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Rostrum’s Law Review | ISSN: 2321-3787

E-Commerce and the Changing Landscape of Contract Formation: A Consumer Protection Perspective

Abstract:
India has witnessed a tsunami of e-commerce in consumer market due to multifarious advantages brought forth by e-commerce to consumers. Entrance of new goods, products and services in consumer market of e-commerce resulted in proliferation of e-commerce in recent years. In consumer market of e-commerce, goods are bought and services are hired by consumers through contracts which are formed online using internet and electronic device, such as smart phone, computer, or laptop. Contracts in e-commerce are formed either on website or customised apps. The process of formation of online consumer contracts has brought a sea change in the market of contracts formation. Technologically driven online consumer contracts have brought forth numerous legal issues and challenges due to the distinctive nature of online contracts from physical contracts. Both, the legal principles and the process for formation of contract have been shaken in web-based and app-based online contracts. Numerous dark patterns and other forms of deceptive practices have developed in the process of online contract formation, which enables e-commerce traders to exploit consumers in e-commerce. Developed nations, especially the USA, the UK and Canada have updated their legal frameworks to address the legal issues and challenges with respect to consumer protection in the formation of online contracts in e-commerce. Efforts have also been made in India, in recent past, to update the legal framework so as to protect consumer in online contracts. This paper tries to analyse whether the existing Indian legal framework is sufficient and efficient for effective consumer protection in the formation of online contract. This paper further attempts to compare the existing Indian legal framework with the laws in the USA, the UK and Canada to identify the gaps in the Indian legal framework with respect to consumer protection in the formation of online contracts. Finally, this paper put forth feasible suggestion for robust legal mechanism and process for consumer protection in the formation online contract in e-commerce.

Key words: Online Contract, Consumer Protection, E-Commerce

1. Introduction
In the era of 21st century, information and communication technologies have reached to all spheres of human society. In this context, it has been well said, ‘In the arena of Information and Communication Technology the world has entered in an unprecedented phase of an unparalleled metamorphosis wherein the cosmos is administered by Cyberspace’. In the journey from industrial age to the information age, and then to the digital age, the world has witnessed a rapid economic development. When the internet had emerged in the businesses like tsunami, it incorporated almost every process in the business with just a vowel “e” before the name of business, such as, e-marketing, e-procurement, e-supply, e-advertisement, e-commerce, e-business, etc. Since the advent of information and communication technology, businesses in the world switching from brick and mortar business to e-business. Consequently, a digital economy has emerged, which is also known as “Internet Economy” or “Web Economy”. This new economy provides a platform in the form of digital networking and communication infrastructures, where individuals or organisations can make strategies, communicate, interact and collaborate with others in far easy way. Thus, this new economy has given rise to new models of doing business. The entire process of advertising, procuring, selling, buying and delivering the goods and services seems to have become just a matter of click.

The growth of e-commerce business in India is at fast-moving stage; and, it is expected to involve many more consumers and grow significantly in future. Middle class consumers in India have begun to purchase an increasing amount of goods and services through the internet as online purchases eliminate geographical and time constraints of physical purchase. The reasons for growth of e-commerce markets in India are many. Over 1.40 billion people in India have established a good base for any business in India and also a centre of attraction for business communities.

Internet and Mobile Association of India (IAMAI), in its report, (published on 03 May 2023) stated that 52% of the populations in India are active internet users comprising 759 million people. It is estimated that the number will increase to 900 million by 2025. Report of the global financial technology solutions provider FIS said that the worth of e-commerce in 2022 in India was $ 83 billion which is expected to grow to $ 185 billion in 2026. The number of e-commerce buyers reached to 190 million in 2021 in India which puts India in third position after China and the USA.

It has also been observed that young demographic profile, increasing internet penetration are the key reasons of increasing B2C e-commerce in India. Further, the new policy and regulatory framework for 100% FDI under automatic route for marketplace model of B2C e-commerce has brought new height to the growth of e-commerce in India. The present government’s policy on “digital India” and its encouragement for online payment further boosting e-commerce markets in India. Thus, it is evident that there is a sharp increase in volume of e-commerce market in India.

