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