Cyberspace is a time-dependent set of interconnected information systems with no physical boundaries making it extremely complex system to be regulated. Parliament of India enacted the Information Technology Act in the year 2000 with extensive amendments in subsequent years. This paper deals with the legal framework and executive regulatory mechanism under this Act which is relevant for the trade and business operations in India. It analyses the implications of commercial agreements in cyberspace and the requirements to be fulfilled for affixing digital signatures on business agreements and documents. The recent rules framed under the Act aim to tighten the data protection regime in India and ensure the secrecy of the data provided by the customers. It puts the responsibility on the business entities for implementing adequate safety measures against unauthorized access and transmission of personal data. There are provisions for payment of compensation in case of damage to the computer systems and networks. However, in areas like intellectual property rights, the law needs to be strengthened to protect such rights in cyberspace.