It is well known fact that every person in a country is a consumer of goods or service. In view of the large number of consumers in the country, a strongest lobby should have been constituted by the consumers, but due to lack of cohesiveness and ineffective organisations, they remain voiceless, more submissive towards whatever they are being provided with. The movement of consumer protection in India has similar age with trade and commerce. It has its reference in Kautilya’s Arthashastra, such as, protection of consumers’ rights against exploitation by traders, protection against diminutive weight and measures, adulteration and punishment for such activities. Consumer Protection in the present days implies an adequate method to encounter market challenges of unfair trade practice from the perspective of protection consumer’s rights and interest in market traffic. The Organisation of Economic Co-Operation and Development (OECD) in 1999 in its recommendation had set up core characteristics of consumer protection in e-commerce, which are: fair business, advertising and marketing practices; clear information about an online business’s identity, the goods or services it offers and the terms and conditions of any transaction; a transparent process for the confirmation of transactions; secure payment mechanisms; fair, timely and affordable dispute resolution and redress; privacy protection; and consumer and business education.

2. Nature of Formation of Consumer Contracts in E-Commerce: The Changing Landscape

There is a huge transformation in the nature of formation of contract in e-commerce. There has been a revolution from exchange of paper based draft contract to virtual draft contract, where communication is instantaneous. In e-commerce, there are three ways through which a consumer may enter into a contract with e-traders: click-wrap agreement, shrink-wrap agreement and browse-wrap agreement. In a click-wrap agreement, a consumer is required to register with the merchant’s website by providing personal details of the consumer. The consumer is asked to read the terms and conditions and privacy policy and then click on “I agree” button. The consumer by clicking on “I agree” button is deemed to have enter into a contract with an e-merchant, and he is presumed to have read the terms and conditions of the contract, user agreement, disclaimer clause and privacy policy on the website. This is also known as “icon clicking” click-wrap agreement. However, sometimes in a click-wrap agreement, a consumer is required to type “I accept” or other specified word in an onscreen box and click “send” or similar button. This type of click-wrap agreement is known as “type and click” agreement. Click-wrap agreements are widely used in e-commerce, either for selling any product, service, or downloading software, or for giving access to a website. In a shrink-wrap agreement, the terms and conditions are written on the box which contains the product. The consumer shall be deemed to have accepted the terms and conditions when he opens the box or uses the product or fails to return the product. In a browse-wrap contract, mere browsing the website would constitute a contract between a consumer and an e-trader. The terms of the contract are part of the content of website; hence, it does not require a specific consent from the consumer. The above-stated contracts are also known as adhesive contract where one of the parties to the contract dictates the terms of the contract to the other party and there is a clear absence of bargaining between the parties. The legality of these contracts have been tested by judiciary in various jurisdiction within certain set of principles, however, in these format of formation of contracts, certain dark patterns have been emerged. These dark patterns have raised the concerns of consumer protection in online contract formation.

3. Consumer Contracts in E-Commerce: Legal issues and Challenges

Online consumer contracts have brought forth numerous legal issues and challenges with respect to consumer protection in e-commerce. The central reason for such issues and challenges is the distinctive nature of consumer contracts in e-commerce. The following are the legal issues and challenges have been emerged by online consumer contracts:

1. In face to face contract, one may make up his or her mind then agrees to the terms and conditions of a contract, but in e-contract, since it is worked on the internet platform, which by its nature very difficult to be understood by a consumer who may be a layman. Hence, there is a possibility of mistake when a consumer clicks, or provides information, or consent to something to which he never intended to give. One of the features of e-commerce contracts is that consumers in a hurriedness or urgency often click on “send” or “I agree” or “order” or other similar icons prior to forming actual intention. Undoubtedly, consumers have often been in a position of unintentionally furnishing information into online forms which are erroneous in the whole thing from spellings to quantity of items. It has been difficult to apply common law of mistake in such a case. In such a situation, e-commerce platforms generally do not contain a provision for correcting the errors mistakenly given or provided, resulting in consumers leaving with no option rather than accepting the goods or services. Thus, in such a case, a consumer must be provided with adequate technical means to correct any error in the data which is given electronically. He must be provided with appropriate, effective and accessible technical means allowing him to identify and correct errors prior to the placing of orders. Often, the rules governing the entire sales process in e-commerce is complex to understand by consumers; though, e-traders maintain an easy ordering process. Thus, online contracts gives ample opportunity to e-traders to take advantages of consumer’s mistake in ordering goods are services. Often, e-traders use purposefully dark patterns in the format of contract formation in e-commerce platforms, which consumers rarely could figure out and result in deception in contract formation.

2. In a traditional commerce, a consumer knows whether a contract has been made or not when he leaves a shop. In contrast, a consumer in e-commerce may not know whether a binding contract has been formed or not. Once a consumer pays money, he may assume that a binding contract has been formed. However, this may not be the case. Many a times, the terms of e-traders provide that a binding contract is formed only when e-traders dispatch goods to consumers. However, on the other hand, a consumer may end up forming a contract while he was only exploring different products or services on the e-commerce platforms. Hence, in such cases, law should compel e-traders to provide requisite information and communicate consumers in a durable form that a contract has been formed. It has been observed in traditional commerce, the consumer is able to seek and retain the copy of the contract once entered into the contract and eventually may use in court proceedings. However, in e-commerce, once a consumer click on “I agree” or similar button for placing the order for goods or services, the terms of the contract may disappear from the e-commerce platform and no longer available to the consumer. This one sided command over information technology by e-commerce traders leads to numerous cases of deception in online contract. Eventually, e-traders decline the existence of such contract due to lack of evidence of online contract in durable form with consumers.

3. In a traditional commerce, many communications may take place between the trader and the consumer. Yet, all the communications may not necessarily be part of the contract. Nevertheless, a consumer becomes clear about the terms of contract through cross communication and bargaining with a trader. In e-commerce, there are major chances of e-traders contracting on different terms than the representations made on their website. Often, e-traders use disclaimer clause through hyperlink, which consumers barely notice and check, as such hyperlink directs to another page. In another way, the promises or liabilities made on the representations may completely be disclaimed by the terms of contracts provided in a different page of the website or app than the page where contracts are entered. Thus, in such a situation, law should step in to make each representation made by e-traders on the page where contracts are entered into a part of the binding contracts.

Hence, a lack of opportunity to correct click or information errors, complex nature of sale process, absence of clarity on the binding terms of contracts, dependency on e-traders for the documents in durable form demonstrating the terms of binding contract, over dominance of e-traders over the platforms of online contract are few issues in the formation of contracts in e-commerce.

4. Interface Between Online Consumer Contract and the Indian Contract Act, 1872

The Indian Contract Act, 1872 laid down the general principles of contract formation which are also applicable to online consumer contracts in e-commerce. For the formation of online contract in e-commerce, a consumer needs to have more clarity on procedure of formation of the contract and the means to correct the errors in the process of formation of the contract before the contract becomes binding. Further, a consumer should have a communication from the e-trader in a durable form to be ensured that a binding contract is concluded with the clarity on the terms of contract. The law for formation of a valid contract is provided in the Indian Contract Act, 1872. To make a valid contract, a proposal must be made by one party to the other party. Considering the nature of contract in e-commerce, an e-catalogue or display of goods in the digital platform can be considered as invitation to offer. Nevertheless, every case has to be analysed based on the facts and circumstances of the particular case. Thus, in e-commerce, it is the consumer who makes offer by clicking on “I agree” button on the e-commerce platform; and once he receives the confirmation notice from the e-trader, a contract is deemed to have concluded. However, apart from the offer and acceptance, for a valid contract, an intention to create a legal relationship and a valid consideration are also required.

Thus, the Indian Contract Act, 1872 requires intention for forming a valid contract. Hence, a consumer may take a defense of “lack of intention” in the court in a dispute that may arise with respect to the enforceability of consumer contract. In addition, a person who signs a document under some mistake due to illiteracy, blindness or forbear to read or misreading it (not due to negligence from his part) may take a defense of “non est factum”, which enables him to say that it is not his document, because he has signed it under mistake. Thus, the principle “non est factum” enables a consumer to say that he clicked on “I submit” button under mistake.

