Attribution, Acknowledgment and Despatch of Electronic Records

(c) Sent by an information system programmed to operate automatically. This is the limb that makes modern commerce possible. An automated confirmation, an algorithmic order, or a bot that accepts a booking is attributed to the person who programmed the system or caused it to be programmed. There is no human mind behind the individual message and the Act does not require one.

Limb (c) is worth pausing on for contract law. It means a proposal or an acceptance can be generated by a machine and still be the act of a party, which is what allows automated web ordering to produce contracts at all.

Section 12: acknowledgment of receipt

Section 12 has three sub-sections and they build on each other.

Section 12(1). Where the originator has not stipulated that acknowledgment be given in a particular form or by a particular method, an acknowledgment may be given by:

• (a) any communication by the addressee, automated or otherwise; or
• (b) any conduct of the addressee sufficient to indicate to the originator that the electronic record has been received.

So acknowledgment is informal by default. An automated read receipt counts; so does conduct, such as beginning to perform.

Section 12(2). Where the originator has stipulated that the electronic record shall be binding only on receipt of an acknowledgment, then unless acknowledgment is received the record is treated as though it had never been sent.

This is a strong provision and it is the one to remember. The originator can make his own message conditional, and if the condition fails the message is a nullity.

Section 12(3). Where the originator has not stipulated that the record be binding only on acknowledgment, and the acknowledgment has not been received within the time specified or agreed, or within a reasonable time if none is specified, the originator may give notice to the addressee stating that no acknowledgment has been received and specifying a reasonable time by which it must be received; and if no acknowledgment is received within that time, he may, after giving notice, treat the electronic record as though it had never been sent.

Note the difference between (2) and (3). Under (2) the record fails automatically. Under (3) it fails only if the originator gives notice and the further time expires. The two must not be run together, and telling them apart is a reliable examination point.

Section 13: time and place of despatch and receipt

This is the section that matters most for contract formation, and it is the electronic analogue of section 4 of the Indian Contract Act.

Despatch, section 13(1). Save as otherwise agreed between the originator and the addressee, despatch occurs when the record enters a computer resource outside the control of the originator. The test is loss of control, which mirrors the Contract Act's "out of the power of the acceptor" in section 4.

Receipt, section 13(2). Save as otherwise agreed, the time of receipt is determined as follows:

• Where the addressee has designated a computer resource for the purpose:
• receipt occurs when the record enters the designated computer resource; but
• if the record is sent to a computer resource of the addressee that is not the designated one, receipt occurs when it is retrieved by the addressee.
• Where the addressee has not designated a computer resource along with specified timings, receipt occurs when the record enters a computer resource of the addressee.

The designated resource rule is the practically important one. If a company says "send all orders to orders@company", a message sent there is received on arrival, whether or not anyone opens it. A message sent instead to an individual's address is received only when that person actually retrieves it.

Place, section 13(3) to (5). Save as otherwise agreed, an electronic record is deemed to be despatched at the place where the originator has his place of business, and received at the place where the addressee has his place of business. Where there is more than one place of business, the principal place of business is used; and if the originator or addressee has no place of business, his usual place of residence is used. A body corporate's usual place of residence is where it is registered.

Section 13(5) is the sting: this is so irrespective of the place where the computer resource is located, and irrespective of the place where the electronic record is deemed to have been received under sub-section (2).

So the location of the server is legally irrelevant. A contract accepted through a server in Singapore, between a Mumbai supplier and a Chennai buyer, is despatched in Mumbai and received in Chennai. That is a deliberate policy choice, and it prevents jurisdiction being manipulated by moving hardware.

A worked example

A buyer in Pune emails an order to a seller's designated address, orders@sellerco.in, at 11 p.m. on Monday. The seller's office opens on Tuesday. The seller's automated system replies at once confirming acceptance. The seller's registered office is in Chennai, and its mail is hosted abroad.

• Whose is the automated reply? Section 11(c): sent by an information system programmed by or on behalf of the originator to operate automatically, so it is attributed to the seller.
• When was the order received? Section 13(2): the buyer sent it to the designated computer resource, so receipt occurred at 11 p.m. on Monday when it entered that resource, not on Tuesday morning when a human read it.
• When was the acceptance despatched? Section 13(1): when it entered a computer resource outside the seller's control.
• Where was the contract made? Section 13(3) and (5): the acceptance is deemed despatched at the seller's place of business in Chennai and received at the buyer's place of business in Pune, irrespective of the hosting location.
• What if the buyer had sent the order to a salesman's personal address instead? That is not the designated resource, so receipt would occur only when the salesman actually retrieved it.

Change one fact: the buyer's order said "this order is binding on us only if you acknowledge it". Under section 12(2), if the seller never acknowledges, the order is treated as though it had never been sent.

What it does NOT mean

"An automated message is nobody's message." Section 11(c) attributes it to the person who programmed the system or caused it to be programmed.

"Receipt means the addressee read it." Only where the record went to a resource other than the designated one. Into the designated resource, receipt is on entry.

"Sections 12(2) and 12(3) are the same." Under 12(2) the record is treated as never sent automatically. Under 12(3) the originator must first give notice fixing a reasonable further time.

"The server's location determines where an electronic contract is made." Section 13(5) excludes it in terms.

"Section 13 replaces section 4 of the Contract Act." It supplies the timing rule for electronic records. Whether there is a contract at all remains a question for the Contract Act.

Quick revision

• Section 11: attributed to the originator if sent by him, by a person authorised in respect of that record, or by a system programmed to operate automatically.
• Section 12(1): acknowledgment by any communication, automated or otherwise, or by conduct.
• Section 12(2): if the originator stipulated that the record binds only on acknowledgment, no acknowledgment means the record was never sent.
• Section 12(3): otherwise the originator must give notice fixing a reasonable time before treating it as never sent.
• Section 13(1): despatch when the record enters a computer resource outside the originator's control.
• Section 13(2): into a designated resource, receipt on entry; into a non-designated resource of the addressee, receipt on retrieval; where none designated, on entering any computer resource of the addressee.
• Section 13(3) to (5): deemed despatched and received at the parties' places of business, irrespective of where the computer resource is located.

Test yourself

1. To whom is an automatically generated confirmation attributed? To the originator, under section 11(c), because it was sent by an information system programmed by or on behalf of him to operate automatically.

2. When is an electronic record received where the addressee has designated a computer resource? When it enters that designated resource. If it is sent instead to another computer resource of the addressee, receipt is when he retrieves it.

3. Distinguish section 12(2) from section 12(3). Under 12(2) the originator has stipulated that the record binds only on acknowledgment, so absence of acknowledgment means it is treated as never sent. Under 12(3) there is no such stipulation, and the originator must give notice specifying a reasonable further time before he may treat it as never sent.

4. Does the location of the server decide where an electronic contract is made? No. Section 13(5) provides that the deemed places of despatch and receipt apply irrespective of where the computer resource is located.

5. What is the test for despatch? That the electronic record has entered a computer resource outside the control of the originator, which mirrors section 4 of the Contract Act's requirement that an acceptance be out of the acceptor's power.