Commercial contracts are often entered into through an exchange of emails, whenever it is inconvenient for the parties to meet in person. The terms of the contract are negotiated, re-negotiated and finalised over email where parties communicate their consent to enter into a contract through written replies. During the Covid-19 pandemic especially, with lockdowns making it extremely difficult to obtain physical signatures, some businesses increasingly relied on emails as a method of negotiation of terms and execution of contracts.
By virtue of Section 10A of the Information Technology Act, 2000, email is a legally valid mode of entering into a contract.
Section 10A confers legal validity to eContracts in India. It does this by categorically stating that a contract cannot be denied enforceability just because it was executed electronically.
The Supreme Court has also in various judgements accepted and reinforced the freedom that parties have to choose any method of electronic execution for entering into eContracts. In Trimex International FZE, Dubai v. Vedanta Aluminum Limited, (2010) 3 SCC 1, the Supreme Court upheld the validity of a contract entered into via an exchange of emails.
Electronic means, such as email exchange, can be used to legally enter into all types of contracts. However, there are 2 narrow exceptions to this rule. Email cannot be used for the following documents:
- Documents listed in the First Schedule of the IT Act, 2000.
- A document which must mandatorily be signed under any law, rule or regulation.
Here is a handy table which tells you where can you use email exchange as a legally valid mode of entering into a contract:
The legal enforceability of any eSign type depends on:
- How well it can establish the identity of the signer (Authentication)
- Whether the document can be altered after the signatures are affixed (Integrity)
- Whether the parties can deny their acceptance of the terms and conditions at a later stage (Non-repudiation)
The enforcement of email exchanges has a good deal of uncertainty around it: