Cyber Law: Place of Formation of Contract
The immense reach of cyber space has made it difficult to define the jurisdiction of cyber laws. The dispute caused by the breach of a contract, falls under the purview of the legislation of the place of contract formation. The court’s jurisdiction in such a dispute is determined by the place of conclusion of the contract.
The contract may be concluded via two means, such as:
- When the letter of acceptance of an offer is posted, in case of postal communication.
- Where the letter of acceptance, is a receipt via electronic means of communication.
Cyber Law: Place of Conclusion of Contract under the IT Act
The electronically formed contracts in India are governed, by the cyber law of India. The IT Act provides that the supposed place of dispatch and receipt, of an electronic record, may not be its actual place of dispatch and receipt.
This provision is laid down, because it is possible that the actual conclusion of a contract may occur in a place, other than the place, where the electronic record is supposedly received.
As per the IT Act, the location of the computer resource used for sending the offer, is not a determining factor. Correspondingly, the place of business of the offeree/addressee, determines the place of formation of a contract.
This objective has been laid down citing two reasons:
- The parties may not know the exact location of the computer resource.
- The computer resource may be in different jurisdiction, other than the place of business of the offeree.
However, the term ‘place of business’ is used in general sense. In case the parties have multiple places of business, the main location of the business shall be considered. Further, when there is no place of business, owned by either party, place of residence is considered. In case of a corporation, the place of registration shall be considered.