It is significant to mention that sufficient protection to consumers in the formation of contract in e-commerce, through the provisions of the Indian Contract Act, 1872 seems to be unfeasible. The manner of the formation of contract in e-commerce is largely different than the other physical contract. Technology enables many means and ways to defraud consumers by e-traders. In addition, to establish “lack of intention” or “mistake” of consumers in the formation of contract is very difficult for consumers in the court of law. Application of law of mistake in e-commerce may raise difficult situation, as it would be difficult to identify who committed the mistake, the “consumer”, or the “seller”, or an “e-commerce intermediary”. Further, the remedy of rescission is permitted only if the other party was aware or had reason to know the mistake. This may be possible to prove while dealing with an individual. In e-commerce, due to the use of automated information processing system, without any human intervention for communication, the question may rise as how to prove that the other party knew or should have known about the mistake. Thus, taking into consideration the technological feasibility to defraud consumers and consumers’ constraints in the formation of valid contract, detail legal provisions should be made to adequately protect consumer in e-commerce. The conventional provisions of the Indian Contract Act, 1872 do not seem to be sufficient in addressing all the issues arising in e-contracts. Further, in absence of legislative provision or judicial interpretation in India with respect to the validity of click-wrap, shrink-wrap and browse-wrap contracts, the legal position in India is still not certain in this aspect. Thus, protection of consumers in e-commerce under the Indian Contract Act, 1872 is limited in its scope. More progressive legislative framework is required for the sufficient and effective protection of consumers in online contracts.

5. The Information Technology Act, 2000 and Consumer Contracts in E-Commerce

Since one of the objectives of enacting the Information Technology Act, 2000 is to give legal recognition to electronic contracts. Section 10A of the Information Technology Act, 2000 gives legal validity to any contract entered or formed through electronic mediums. This section reads as: ‘Where in a contract formation, the communication of proposals, the acceptance of proposals, the revocation of proposals and acceptance, as the case may be, are expressed in electronic form or by means of an electronic record, such contract shall not be deemed to be unenforceable solely on the ground that such electronic form or means was used for that purpose’. Thus, even if all communication with respect to a contract are made through electronic means or online mode, such a contract still be a valid contract by virtue of section 10A of the Information Technology Act, 2000.

Further, section 11 of the Information Technology Act, 2000 provides for attribution and recognition of electronic communication even if programmed it in such way to operate automatically. Such programmed automatic communication is primarily used in e-commerce. Hence, section 11 read with section 10 of the Information Technology Act, 2000 ensure validity to all programmed automatic consumer contracts of e-commerce. In addition, section 12 of the Information Technology Act, 2000 laid down rules as to forms or methods and necessity of acknowledgement of receiving of electronic records in e-contracts. Section 12 of the Act reads as:

“(1) Where the originator has not stipulated that the acknowledgement of receipt of electronic record be given in a particular form or by a particular method, an acknowledgment may be given by-
(a) any communication by the addressee, automated or otherwise; or
(b) any conduct of the addressee, sufficient to indicate to the originator that the electronic record has been received.

(2) Where the originator has stipulated that the electronic record shall be binding only on receipt of an acknowledgement of such electronic record by him, then unless acknowledgement has been so received, the electronic record shall be deemed to have been never sent by the originator.

(3) Where the originator has not stipulated that the electronic record shall be binding only on receipt of such acknowledgement, and the acknowledgement has not been received by the originator within the time specified or agreed or, if no time has been specified or agreed to within a reasonable time, then the originator may give notice to the addressee stating that no acknowledgement has been received by him and specifying a reasonable time by which the acknowledgement must be received by him and if no acknowledgement is received within the aforesaid time limit he may after giving notice to the addressee, treat the electronic record as though it has never been sent.”

In application of the above provision in e-commerce, the following propositions can be drawn:

(1) If a consumer does not stipulate any particular mode or method of communication of acceptance by an e-trader, the e-trader may either communicate the consumer in any form or does any other act (for instance, delivery of goods or services) signifying the communication of acceptance. However, in e-commerce, consumers get rare opportunity in the process of ordering goods or services to stipulate any particular mode or method of communication of acceptance by e-traders.

(2) If a consumer stipulates that there shall be a binding contract only if an e-trader sends acknowledgement of acceptance, then there is no contact until such acknowledgement is sent. However, in e-commerce, opportunity to expressing any such stipulation is determined by e-traders, who do not usually give such an opportunity to consumers.

(3) If a consumer does not stipulate (in his acceptance) that there shall be a binding contract only if the e-trader sends acknowledgement of acceptance, then the consumer may give notice to the e-trader stating that no acknowledgement has been received by him and specifying a reasonable time by which the acknowledgement must be received by him; and if no acknowledgement is received within the said time limit, he may after giving notice to the e-trader, treat his communication (acceptance) as though it has never been sent. However, here too, incapacity of a consumer to express such claim in the standard format of e-commerce platform results in ineffectiveness of this provision for consumer protection in e-commerce.

