The principles governing the E-contracts are based on the traditional law of contracts. According to section 10, of the Indian Contract Act, 1872 essentials of a contract include:
1. Parties competent to contract
2. Existence of consent of parties
3. Consent being free
4. Existence of consideration
5. Consideration and Object being lawful
6. The agreement does not being expressly declared void.
However, before ascertaining whether a contract is valid or not, it is important to ascertain whether a contract has been concluded at all. A contract is formulated when the offer is communicated by the offeror to the offeree and the same is accepted by the offeree, whether expressly or by implication. The key to understanding electronic contracting is that is to regard the Internet simply as another tool of communication. Until now, new modes or tools of communication have been adequately incorporated into the legal system for example the telex or the fax machine. In theory, therefore law is capable of dealing with the issues raised by electronic means of communication.
Communication in Electronic Form and E-contract Issues:
An offer or acceptance, like any other expression of will or intention, may be communicated by any means, including by messages in electronic form (called electronic record in Information Technology Act, 2000). The provisions of Indian Contract Act, 1872 are wide enough to cover such transactions. In the context of contract formation, unless otherwise agreed by the parties, an offer and the acceptance of an offer, or either of them, can be expressed by means of data messages or electronic records.