 covers the aspects of Attribution, Acknowledgment and Dispatch of Electronic Records. According to Sec.10A of the IT Act, 2000, a communication or contract shouldn’t be denied or declared void merely because it’s in electronic form. It thereby acknowledges the legal validity of e-contracts.

Mayank Shekhar
Author: Mayank Shekhar

Mayank is a student at Faculty of Law, Delhi University. Under his leadership, Legal Bites has been researching and developing resources through blogging, educational articles, competitions, and seminars.

What did I miss? Don't forget to leave your valuable feedback