Author- Charvi Devprakash


In an era of digitization, where everything is available to man in just a matter of a click, more often than not, one is sceptical about the pace of this dynamism. Today e-commerce has become an integral part of our daily life and many business transactions, running in millions are carried out every second through this ever-growing newly found sector. With government initiatives like Make in India, Digital India and the very new Vocal for Local initiative, many MSMEs and even the big fishes in the sea, find it more convenient to reach out to the consumers through e-commerce. On one hand where this industry is booming, on the other hand we have the laws of the land, which again play a very integral part in this domain.

While India witnesses a rapid growth in technology, most of the laws are still outdated. Changing times call for changing solutions. Going by this, the laws of the land have also undergone many amendments to suit the current need; the need of the hour. However, in some cases, the laws might persist to be obsolete or redundant; for instance the Sale of Goods Act, 1930. When one tries to level an even ground with something as novel as e-commerce and something as aged as the Sale of Goods Act, 1930, (Act), one will have to try and investigate the relevance of the Sale of Goods Act in the e-commerce setup.

Analysis on the current Position of Law

Information Technology Bill was passed in 2000, (IT Act, 2000) in order to catch up with changing trends. This Act recognises the electronic commerce as a legal transaction. Prior to the e-commerce boom, Sale of Goods Act was only meant to cater to the needs of traditional markets, but now this Act is applicable to many virtual business and e-commerce websites as well, helping in the establishment of legal sanctity.

In order to recognise the  relationship between Performance of the contract and E-commerce, it is recommended that we look at them in reference to the sections laid out in the Act. When performance of the contract is mentioned, it refers to the delivery of the goods. Under Sale of Goods Act, 1930, delivery of the goods is covered between Sec 32 and 40.

Sec 32 of the Act intends to convey that both the seller and the buyer must be willing and able to sell and buy, respectively, something that is mutually agreed by both parties at a given price. One is aware that e-commerce websites gives an option to its consumers to choose ones mode of payment as per their convenience. One can either choose to pay digitally or choose to pay on delivery. In either cases, the seller is bound to deliver the goods to the consumer, without any guarantee of the payment. This section fails to chalk out the different modes of payment that have emerged in the recent past. Section 32 has no relevance to the question whether there was a contract at all between the parties, but if a contract is shown to exist, the payment and delivery are concurrent conditions.

Moving on, the first part of Section 33, talks about the mode of delivery arrived at consensus ad idem. Now, for instance, in a scenario where after the pre-payment of the goods, the customer is unavailable to receive the delivery, then the Act, assumes constructive delivery, similar to its operation in the traditional business world. In cases like these, the seller’s possession of goods will change soon after the sale and he may no longer hold the goods as owner but may hold the goods only in the capacity of a bailee. The same was also established in Elmore v. Stone[1].

This rule can only be applied in e-commerce cases where the buyer opts for pre-payment. In cases of cash on delivery this rule will not hold good. Adding to this, the decision of constructive delivery has to be agreed upon by both the parties. A failure of agreement from even one of the parties, will deem such possession, illegal. 

Furthermore, another potential issue that could be foreseen is the right of the product. Many MSMEs use online platforms like Amazon or Flipkart as a medium to reach their customers. Multinational giants like these, further outsource their delivery facilities to a third party agency. In this case, one can never be sure of the extent up to which the rights of the seller is being protected. Owing to the many intermediaries between a buyer and a seller, one cannot ascertain if the seller has received his share of the amount and when can the buyer exercise his right over the product in cases of cash on delivery. This inconsistency of the law, which fails to focus on and address the nuances of E-commerce, leads to its operational inefficiency.

Additionally, Section 35 explains that buyer has no cause of action against the seller if he has not applied for delivery and he must state that cause of action in his plaint[2]. The demand by a third party isn’t valid and in cases where seller provides for notice of arrival of goods like invoice, the buyer will be under the obligation to apply for delivery[3]. As stated earlier, many of the big giants like Flipkart or Jabong outsource their delivery. These agencies work independently only as a courier agency. If GoJavas (Jabong’s delivery partner) is unable to deliver the products ordered from Jabong, the buyer has to apply for delivery with GoJavas and not Jabong, and accordingly GoJavas will be held legally liable.

Sec 36 deals with the duration of delivery. Unlike, the big giants, some websites, neither notify, nor let the consumers cancel their orders with respect to mode and duration of delivery. This leads to a lot of inconvenience as a delay of delivery within the stipulated time amounts to breach of e-contract. However, there is no recourse available for the buyer here.

Sec 37 gives rise to a lot of ambiguity in terms of e-commerce as apps like Swiggy or Zomato are tied up with restaurants around cities and they deliver restaurant food to the doorstep. The the buyer is entitled to 100% instant refund and also additional discounts in case of any mistake in delivery. However, there is no obligation for the buyers to report, return or cancel the wrong delivery. These instances evidently show the lack of protection of the rights of virtual sellers.

Most of the provisions here are either irrelevant or inapplicable as it does not take into consideration the changes in the style of trading. This emphasises the need for more stringent laws that could protect the rights and enforce duties upon the virtual buyers and sellers.

To talk of auction sites, the brick world auction, is quite different from an online auction. In order to determine when the contract is concluded on an online auction, one has to refer to the principles embodied in Sec 64(2) mutatis mutandis. However when this section is applied practically, there arises quite a few concerns with respect to its validity and enforceability. The Supreme Court, in Consolidated Coffee Ltd., v. Coffee Board[4] has held that an auction sale is subject to the terms laid down by the auctioneer.

Concluding Remarks

In this ever growing world of E-commerce, we need various legal provisions to legalise and validate the operation of this sector. One has to ensure that rights of both buyer and seller are not infringed due to lack of clarity or ambiguity of legal norms at place. Owing to the novelty of this concepts, there is no law in India, that is equipped enough to deal with reverse auction cases.

Sale of Goods Act, 1979 (UK) provides some stability to the e-commerce sector. Many small time retailers and individuals sell their products on big platforms like Amazon unlike India where anyone can trade online thereby gaining some authenticity.

However, not completely discarding the usefulness of the existing provisions, Sale of Goods Act 1930, has been able to regulate the E-commerce sector to a certain extent. Without these provisions, it would be impossible to give legality to the world of virtual business. But it could also incorporate laws like the UK, in terms of what regulates the quality of the goods sold.  

Nonetheless, since it is still the beginning, new laws will hopefully be developed with time to counter problems which might arise in the future. Law has to be flexible which can be amended with time and requirement. Sale of Goods Act, 1930 requires to see few amendments in future in relation to E-commerce.  

[1] 127 ER 912

[2] Sivaya v. Ranganayakulu, (1935) 37 Bom LR 538 :62 IA 89: AIR 1935 PC 67; Alapty Ramamoorthy v. P. Satyanarayana, (’58) A Andh Prad 550

[3] Ganesh Das v. Ram Nath, (1928) A Lah 20(27): 9 Lah 148 : 111 IC 498

[4] AIR 1980 SC 1462.

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