Hence, it may be inferred from the above propositions that the afore-stated provisions, though help individuals or businesses in e-contract, seem to be ineffective in consumer protection in the formation of contract in e-commerce. In addition, the Information Technology Act, 2000 also fails to address the following issues in the formation of consumer contract in e-commerce: (a) lack of opportunity of consumers for correcting click or information errors in the formation of contract; (b) complex nature of sale process in e-commerce; (c) lack of proof of binding contract in a durable form; (d) uncertainty as to the terms of binding contract; (e) uncertainty as to the point of time when a binding contract takes place. It is pertinent to mentioned that the provisions with respect to contracts under the Information Technology Act, 2000 primarily protects business customers in online transactions. Protection of consumers in online contract was not even one of the primary objectives of the Information Technology Act, 2000.

6. Formation of Consumer Contract in E-Commerce and the Consumer Protection Act, 2019

The recent Consumer Protection Act, 2019 enacted repealing the Consumer Protection Act, 1986 with one of the objectives to protect consumers in e-commerce. The Consumer Protection Act, 2019 widen the scope of the Act and expressly incorporated provision with respect to e-commerce within the Act. However, there is no direct provision with respect to the above-mentioned issues which online contracts brought forth to consumer protection in the Consumer Protection Act, 2019. Yet, e-commerce as a mode of business is recognised in the definition of the term “consumer” under the Consumer Protection Act, 2019. The definition includes the following terms in it: “the expression ‘buys any goods’ and ‘hires or avails any services’ includes offline or online transaction through electronic means or by teleshopping or direct selling or multi-level marketing”. Further, section 2(47)(vii) of the Consumer Protection Act, 2019 incorporates a new provision in the definition of “unfair trade practice”, which reads as:

‘(vii) not issuing bill or cash memo or receipt for the goods sold or services rendered in such manner as may be prescribed;’

The Consumer Protection Act, 2019 falls short of comprehending the complex nature of formation of consumer contract in e-commerce and understanding the concerns of consumers in such models of formation of contract. The following concerns of consumers remain untouched under the existing provisions the Consumer Protection Act, 2019: (a) inadequate mechanisms for correcting errors in the consumer inputs in the formation of contract in e-commerce platforms; (b) technologically enabled complex nature of contract formation in e-commerce; (c) consumers’ lack of clarity with respect to the fact whether binding contract has been formed or not; (d) a consumer may end up forming a contract, while he/she is just exploring different products or services in e-commerce platforms; (e) e-traders may contract on different terms than the representation made on e-commerce platform; (f) inadequate mechanisms to provide the confirmation of concluded contract and other detail of terms and conditions in a durable form to the consumer. The afore-sated issues are so crucial that the recent e-Commerce Policy recognised the importance of development of existing laws taking into consideration the changing mode of doing business involving technologies, online placing of order, etc.

7. Online Contract Formation and Consumer Protection: Legal Position in the USA, the UK and Canada

The legal provisions in the USA, the UK and Canada with respect to consumer protection in online contracts have been updated and developed with the development of e-commerce in these countries.
A. Position in the USA

In the USA, the Uniform Electronic Transaction Act, 1999 (hereinafter referred to as “the UETA”) and the Uniform Computer Information Transaction Act (hereinafter referred to as “the UCITA”) provide protection to consumer in the formation of contract in e-commerce. The UETA provides that an individual may avoid a contract entered with an electronic agent of another, if such electronic agent fails to provide opportunity to the individual to correct or prevent the errors. However, the individual is required to promptly notify the other person of such error. Hence, opportunity to consumers to correct errors in online contracts has been expressly recognised in the US legal system. Similarly, the UCITA also provides that the consent of a person to the electronic contract and the contractual terms shall be considered valid, if the person is given with an opportunity to acquire sufficient knowledge, review any records or terms, and have a copy of it. The UCITA further clarifies the meaning of “opportunity to review”, in the following words: ‘A person has an opportunity to review a record or term only if it is made available in a manner that ought to call it to the attention of a reasonable person and permit review’. Hence, the US legal system provides a robust system recognising the complexities of online consumer contracts by incorporating provisions which give opportunity to adequate knowledge, correcting errors, review records and have copy of it, which provide protection to consumers in the formation of contract in e-commerce.

