E-SIGN ON AGREEMENT

Introduction

According to section 10-A of the Information and Technology Act, 2000 (hereinafter IT Act), a contract executed electronically is enforceable by law. The executed agreement is stored in electronic form and is considered as an electronic record under the IT Act. Similar to the traditional agreement, intention and free consent of the competent parties are mandatory for the execution of a valid electronic agreement (e-agreement). These mandates of law are fulfilled by Electronic Signature (e-sign) which is used to verify the intention, free consent, and identity of the parties signing the agreement. According to Black's Law Dictionary, an electronic symbol, sound or process that is either attached to or logically associated with a document (such as a contract or other record) and executed or adopted by a person with the intent to sign the document, is called an electronic signature. Whereas, the IT Act defines it as authentication of any electronic record by a subscriber by means of the electronic technique specified in the Second Schedule and includes a digital signature. Section 5 of the IT Act legally recognises e-sign as same as the traditional signature to the extent it is affixed in a manner prescribed by the Central Government. E- sign on an agreement is a convenient substitute for the traditional hand-written signature on an agreement. Unlike traditional hand-written signs, e-sign is less prone to forgery and tampering due to its complex technical process.

Significance of E-sign on agreement

According to the Indian Contract Act, it is not mandatory to sign on an agreement to show the intention or willingness to enter into a contract. The best example of it can be an oral contract which is as valid as a written contract under the Act. However, people play safe by entering into a written contract. The same mindset encourages people to sign on a contract to show their clear intention of entering into a contract and be bound by its terms and conditions. The same principle applies to e-agreements too where e-sign has great evidentiary value to show the intention of parties. In this regard, section 10-A of the IT Act states that

“Where in a contract formation, the communication of proposals, the acceptance of proposals, the revocation of proposals and acceptances, as the case may be, are expressed in electronic form or by means of an electronic records, such contract shall not be deemed to be unenforceable solely on the ground that such electronic form or means was used for that purpose.”

It is important to note that the provisions under section 10-A reiterate the basic principles of the contract under the Indian Contract Act. Therefore, intention, free consent, and identity of the parties play a vital role in the formation of such contracts. E-sign on such contracts establishes a prima facie presumption that parties signing the contract have read and agreed to enter into a contract along with the terms and conditions. Nevertheless, this presumption is rebuttable on the grounds mentioned under the Indian Contract Act such as coercion, undue influence, fraud, misrepresentation, mistake and incapacity of the party.

Evidentiary value of E-sign on agreements

As established, e-sign on an agreement is as valid as a hand-written signature. This fact was given a legal character in 2000 when sections 85-A and 85-B were inserted into the Indian Evidence Act, 1872. Section 85A of the Act says that the court shall presume that every agreement containing the electronic signature of the parties was affixed by the parties. It simply means that the court is required to presume the genuineness of e-sign on every agreement. Section 85-B of the Act says that the court shall presume that any secure electronic record including agreements or e-sign is not altered unless the contrary is proved. Secure electronic record has been defined under section 14 of the IT Act as:

“Where any security procedure has been applied to an electronic record at a specific point of time, then such record shall be deemed to be a secure electronic record from such point of time to the time of verification."

Therefore, section 85-B basically means that the court shall presume every secure agreement or e-sign to be genuine unless it is proved by any party in the court that it was altered. Finally, section 65-B of the Act includes electronic agreements and e-sign as documents and mandates to be admissible in any proceedings. It means every electronic record has the same evidentiary value as compare to traditional documents.

Forms of Electronic Signature

The forms of e-sign vary from agreement to agreement. Indeed, there are various legally accepted forms of e-signs on agreements. It includes:

  • Typing a name in an electronic document: Text Messages on mobile telephones with the name of the person at the bottom.

  • The ‘click wrap’ method to indicate intention: This includes clicking the 'I agree' or 'I accept' icon to confirm the intention to enter into an agreement while buying goods or services electronically. This kind of e-sign is a very popular method of indicating the intention and very much satisfies the function of a signature.

  • Personal Identification Number (PIN): The PIN has become a very widely used form of authentication, especially to obtain access to a bank account through the use of an ATM (automated teller machine or automatic teller machine, or automated banking machine, or cash machine), or to confirm a transaction with a credit card or debit card.

  • An email address: The name in an email address is capable of identifying a person. Sometimes, a mail sent from someone’s email account may be considered as a signature because it indicates his agreement to something.

  • A manuscript signature that has been scanned: A variation of the biodynamic version of a manuscript signature is where a manuscript signature is scanned from the paper carrier and transformed into digital format.

  • Biodynamic version of a manuscript signature: There are products available that permit a person to produce a biodynamic version of their manuscript signature. For example, some delivery companies use handheld devices that require the recipient of an item of post or parcel to sign on a screen acknowledging receipt of the mail. Another method of obtaining a digital version of a manuscript signature is where a person can write their manuscript signature by using a special pen and pad. The signature is reproduced on the computer screen, and a series of measurement records the behaviour of the person as they perform the action. The measurement includes the speed, rhythm, pattern, habit, stroke sequence and dynamics that are unique to the individual at the time he writes the signature. The subsequent electronic file can then be attached to any document in the electronic format to provide a measurement of a signature represented in graphic form on the screen.

  • The digital signature: In order to digitally sign the record, the hash result of the record is encrypted with the private key of the subscriber. This is called a digital signature. It is unique to the message and the subscriber. It varies from different subscribers as the other subscriber has his own private key.

This is not an exclusive list of forms of e-sign. The approach of law is very flexible in upholding the validity of various forms of e-sign as the Contract Act does not provide any specific way of showing intention to enter into a contract. Moreover, the judiciary while looking for the intention of the parties to enter into the contract applies the objectivity test. Objectivity test means what a reasonable person can assume. The presence of e-sign on an agreement is capable enough the pass the objectivity test unless the contrary is proved a party.

Conclusion

The presence of signature though not necessary for validation of an agreement, however, it is essential for prima facie presumption of the intention of the parties to enter into it. Electronic agreements have the same legal value as compare to traditional agreements and the same applies to e-signs too. The various types of e-signs establish intention, free consent and the identity of the parties in an agreement that can be used by the court as evidence to decide any dispute arising between the parties in the future. Hence, an e-sign plays the same legal role as compared to a traditional signature in an agreement but in a more secure manner.