By Karan Shelke, Advocate at Lex Credence on March 08, 2024
Introduction:
In India, there is no statutory law which prescribes the legality of online end-user agreements. “I Do” has now been given over to “I Agree” with people blindly following their fingers to click and enter contracts without a moment’s hesitance. Virtual shopping to seeking virtual medical assistance is the norm in this time-challenged world today.
The single-click closure of contracts where every single aspect of online transactions relies on the single finger “click” is termed a “clickwrap contract”. The click on the “I Agree” in its various forms including a simple “accept” is not single dimensional, as it may appear at first glance. Clicking on the innocuous virtual button signifies the commencement of a relationship between the user and the service/content provider.
Legal treatment by Indian Courts and other Authorities:
The import of the various judgments is that when parties have entered into a contract with prior notice of the terms and conditions, they ought to be bound by the terms. Through various judicial interpretations, it has been recognized that like many other transactions, clickwrap contracts are governed by the common law principles as embodied in the Indian Contract Act.1
A clickwrap contract is the standard form of contract which is not new. Standard forms of contract have existed and evolved over some time and are now accepted and enforced subject to such contracts complying inter alia with public policy and fair play. The Supreme Court of India (hereinafter referred to as “SCI”) has observed that standard clauses of the contract had been settled over years and widely adopted based on experience and to facilitate supply. Such contracts according to the SCI are in the form of “take it or leave it” where the supplier gets to dictate the terms of the contract.2
The SCI has also held that “parties were the best judges of their interests and if they freely and voluntarily entered into a contract the only function of the court was to enforce it”.3 The essence can be derived whereby it can be stated that in history, there were contracts that precluded one party from negotiating the terms of the contract while the other party got to set the terms of the contract.
The Courts in India have given us ample ground to say that the right to enter into a contract irrespective of the barraging power of the parties and subject to law and public policy has trickled down from the pages of history as a legitimate way of conducting commerce. The Courts have also recognized contracts that are executed over the Internet.4 The law assumes that any party entering into a contract is doing so with full knowledge and its effects.
Hygiene practices for clickwrap contracts:
- Active user consent: Avoid pre-checked boxes to make active user consent
- Screen Design: Design the layout in a simple, uncluttered, and easily understandable language.
- Notice of terms: terms such as terms and conditions, privacy policy, and user contracts should be written in user-friendly language.
- Revised conditions: if terms are revised, ensure users agree to the updated terms to keep them informed.
- Terms to be balanced-reasonable and fair.
- Avoid “Take it or leave it” paired with unconscionable contracts.
Conclusion:
The legal validity of clickwrap contracts can be seen in most of the developed countries where statutes specifically deal with them. However, in the Indian context, there is still ambiguity on the statutory recognition of clickwrap contracts. Clickwrap contracts are the future of digital commerce. Concerns like minors entering into contracts, the identity of parties involved in it, data breaches, etc. can be often tricky.
To mitigate the instances of minors entering contracts over the Internet, age verification mechanisms, parental consent, and imposition of restrictions should be developed. The courts are typically more sympathetic to the minor and would rule in their favor.
As the use of clickwrap contracts continues to grow exponentially, legal frameworks in India must evolve and adapt in the form of statutes and guidelines. This will protect both the companies and the users from any potential exploitation. Clickwrap contracts represent the future of digital agreements, and with proper legal support, they can optimize fairness and transparency in online transactions.
The article represents the personal views of the author.
- Capgemini Business Services v. Assistant Commissioner of Income Tax – Mumbai (ITA No. 7779/M/2011
- Bihar State Electricity Board, Patna v. Green Rubber Industries (1990 AIR 699)
- Central Inland Water Transport Corporation v. Brojo Nath Ganguly (1986 AIR 1571)
- World Wrestling Entertainment v. Reshma Collection – 2014 SCC OnLine Del 2031(2014) 60PTC 452