Technology Contracts – the future of contracts!

The present article is written by Shikha Behera, 4th year B.A LLB student from KIIT Law College discussing about, how technology contracts are the future of contracts & difference between traditional contract and technology contracts.

Introduction:


With the rapidly developing technology in the world, digitization is taking over most of the things. Also, one needs to consider the outspread of the Covid-19 where social distancing is a must. The whole world went into a shutdown and within no time the working class started to work from home. The world would have come to a standstill, and the economy would have collapsed if we would have been deprived of technology.

We as users of technology are dependable on the various transactions which happen via help of technology, whether it is related to the purchasing of goods and services online (E-contract) or sending/receiving money online (E-transaction) or even coming online on a social networking platform. Technology comes to our rescue for overseas transactions within no time; it becomes a transparent process and mainly it is a cost-effective system where the parties need not have to meet, the whole procedure can be completed paperless with transparency with the help of technology. Technological developments are driving business all over the world and In such times, Technology Contract is one such boon to the legal world.

What are technology contracts?

Technology Contracts is a practical resource for IT transactional legal work. Technology Contracts provides practice notes on different types of information technology related transactions as well as the agreements or products encountered in such transactions. The constant increase in the use of e-commerce, and the ever developing and evolving technological innovation, as well as the constant need for businesses to renew and be updated, maintain or update existing technology solutions, technology contracts are being preferred over the traditional contract. 

Technology contracts are usually done for overseas agreements, but as said earlier, with the situation prevailing and the anticipated future, a digitalised mode of legal document has taken over the place of traditional paper-based contracts. The validity of contracts entered into by email has been discussed in the case of Trimex International Fze. Limited, Dubai v. Vedanta Aluminium Limited, India, (2010) 3 SCC 1. The Supreme Court has deliberated over the issue of agreements executed over emails and held that “Unconditional acceptance of contract concluded orally or in writing [or by e-mail] mere absence of a signed formal contract, would not affect either unconditional acceptance of contract or implementation thereof.” Whenever there is technology contract, there is an agreement between the parties, and the agreement is done only after all the terms and conditions and thereafter negotiations, then only an agreement is created electronically with the consent of the parties. The court in the case of Ambalal Sarabhai Enterprise Limited v. KS Infraspace LLP Limited, (2020) SCC OnLine 1, accepted and provided that agreements may be executed electronically, so long as they meet the minimum criteria provided under the Contract Act and the IT Act. This includes agreements entered into via email as well as WhatsApp.

Digital signatures are used, It is for the purpose of ensuring that the sender can be identified and he has given his consent to the message. This type of contract is admissible in a court of law, and are governed by The Indian Contract Act, 1872 and The Information Technology Act (Amendment), 2008. Jurisdictional issues are a major setback in the matters of technology contract in case of breach. Electronic documents are also used as evidence in court. In case of Trimex International Fze. Limited, Dubai v. Vedanta Aluminium Limited, India, it was further said that ‘proof of contract’ (in the absence of a signed agreement) can be established from documents approved and signed by the parties in the form of exchange of e-mails, letters, telex, telegrams and other means of telecommunications. In this case, acceptance was conveyed via e-mail using the words “we confirm the deal for five shipments”.

Examples of technology contracts can be: License Agreements, Cloud Computing, Evaluation Agreements, Technology Services Agreements, Software Licensing, Clickwrap/Browse wrap Agreements, Co-Location Agreements, Data Licenses, etc.

Both technology contract and a traditional contract share the same end goal, which is to give effect to the intention of contracting parties in their dealings with one another, but the fundamental structure of a technology contract is comparable to the fundamental structure of a traditional contract.

Difference between technology contract and traditional contract:
Sl. No.Traditional ContractsTechnology Contracts
1Parties meet face to faceOnline procedure
2Done on the papers.Environment friendly, digitalize mode
3Time consuming procedureTime efficient execution
4Registration is requiredRegistration is not necessary
5Parties meet and signature is doneOnline agreement, digital signature.
6Operational costs are involved which increases the cost in the implementation of the agreement. Low transaction cost
7Easier to executeComplicated procedure
8Chances of tampering Technology eliminates any kind of tampering
9Chances of human errorThe technology contract software meets all compliance standards and contract law
10Take a lot of time to search for one single thing. Easier to monitor, track and find data
   
Conclusion:

Within huge organizations, legal departments are forced to do compliance work, monitor, track and find data, draft again, examine work that are of high volume, but of low complexity. Legal department’s people, who are well-trained individuals, a low-value and time consuming work like this is wastage of resources for the organization. This gave rise to a wave of technological solutions designed to offload low-value and time consuming work being done by well-trained people, by the solution of technology contract. The technology is soon taking over the paper pen mode, but it continues to rely on the input of legal professionals to grow its intelligence in the cases.

Learn more about Technology contracts and its drafting by taking our course on Technology Contracts by LeDroit India.

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