B. Position in the UK

In the UK, the Electronic Commerce (EC Directive) Regulations 2002 (hereinafter referred to as “the ECR”) imposes the following obligations on the service providers for concluding a contract in e-commerce: (a) the order of the recipient of service must be acknowledged by the information service provider without undue delay through electronic means; (b) prior to placing the order, the recipient of the service must be furnished with accessible, appropriate and effective technical means to identify and correct input errors in the order (the information for the same is also required to be provided in the website). Any failure to fulfill the second obligation by the service provider entitles the consumer to rescind the contract. Besides, in the event of failure of the service provider to adhere to any of the above two conditions, the recipient of the service may file a suit for damages for breach of statutory duty.

The ECR also brings provisions with respect to the providing information in the e-commerce website pertaining to the process of formation of contract. The following are the types of information required to be provided to the recipient of service prior to the placing an order in unambiguous, clear and comprehensible manner:

A. The technical steps which are required to be followed for concluding the contract;
B. Prior to placing any order, the technical means which are required to be followed for identification and correction of any input errors;
C. The offered languages for the concluding of the contract;
D. Whether or not the service provider will fill the concluded contract, and whether that will be accessible or not.

In the UK, the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (hereinafter referred to as “the CCICACR”) also provides certain protection to the consumer in the formation of contract in e-commerce. The CCICACR provides that the trader needs to ensure that the consumer is able to clearly recognise when placing any order that the order carries an obligation to pay; secondly, in the event of placing of an order involves activating a button or other similar function, it is mandatory for the trader to ensure that the button or other similar functions is marked in simply intelligible method only with the words as “order with obligation to pay” or a similar unequivocal formulation specifying that placing the order involves an obligation to pay (any violation of any one of the above two conditions by the trader entitles a consumer to terminate the contract); and thirdly, the trader needs to ensure that the website which is used for concluding the contract specify legibly and undoubtedly at the commencement of the process of the placing the order, the application of any delivery restriction, if any, and the mode of payment.

To secure further the consumer in the formation of a contract, the CCICACR provides that, on conclusion of the contract, the trader must give confirmation of the contract on a “durable medium” within a reasonable time, not later than the time of delivery of goods or beginning of the performance of the service, as the case may be. Besides, the confirmation must include the information set forth in the Schedule 2 of the CCICACR, unless prior to the conclusion of the contract, the said information is already provided on a durable medium. Hence, a legal framework has been developed in the UK which ensure pre-policing mechanisms to protect consumers in online contracts.

Thus, from the above provisions, it may be concluded that the consumer protection issues with respect to the formation of contract in e-commerce are well taken care of by the legal framework of the UK.

C. Position in Canada

In Canada, the Internet Sales Contract Harmonization Template (hereinafter referred to as “the ISCHT”) obliges the supplier to, immediately before entering into contract, give the consumer an express opportunity either to accept or decline the contract and also to correct errors. If the supplier does not provide such opportunity, the consumer may cancel the contract within 7 days from the date the consumer obtains a copy of the contract. The Canadian Code of Practice for Consumer Protection in Electronic Commerce (hereinafter referred to as “the CCPCPEC”) also provides that it is the vendor’s responsibility to ensure that the consumer is fully informed and his consent is intentional. Further, a consumer must be provided with an opportunity to correct error or cancel the orders before processing the order for acceptance.

In addition, the Uniform Electronic Commerce Act (hereinafter referred to as “the UECA”) provides that an option to correct errors must be given to make electronic contract valid. In a computer communication two concerns have been expressed in the UECA, which read as:

‘First, it is easy to hit a key when typing quickly, or click a mouse on the wrong spot on a screen, and by doing so send a command with legal consequences (‘the single keystroke error’); and second, as much electronic commerce is done by electronic agents, the electronic agent may not be programmed to respond to a subsequent message saying “I didn’t mean that’.

