Enforceability and Extent of Applicability of Click Wrap Contracts

Profile of the Author: Kanav Bharti Gupta is a BBA-LLB student at ICFAI Law School, ICFAI University, Dehradun.

In the time of this global pandemic, if there is anything that has helped us to be in constant connects with the world and do a different version of all the activities that we like; it is the Internet. When the internet first came into existence, it brought along an extensive number of opportunities, most importantly those of trade and commerce which were safeguarded by online agreements or popularly called as click wrap agreements. We often come across websites or resource pages wherein to get complete access, we have to click on a dialogue box somewhere on the page. This comes along with its potential risks and threats. With a continuous rise in the number of internet users, the amount of such contracts is increasing manifold. This article lays emphasis on analysing the Click Wrap Agreements and the role of the Indian Judiciary and the laws related to the former.

WHAT ARE CLICK WRAP AGREEMENTS?

According to Thomson Reuters[1], click wrap agreements also known as a click-through agreement and a click wrap license are a form of agreement used for software licensing, websites and other electronic media. It requires the user to agree to terms and conditions before using a website or completing an installation or online purchase process. The agreement typically presents the terms and conditions followed by a check box with the words “I agree” or “I accept” that the user has to click. What is the difference between these agreements and the normal ones? The major difference is that one party which is the owner of the website or the software completely controls the terms and conditions and the user has no authority to negotiate them. Accepting or rejecting is the only choice that the user withholds. Most of the users enter into such agreements without even knowing and have no knowledge as to who is accessing their data and what can the consequences be of not properly reading the agreement.

APPLICABILITY AND ENFORCEABILITY IN INDIA

In India, all types of contracts are governed by the Indian Contract Act, 1872. According to the Indian Contract Act, a contract is an agreement enforceable by law.[2] But the statute was written in the olden days and has not been amended so as to include the new types of contracts that have been made possible by electronic media. But then how are such contracts valid in the country. In the landmark judgment of Trimex International FZE v. Vedanta Aluminium Limited India, 2010[3]; the Hon'ble SC of India held that if the terms of the contract are discussed via E-mail which is a form of electronic media, such communication curtails to a valid contract and hence is completely valid and therefore enforceable under the Indian Judiciary. This validated the electronic contracts in India and the fact of them being electronically signed or registered was rendered immaterial for the enforceability and applicability of the contract.

Before discussing the enforceability of the click wrap agreement, it is very necessary to get an insight into the term ‘Adhesion Contract’. An adhesion contract (also called a "standard form contract" or a "boilerplate contract") is a contract drafted by one party (usually a business with stronger bargaining power) and signed by another party (usually one with weaker bargaining power, usually a consumer in need of goods or services)[4]. The honourable SC in the case of LIC India v. Consumer Education and Research Centre[5] held that when a contract is of such nature that it can be regarded as an Adhesion contract and the parties to the contract have unequal bargaining power, the same is said to be violative of the Constitution of India[6]. The SC can strike such a contract as an unreasonable one. The above two judgments clearly envisage that although the Indian Government has accepted such contracts as moving ahead with time, the acceptance is not merely a flatbread, the Indian judiciary will not allow arbitrary contracts which are violative of the rights of its citizens.

Certain laws have also been laid down for a better understanding and enforceability of such agreements. Section 209 of the UCITA (Uniform Computer Information Transaction Act) states that the terms and conditions of the agreement if asserted by the party’s initial performance then they can be adopted. Section 112 of the UCITA led down that a person can give assent to a record or a term by his or her conduct if he intentionally engages in such conduct with reasons to know that such behaviour will be considered by the other party as his or her assent. But all this will hold good if the terms and conditions are within the knowledge of the party asserting and he or she has a chance to review the same thus if a person assents in the click wrap agreement by clicking “I Agree” he or she assents to the same under Section 209 and 112. Section 11, the legislators accept an offer by way of data messages either by the party himself or by any electronic system programmed for a specific purpose (which include an offer in click wrap agreement) but it is silent as regard mode of assent or acceptance of the same.

The click wrap agreements are valid and enforceable contracts as far as offer and acceptance are concerned.

[1] https://uk.practicallaw.thomsonreuters.com/

[2] Sec 2(h) of the Indian Contract Act, 1872.

[3] Arbitration Petition No. 10 of 2009

[4] Legal Information Institute, Cornell Law School.

[5] 1995 AIR 1811

[6] Article 14 of the Constitution of India, 1950 calls for equal protection of law.

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