When we hear the word contract, what comes to our mind ? lawyers, legal documents, court etc. But the fact is that contracts are part of our everyday life. And many a times we enter into contract without even realizing that. Example – buying goods or services in daily life, terms & conditions of credit card etc

So, what’s a contract ? To understand that we need to understand “Agreement”. Most people confuse “Agreement” and “Contract”.

An “Agreement” is an understanding between two or more parties that outlines their responsibilities and obligations. Agreements can be written or spoken, and they can be formal or informal. An Agreement which is legally binding / enforceable in court also, is called as “Contract”

As such, all contracts are agreements, but not all agreements are contracts.

Essential elements of contract – Offer, Acceptance, Awareness, Consideration, Capacity & Legality.

A contract may be – Valid, Void, Voidable, Illegal or Unenforceable.

If a contract can be oral also then why to write it down ? Because a written contract provides several advantages, including: having a proper record of what has been agreed upon, preventing disputes by clearly outlining terms and conditions, protecting interests of parties by defining rights and obligations, offering legal enforceability in case of disagreement / non performance, minimizing misunderstandings and establishing a clear path for dispute resolution if issues arise.

Does it means that parties especially those who are at considerable distance from each other need to meet, have printed document, sign the document by hand & store a physical copy of that ? No. The parties may enter into contract digitally. That’s also known as E-Contract. It’s created & stored electronically, signed using electronic signatures & accessible from anywhere with an internet connection.

Now the question arises whether it’s safe to enter into e-contract. Yes, as long as a party carefully review the terms and conditions, understand the legal implications, and ensure that the platform being used has adequate security measures to protect the information. An e-contract is legally binding and enforceable just like a physical contract when properly executed and the same is compliant with applicable laws. There are 3 types of E-Contracts –

a) Click Wrap Agreements :
These are the most common type, where users must actively click “I agree” to accept terms and conditions before using a service or website.

b) Shrink Wrap Agreements :
These are often associated with software purchases, where the user is considered to have agreed to the terms by opening the packaging and using the software.

c) Browse Wrap Agreements :
These are contracts where users are deemed to have agreed to terms and conditions simply by browsing a website, usually with a notice stating the terms somewhere on the site.

Coming to the last part of this article, let’s analyze the risks involved & how to mitigate them.

The risks involved may be –

a) Financial risks – like non-payment or failure to deliver goods / services.

b) Legal risks – breaching contractual obligations.

c) Security risks – data breaches from confidential contract information.

d) Brand risks – negative public perception due to contract issues.

e) Operational risks – Disruption to business operations due to contract issues.

f) Compliance risks – violating laws or regulations within the contract terms.

How to mitigate the risks ?

a) Contract needs to be carefully reviewed & understood before executing the same.

b) Language in contract should be clear & concise. Ambiguity must be avoided.

c) Potential risks need to be identified & taken care off before executing the contract.

d) Contract compliance must be regularly monitored & issues should be promptly addressed.

e) Consult an expert legal professional to ensure that the contract is legally sound and safeguards your interests.

“Thanks so much for reading, it means alot !”

For drafting & vetting of contract, you may contact us.