Clicking With Caution: Minors and Click-wraps
India is set to be world's most populous country by 2023. According to a recent report by Cisco, in India, there will be 907.4 million total internet users (64% of the population) by 2023, up from 398.2 million (29% of the population) in 2018. The growing number of internet users implies more formation of contracts over the internet or e-contracts. The increase in e-contracts creates certain legal challenges concerning minors entering such contracts like verification of the age and identity of the parties involved in it, which is often tricky. Though contracts are an essential aspect of any commercial transaction, there are certain legal restrictions on the capacity of specific individuals to enter them.
As per Section 11 of the Indian Contract Act, 1872 (hereinafter "Contract Act"), minors are not competent to contract. In layperson's terms, a minor is a person who has not attained the age of majority. In India, Section 3 of the Indian Majority Act, 1875 provides for the age of majority in the country, which says that a person is a major when he completes 18 years of age.
Though Section 11 of the Contract Act makes minors incompetent to enter into contracts, however, the Act is silent on the nature of an agreement formed by a minor as to whether it is void or voidable. The perplexity due to the absence of any statutory provision relating to the nature of such an agreement was set at rest by the Privy Council's judgement of Mohiri Bibee v. Dharmodas Ghose (hereinafter "Mohiri Bibee") wherein it was held agreements by a minor are void, and that Section 64 and 65 of the Contract Act do not apply to such agreements because minors are not competent to contract.
In the epoch of digitization, what remains fuzzy is whether click-wraps, which technically are contracts, may be enforced against minors who are legally incapable of engaging in contracts.
Legality of click-wraps
Click-wraps are a type of online contract wherein an online user or purchaser agrees to the terms and conditions of the website or an application they use to conclude the contract between them. They are termed click-wrap because they require the person entering a transaction to click on the "I agree," "I accept," or the check-box buttons to complete the transaction. One of the earliest instances to support the legality of the click-wrap in its judicial interpretation was Hotmail Corporation vs. Van Money Pie Inc.1 In this case, the customer allegedly violated the terms of the contract by altering the messages and emails. The plaintiff alleged violations of the Computer Fraud and Abuse Act, breach of contract, fraud, misrepresentation, and chattel trespass on the defendant's part. The court observed that the click-wrap contracts were enforceable in the case since the "I agree" button at the conclusion of the terms and conditions was clicked and the click-wrap's terms and conditions were broken. The language and context impact the agreement's enforceability when understanding the judicial interpretation of click-wraps.
In India, click-wraps are enforceable in courts if they fulfil all the prerequisites for a legitimate contract, as mentioned under Section 10 of the Contract Act. Section 10A of the Information Technology Act, 2000, states that no e-contract shall be deemed unenforceable solely because it was created using an electronic source. The legality of click-wrap agreements can be inferred through numerous decisions of Indian courts also. In Trimex International FZE v. Vedanta Aluminium Limited, the Supreme Court declared contracts made over e-mail as valid online contracts. In Ddit (ltd) Mumbai v. Gujarat Pipavav Port ltd, the Income Tax Tribunal held that if one party has excessive negotiating power, click-wraps may well be unenforceable even if they include all the necessary components of a valid contract.
Enforceability against minors and restitution
It is conclusive from various judicial precedents like Mohiri Bibee that contracts by minors are void and not enforceable. But what would be the consequences of a minor entering into a click-wrap and deriving undue benefits from it? Such instances can occur repeatedly, and many of them may go unnoticed. Consider the following illustrations:
Illustration (1)-Z, a 13-year-old Indian boy, makes an account with true information on the online goods-selling app YOLX. YOLX has no policy regarding age of their users. Z sold his mobile to YOLX after clicking on the "I accept the terms" button and later received money from YOLX but refused to give his mobile phone to YOLX's agent, contending he is a minor and the contract between YOLX and Z is void.
Illustration (2)-X, a 16-year-old Indian girl, creates an account on an online shopping platform, Zipkart, using fake credentials pretending to be an adult competent to contract. Using that account, she intends to purchase a laptop. In the last step of the purchase, while choosing the cash-on-delivery payment option, X clicks on the "I agree" button agreeing to the terms and conditions of Zipkart. Later, when the laptop is delivered to X, she declines to pay the money stating the same reason as Z in Illustration (1).
