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CMA Foundation · Fundamentals of Business Laws and Business Communication · E-Contracts and E-Signature - Meanings and Requirements

Under the Information Technology Act, 2000, when a contract is formed by communicating the proposal and acceptance through electronic records, what is the legal position?

A contract formed through electronic records is not unenforceable solely because electronic form or means was used. Section 10A of the IT Act protects electronic proposals, acceptances and revocations, and it does not require paper, registration or a digital signature merely to make such a contract enforceable.

  1. AThe contract is void because it is not on paper
  2. BThe contract is enforceable only if a digital signature is affixed by both parties
  3. CThe contract is not unenforceable solely because electronic form or means was usedCorrect
  4. DThe contract is valid only if registered with the Controller

Explanation

Section 10A provides that where proposals, acceptances and their revocations are expressed in electronic form or by electronic records, the contract is not deemed unenforceable solely on the ground that electronic means were used. The Act does not require a digital signature or registration with the Controller for this purpose, so the other options add conditions that the section does not contain.

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