Adv. Lazim Vengattil, Associate, Alishahz Legal LLP
INTRODUCTION
In our increasingly interconnected world, contracts are no longer limited to formal agreements signed with pen and paper. Many of our daily interactions ranging from clicking “I Agree” on a website to stepping into a metro station are governed by contracts we barely notice. These are what we may call everyday automatic contracts: legally binding arrangements that arise through routine behavior or minimal acknowledgment. While often unseen, their impact is significant and global, raising questions about enforceability, awareness, and consumer rights in both digital and real-world environments. An automatic contract, sometimes referred to as an implied or clickwrap contract, is formed when one party unilaterally sets the terms and the other implicitly agrees through action or continued use. These contracts are rooted in contract law principles, particularly the doctrines of offer, acceptance, and consideration. The legal system has long recognized that consent can be implied by conduct, such as entering a premises or using a service with posted terms. With the advent of digital technologies, these contracts have proliferated, especially through online platforms, apps, and services that require users to accept terms with a single click.
LEGAL BASIS OF AUTOMATIC CONTRACTS
Indian law explicitly recognizes such digital and standard-form contracts. The Indian Contract Act, 1872 requires a valid offer, acceptance and lawful consideration. Clickwrap mechanisms satisfy these requirements by offering clear consent (clicking “Agree”). Crucially, the Information Technology Act, 2000 (as amended) confirms that contracts formed electronically are fully valid. Section 10A of the IT Act states that a contract cannot be denied validity merely because it is electronic, so long as it meets normal contract conditions. In other words, a contract made by email, online acceptance or digital signatures is as binding as a written one.
The Consumer Protection Act, 2019 (CPA 2019) adds another layer of regulation. It specifically targets unfair terms in standard contracts. Section 2(47) of the Act defines an “unfair contract” as one between a seller and a consumer that “causes significant change in the rights” of the consumer, such as requiring excessive deposits or imposing penalties far disproportionate to any loss. Under CPA 2019, such clauses are prohibited. Notably, recent e‑commerce rules, The Consumer Protection (E-Commerce) Rules, 2020, require online marketplaces to display clear terms, prices, (as per Rule 4(3)) and provide grievance officers for consumer complaints ( as per Rule 4(4)). Analysts observe that CPA 2019 includes provisions on online transactions like oversight of misrepresentation and unfair terms, and explicitly empowers consumer forums to strike down exploitative clauses. For example, the Central Consumer Protection Authority has ruled that failing to issue a receipt or invoice for a service (such as a cab ride) constitutes an unfair trade practice under CPA 2019.
Other laws may also apply: the Information Technology Act and related rules legalize electronic signatures (Section 3A) and records, penalize data breaches, etc., which indirectly support digital contracts. In sum, Indian law treats click-wrap and similar electronic agreements as valid contracts by default, provided the essential contract elements (free consent, capacity, consideration, legal object) are met.
CONCLUSION
Indian courts have consistently upheld the validity and enforceability of electronic contracts, including clickwrap and browsewrap agreements, provided certain conditions are met. The Supreme Court in Trimex International v. Vedanta Aluminium confirmed that even contracts concluded through email exchanges can be binding if there is consensus on essential terms. Courts have emphasized that for a clickwrap contract where a user clicks “I agree” to terms to be valid, the user must have had reasonable notice and opportunity to read those terms.Across judgments, the Indian judiciary has relied on principles under the Indian Contract Act, 1872, particularly the importance of free consent, lawful consideration, and clear communication of terms even in digital and non-traditional formats.