Such cases may prima facie seem to be clearly in favor of platforms/companies like YOLX and Zipkart, but to derive the recourses available to the parties to the contracts, reliance must be made on court judgments on the doctrine of restitution. In Mohiri Bibee, the defendant's contention regarding the application of estoppel against the plaintiff on the grounds that the minor misrepresented his age was rejected on the grounds that the defendants had sufficient grounds to know the age of the plaintiff and were aware of the plaintiff is a minor. The same is the case in Illustration (1), where the fact that Z was allowed to create an account and make a transaction through click-wrap is evidence of YOLX's awareness of Z's age. In Leslie v. Sheill2 (hereinafter "Leslie"), it was held that restitution is about restoring ill-gotten gains by the minor rather than enforcing the contract. If the minor is asked to pay the money back, and that money is already exhausted and no more traceable, then it would amount to enforcing the agreement, which goes against the provisions of the Contract Act. In Khan Gul v. Lakha Singh (hereinafter "Khan Gul"), Lahore HC made a liberal approach departing from Leslie holding that restoration of unjust benefit should not depend upon the mere accident of a person coming before the Court as a plaintiff or defendant. The Court also observed that asking a minor to restore an ill-gotten gain in form of money is not enforcing the agreement but restoration of the pre-contract position. However, almost after a decade, in Ajudhia Prasad v. Chandan Lal (hereinafter "Ajudhia Prasad"), Allahabad HC took a view contrasting to Khan Gul in consonance with Leslie. The Court held that a minor could be asked to restore the property only if it is traceable. In Illustration (2) also, X dishonestly created the account and enjoyed undue gain in the form of a laptop, a traceable property.
The stance of Lahore HC in Khan Gul offers better reasoning than Ajudhia Prasad. Through its report3, the Law Commission of India also declared Khan Gul better. Presently, the principle of compensation has been incorporated in Section 33 of the Specific Relief Act, 1963. This provision requires the minor to restore any undue benefit out of the contract, whether monetary or proprietary, irrespective of their status in Court. Thus, as per Section 33, Specific Relief Act, 1963, both Z in Illustration (1) and X in Illustration (2) must restore money and laptop, respectively, to revert to the pre-contract position.
To mitigate the instances of minors entering e-contracts like click-wraps, age verification mechanisms and imposition of restrictions should be developed. A broad range of measures must be adopted in this regard to verify the age of the users. In the present context, many online platforms that involve clickwraps use self-identification by minors on sign-up, presenting a neutral data field. Age verification is relevant to platforms prescribing a minimum age for users. This age criterion is generally set at 13 for some services, which may result from requirements under the US Children's Online Privacy Protection Act (hereinafter "COPPA").
As minors often misrepresent their ages, the efficacy of age verification that relies on self-attestation and has been influenced by COPPA has come under fire. The introduction of COPPA on online age verification "has had the unintended consequence of disincentivizing platforms from actively identifying which of its users are children and building age-appropriate settings for them." There should be the development of an online mechanism by platforms for age-verification that requires users to enter their date of birth. However, this verification should not stop here. There should be technical and design algorithms to prevent misrepresentation on the part of the minor, which can be done by using cookies in web browsers that identify the previously entered age records. Placing cookies on the browser may also help discourage the minor's repeated attempts to enter false age. The development of standards for age verification can also include linking government-issued documents such as PAN cards and Aadhar, among others. Post-identification measures can also be implemented, such as immediate suspension of accounts if there is a strong proclivity of the reviewers that the account holder is underaged.
Moreover, other measures that could be adopted in cases of in-app purchases include requiring guardians' consent to verify and requiring proof of CVV, security code, or some verification code sent through SMS. Apart from these measures, other ways to check the entering of minors into e-contracts include AI and account reporting. This would also require constant checking and other efforts by platform administrators. A precise formation of guidelines by the appropriate regulatory authorities would also be encouraged.
It is crucial to inform the user that the use conditions govern a website's transaction. The consensus ad idem necessary for contract formation would be regarded to exist if the terms and conditions offered on a website are reasonably apparent to the customer. If, per the terms and conditions of the website, the minor's behavior in using it to make purchases constitutes permission, he cannot afterward assert that it does not. As a matter of principle, employing technology efficiently to inform users of such terms must be required to ensure the efficacy of click-wraps. If the conditions are deemed unfair and unconscionable, the courts are typically more sympathetic to the minor and would rule in their favor. In addition, the minor is always free to choose whether to enter into a contract of adhesion. In essence, minors have protection under the fairness of contract conditions, which is a fundamental tenet of every legal agreement. One can rely on the contract's unconscionability and relevant legal precedents to declare it invalid.
1 1998 WL 388389 (N.D.Cal.).
2 (1914) 3 KB 607.
3 9th Report, Specific Relief Act, 1877.
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