Section 10A: the Validity of Contracts Formed Through Electronic Means

Broken down

Four elements, and each is worth a line in an answer.

1. "Where in a contract formation." The section is about formation, that is, about how the contract came into being. It says nothing about performance, breach or remedies, which remain governed by the Contract Act.
2. "The communication of proposals, the acceptance of proposals, the revocation of proposals and acceptances." All three stages are covered. So an offer made by email, accepted by a web form and revoked by a message are each within it. The phrase "as the case may be" means the section applies to whichever of these actually happened electronically; it does not require that all of them did. A proposal made on paper and accepted by email is still within the section.
3. "Expressed in electronic form or by means of an electronic record." The two limbs are wide, and "electronic record" carries its section 2 definition.
4. "Shall not be deemed to be unenforceable solely on the ground that such electronic form or means was used." This is the operative words and the two most important are "solely" and "unenforceable".

What "solely" does

The protection is confined to the single objection that electronic means were used. Every other ground of invalidity is untouched. A contract made by email with a minor is still void under section 11 of the Contract Act. A contract made by web form for an unlawful object is still void under section 23. Consent obtained by fraud in an email is still voidable under section 19.

The word does a second job as well. It means the section cannot be used to validate a transaction that the Information Technology Act itself excludes from electronic form. A will or a contract for the sale of immovable property is outside the Act's Schedule, so the electronic form is not merely the sole ground of objection; it is an objection the Act has itself preserved.

What "unenforceable" does

The section says the contract shall not be deemed unenforceable. It does not say the contract is valid, and it does not create a contract where none exists. If there was no proposal, or no acceptance, or no consideration, there is nothing for section 10A to save. The section removes a defence; it does not supply an agreement.

How section 10A works with the Contract Act

This is the point most worth making in an answer, and it is the same structure as the rest of the topic.

Section 10A is a shield, not a source. The contract is made under the Contract Act; section 10A stops one particular attack on it.

A worked example

Aditi, a graphic designer, receives a message on a business platform from a company asking her to design a logo for forty thousand rupees. She replies "Agreed, I will deliver in ten days." She delivers, and the company refuses to pay, saying there was never a binding contract because nothing was signed and everything was on an app.

• Proposal. The company's message signified willingness to pay for work, with a view to obtaining Aditi's assent. Contract Act, section 2(a).
• Acceptance. Aditi's reply was absolute and unqualified, section 7, and was communicated, sections 3 and 4.
• Consideration. Each promise is the consideration for the other, section 2(d) and 2(e).
• Section 10 requirements. Competent parties, free consent, lawful consideration and object. Satisfied.
• The company's objection. That the contract is unenforceable because it was formed on an application. Section 10A answers it exactly: the contract shall not be deemed unenforceable solely on that ground.
• The absence of signature. Only relevant if a law required this contract to be signed. None does. Section 5 would answer it if one did.

Aditi succeeds.

Now change one fact: Aditi is seventeen. Section 10A does not help her, because the objection is no longer that the contract was made electronically. Her agreement is void under section 11 of the Contract Act, and the medium is irrelevant.

Change it again: the contract is for the sale of a flat, concluded by email. A contract for the sale or conveyance of immovable property is excluded from the Information Technology Act by its Schedule, so section 10A does not apply at all.

What it does NOT mean

"Section 10A makes all electronic contracts valid." It does not. It removes one objection. Everything the Contract Act requires must still be present, and the excluded documents remain excluded.

"Section 10A replaced section 4 of the Contract Act." It did not. Communication is still governed by the Contract Act, and for electronic records the timing is fixed by section 13 of the Information Technology Act, not by section 10A.

"Section 10A was part of the Act from 2000." It was inserted by the 2008 amendment, in force from 27 October 2009. A textbook that describes the Act as enacted will not contain it, which is the single most common error in revision material on this topic.

"Section 10A requires a signature." It says nothing about signatures. Signature requirements, where they exist, are dealt with by section 5.

Quick revision

• Section 10A, inserted by the 2008 amendment, in force 27 October 2009.
• Covers communication of proposals, acceptance, and revocation of proposals and acceptances, "as the case may be", so any one of them being electronic is enough.
• Effect: the contract shall not be deemed unenforceable SOLELY on the ground that electronic form or means was used.
• "Solely" preserves every other ground: minority, unlawful object, absence of consideration, defective consent.
• "Unenforceable" means it removes a defence; it does not create a contract or validate an excluded document.
• The excluded documents in the Schedule, including wills, powers of attorney, trusts, negotiable instruments other than cheques and contracts for sale or conveyance of immovable property, remain outside.
• It is a shield, not a source: formation is still governed by the Indian Contract Act.

Test yourself

1. Reproduce the effect of section 10A in one sentence. Where the communication of proposals, their acceptance, or the revocation of proposals and acceptances is expressed in electronic form or by an electronic record, the contract is not to be deemed unenforceable solely on the ground that electronic means were used.

2. When did section 10A come into force, and why does the date matter? 27 October 2009, having been inserted by the Information Technology (Amendment) Act 2008. It matters because the section did not exist in the Act as enacted in 2000, so any account of the 2000 Act will not contain it.

3. A contract is concluded by email with a person of unsound mind. Does section 10A save it? No. The word "solely" confines the section to the objection that electronic means were used. Incapacity under section 12 of the Contract Act is a different objection and remains fatal.

4. Does section 10A create a contract? No. It removes a defence. If any essential of a contract under the Indian Contract Act is missing, there is nothing for section 10A to operate on.

5. Can a will be made under section 10A? No. A will is one of the documents excluded from electronic form by the Act's Schedule, so the section does not apply.