Hence, to solve the above two concerns, the UECA under section 22 makes the following provision, which reads as:

“Errors when dealing with electronic agents
22. An electronic document made by a natural person with the electronic agent of another person has no legal effect and is not enforceable if the natural person made a material error in the document and
(a) the electronic agent did not provide the natural person with an opportunity to prevent or correct the error;
(b) the natural person notifies the other person of the error as soon as practicable when the natural person learns of it and indicates that he or she made an error in the electronic document;
(c) the natural person takes reasonable steps, including steps that conform to the other person’s instructions to return the consideration received, if any, as a result of the error or, if instructed to do so, to destroy the consideration; and
(d) the natural person has not used or received any material benefit or value from the consideration, if any, received from the other person.”

The ISCHT also requires a supplier to provide certain post-contract information to a consumer. As per the provision of the ISCHT, a supplier is required to furnish a copy of the internet sales contract to the consumer within 15 days from the date of the contract. Such copy must be either in writing or in electronic form. The copy of such internet sales contract must contain the information as provided in section 3(1)(a) of the ISCHT along with the name of the consumer and the date of the contract. Further, the copy of the internet sales contract is required to furnish in such a manner that a consumer is able to hold and print it. The provision of the section 3(1)(a) of the ISCHT reads as:

“A supplier must do the following before a consumer enters into an internet sales contract:
(a) Disclose to the consumer the following information:
i. the supplier’ name and, if different, the name under which the supplier carries on business;
ii. the supplier’s business address and, if different, the supplier’s mailing address;
iii. the supplier telephone number and, if available, the supplier e-mail address and facsimile number;
iv. a fair and accurate description of the goods or services being sold to the consumer, including any relevant technical or system specifications;
v. an itemised list of the price of the goods or services being sold to the consumer and associated costs payable by the consumer, including taxes and shipping charges;
vi. a description of any additional charges that may apply to the contract, such as custom duties and brokerage fees, whose amounts cannot reasonably be determined by the supplier;
vii. the total amount of the contract or, where the goods or services are being purchased over an indefinite period, the amount of the periodic payment under the contract;
viii. the currency in which amounts owing under the contract are payable;
ix. the terms, and conditions and method of payment;
x. the date when the goods are to be delivered or services are to begin;
xi. the supplier’s delivery arrangement, including the identity of the shipper, the mode of transportation and the place of delivery;
xii. the supplier’s cancellation, return, exchange and refund policies, if any;
xiii. any other restrictions, limitations or conditions of purchase that may apply;”

Apart from the above provisions under the ISCHT, the CCPCPEC also incorporates provisions for information requirement during the formation of contract, which the vendor is required to provide to consumers in e-commerce. The CCPCPEC provides that the vendor is duty bound to furnish adequate information so as to enable the consumer to make an informed choice as whether to inter into a contract and how to proceed for completing a transaction. Such information is required to be furnished in clear and plain language, be truthful, noticeable and simply accessible on the website of the vendor at the appropriate stage when a consumer makes decision, i.e., before a consumer gives his consent and furnish any personal information. Further, such information is required to be in such a format which enables a consumer to save and print the information. In addition, the vendor is required to provide a record of the e-commerce transaction to the consumer as soon as the transaction is completed. In the event of placing of order for goods or services to be delivered physically in future on one-time basis, the vendor is required to furnish a printed record of the transaction along with delivered goods or services. Such record must contain all the information provided in the principles 1.5 (a) to (d) , which read as:

“1.5 Prior to the conclusion of transactions, vendor shall ensure that all terms and conditions of sale related to the transactions are available to consumers. Such information shall include:
a) a description of the goods or services including the quantity to be purchased;
b) the full price to consumers, including
• the applicable currency;
• any shipping charges, taxes, and specific reference to any other charges that the vendor is responsible for collecting;
• when the vendor cannot reasonably ascertain the amount of potentially applicable charges (e.g. additional taxes, custom fees, custom broker fees, etc.), the fact that such charges may apply; and
• when the full price cannot be worked out in advance, the method the vendor will use to calculate it, including any recurrent costs and the method used to calculate them;
c) payment terms, including the methods of payment available to consumers and any associated surcharges or discounts;
d) cancellation, return and exchange policies, including any associated charges;”

Hence, detailed framework has been laid down in Canada at federal level to ensure adequate protection of consumers in the formation of contract in e-commerce.

Thus, the legal provisions in the USA, the UK and Canada have adopted a system which is more pre-policing than post-policing. More detailed, comprehensive and efficient are the fundamental features of the legal system in the USA, the UK and Canada vis-à-vis consumer protection in online contracts.

8. Conclusion

In e-commerce, after making a choice for the goods or services, the next step is that the consumer has to place an order for the goods or service, which results in the formation of a binding contract with the e-trader. This process of formation of a contract is done by finger click or finger touch rather than speaking or writing text. One mere touch or click, though mistakenly done, without any intention to enter into contract, may result in binding obligation on the consumer under a contract in e-commerce. Secondly, though the consumer intends to enter into the contract, yet, mistake may be made with respect to the selection of the goods or services, or the information provided by the e-trader. Thirdly, the terms of use of e-commerce platform or the process of formation of the contract may not be clear to a consumer, and which may also differ from e-commerce to e-commerce. Fourthly, the consumer may be left with no evidence of proof of the fact that the binding contract has taken place between the consumer and the e-trader, even after the consumer orders for goods or services and makes payment for the same; because, the platform, through which the consumer enters into the contract in e-commerce remains completely under the control of the e-trader. Fifthly, due to display constraint in e-commerce platforms and the complex terms and conditions, the consumer may not be assured about the terms and conditions, which will govern the contract. Thus, in such a situation, an opportunity to the consumer to correct mistakes and to have more clarity on procedure of formation of contract and the terms and conditions governing such contract, and to have a post-contract digital document in a durable form as proof of contract are required. Thus, in the formation of contract in e-commerce, the consumer requires special protection.

In India, the Information Technology Act, 2000 fails to recognise these critical issues of consumers in e-commerce. However, in such a situation, the Indian Contract Act, 1872 may provide a small help to consumers. Under the Indian Contract Act, 1872 for the formation of a valid contract “an intention to create a legal relationship” is required. Secondly, the principle of “non est factum” may also help consumer to get exempted from the contractual liability in e-commerce. However, these provisions of the Indian Contract Act, 1872 may help consumers partially in these issues, specifically, if the consumer orders goods or services mistakenly. The issues with respect to correction of the information provided mistakenly, the required information about the process of formation of contract in e-commerce, clarity with respect to the terms of binding contract and non-availability of proof of the binding contract in a durable form are largely untouched by the existing legal framework of India. The Consumer Protection Act, 2019 also fails to provide any provision with respect to this issue, except the provision for issuing receipt, or cash memo, or bill for the sold goods or services.

In the UK, the ECR and the CCICACR provide comprehensive procedural requirements to be adhered to by e-traders in e-commerce with an object to protect consumers in the formation of contract in e-commerce. Similarly, in Canada, the ISCHT, the CCPCPEC and the Uniform Electronic Commerce Act (hereinafter referred to as “the UECA”) have precisely identified the issues in the formation of consumer contract in e-commerce, and prescribe thorough procedure for making such contracts and impose obligations on e-traders accordingly.

9. Recommendations:
The following recommendations are made for the effective consumer protection in the formation of online contract in e-commerce:

1. The Central Consumer Protection Authority should be empowered under section 18(2) of the Consumer Protection Act, 2019 to frame guidelines on the process of formation of consumer contract in electronic commerce and corresponding liabilities of e-traders. The guidelines should make standards to ensure the following aspects of e-commerce:

(a) the process of ordering goods or services and terms of use of e-commerce platforms are clear, conspicuous and consumer friendly;
(b) an opportunity to e-consumers to correct any errors in providing information and selecting goods or services before completion of ordering process;
(c) ensure that consumers place an order with an intention to buy or hire after getting fully acquainted with the relevant information in e-commerce;
(d) disclose clearly and conspicuously terms and conditions of consumer contract on the home page of the e-commerce platform, and restraint from using any nullifying clause on any other page of the e-commerce platform so as to change the terms and conditions as disclosed on the home page;
(e) e-traders confirm consumers’ order without undue delay, and furnish to consumers the details of contract including details of product or service, price, delivery date and address, terms and conditions of contracts, etc. in a durable form within a reasonable time without undue delay;
2. The Central Consumer Protection Authority should be authorised to ensure compliance of the above guidelines. The legal approach of the UK, Canada and the USA may provide suggestive guidance in framing of such guidelines.


Author(s):

Jehirul Islam, Assistant Professor of Law, Hamdard Institute of Legal Studies and Research, Jamia Hamdard.


 

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