LAW Courses

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

Is contract agreement is required

(Querist) 04 January 2018 This query is : Resolved 
Respected Sir/Madam,

Undersigned found that in Works and Service Contracts a contract agreement is signed on Non Judicial Stamp Paper of Rs. 100.

As per contract law intimating the offerer about acceptance of his/her offer is sufficient to form a contract then why there is prevalent practice of signing contract agreement on Non Judicial Stamp Paper.

Further, the value of the non judicial stamp paper is not linked with the value of the contract. Do The India stamp act or any other act calls for such requirement ?

Further, it is also said that the Indian stamp paper should be of the state where work/service is to be executed, so in cases where work/service is going on in multiple states, the agreement will be required to be signed on non-judicial stamp paper of all the states.

Please help clarifying the queries.

Thanking you in advance.

Vijay Raj Mahajan (Expert) 04 January 2018
You are absolutely right, the Contract Act no where mentions that a contract has to be written and that too on Non-judicial Stamp paper. However because of practise started by so called bogus lawyers who hardly had knowledge of the Contact law.
The simple exchange of letters of offer by the company/organisation and acceptance of job by the worker/employee is good enough for the purpose of contract.
However as the legal advisors in most companies just follow the traditional practise of putting all the terms and conditions of job in writing and to show extra ordinary weightage to the job contract they get it printed on the non-judicial paper. The importance of paying stamp duty arise if the contract is to be registered with the sub-registrar of the district, which in most case not done, but only notary attestation carried out to give some sort of legal look.
A simple white sheet written down agreement/contract, duly signed by both parties and may be witnessed by one or two witnesses is good enough for all legal purposes to be used by either party in case of any dispute relating to the job contract.
R.Ramachandran (Expert) 04 January 2018
Dear Mr. Vijay Raj Mahajan, I am afraid you have not clearly understood the query. The query is not about the job/employment contract. Rather it is about contract for executing works or for rendering services.
Hemant Agarwal (Expert) 04 January 2018
1. A Monetary Contract is a "Agreement" which is duly required to be Stamped and Registered under the respective State laws. ELSE it is not enforceable in a Court of Law.

Keep Smiling .... Hemant Agarwal
Vijay Raj Mahajan (Expert) 04 January 2018
Even the contract of executing work doesn't require any contract to be written down on non-judicial paper. For any contract written form not required. Read the Contract Act.
R.Ramachandran (Expert) 04 January 2018
I am sorry.
It is true that every promise and every set of promises forming the consideration for each other, is an agreement, according to Indian Contract Act. Even oral agreement is an agreement and that does not require any stamp.
However, if there is any document which amounts to an agreement or a memorandum of an agreement, it certainly requires to be stamped. (Registration is not compulsory - but stamping is a must).
Pl. see Article 5 (c) of Indian Stamp Act, 1899 which relates to "Agreement or Memorandum of Agreement" - if not otherwise provided for.
Various State Governments have prescribed varying rates of Stamp Duty.
In Andhra Pradesh for Agreement or Memorandum of An Agreement not otherwise provided for:
(A) (i) Where the value does not exceed Rs. 5000/- Rs. 10/- (ii) Where it exceeds Rs. 5000 but does not exceed Rs. 20000/- Rs. 20; (iii) where it exceeds Rs. 20000 but does not exceed Rs.50000/- Rs. 50; and (iv) where it it exceeds Rs. 50000/- Rs. 100.
(B) If relating to construction of a house or building ... 5 Rupees for every one hundred rupee or part thereof on the market value of the estimated cost of the proposed construction ...
(C) In any other case - Rs. 100/-

In Assam and Manipur - it is 5 Rupees - for Agreement or Memorandum of an Agreement if executed for service or for performance of work in any estate ... If not otherwise provided for it is Rs. 10/-
Likewise many States have prescribed stamp duty rates.
Sankaranarayanan (Expert) 04 January 2018
i endorse expert mr mahajan suggestion
R.Ramachandran (Expert) 04 January 2018
Unfortunately, Legal propositions do not get resolved on the basis of number of endorsements one gets, but on sound legal reasoning.
P. Venu (Expert) 04 January 2018
Yes, Contract Act do not prescribe any standard form or stamp or stamp paper. However, certain specified forms of Contracts and agreements require them to be stamped> otherwise such agreements will not received in evidence in a Civil Court; and they liable to be impounded.
SANJAY SINGH (Querist) 04 January 2018
Request further view as not covininced due to contradictory views by Experts.
J K Agrawal (Expert) 05 January 2018
Dear Experts.
I endorse your valuable opinion and Let me try to clear the issue in simple words.
1- In General an agreement not required to be in writing.
2- But in some conditions, it requires written as per section 10.

(10. What agreements are contracts

All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Nothing herein contained shall affect any law in force in India, and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents.)

3- A written Contract is must as per section 25 of the Indian Contract Act.

(25. Agreement without consideration, void, unless it is in writing and registered or is a promise to compensate for something done or is a promise to pay a debt barred by limitation law -

An agreement made without consideration is void, unless -

(1) it is expressed in writing and registered under the law for the time being in force for the registration of documents, and is made on account of natural love and affection between parties standing in a near relation to each other; or unless.

(2) it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do; or unless. (3) it is a promise, made in writing and signed by the person to be charged therewith or by his agent generally or specially authorised in that behalf, to pay wholly or in part debt of which the creditor might have enforced payment but for the law for the limitation of suits. In any of these cases, such an agreement is a contract.

Explanation 1 : Nothing in this section shall affect the validity, as between the donor and donee, of any gift actually made.

Explanation 2 : An agreement to which the consent of the promisor is freely given is not void merely because the consideration is inadequate; but the inadequacy of the consideration may be taken into account by the Court in determining the question whether the consent of the promisor was freely given. )

4- As per section 28 an Arbitration Agreement must be in writing only.

5- It concludes that as per section 10 other laws are superseding to the Contract Act in matter of written or oral agreement controversy.

6- So many Acts requires that some specific agreement should be in writing only. Like Stamp Act, Registration Act, Insurance Act, Negotiable Instruments Act and many other Acts.
7- The Stamp Act provide a list of documents which required to be stamped and at the rate specified in that Act.
8- The Registration Act provide that which document require compulsory registration. Certainly it should be written only.
9 As the both act very state to state so a fix example can not be given here but I refer Indian Stamp Act. As per Article 5, if an agreement is written, it compulsorily requires Stamp. Almost the same provision is in every state.
(1
[5. AGREEMENT OR MEMORANDUM OF AN
AGREEMENT—
(a) if relating to the sale of a bill of exchange;
Two annas.
Subject to a maximum of ten rupees, one anna
(b) if relating to the sale of a Government security
or share in an incorporated company or other body
corporate;
for every Rs. 10,000 or part thereof of the value
of the security or share.
(c) if not otherwise provided for Eight annas.)

10- Conclusion is that if your agreement requires to be written by any law other than contract act, it should be in writing.
11- If your agreement is written however it is required in writing or not, It may attract stamp duty also.

Welcome further knowledge.

PS. It is highly and humbly expected that Experts should update their personal information so that readers can understand his expertness level else they should refrain to answer a query or endorse something.

J K Agrawal (Expert) 05 January 2018
Respected Mahajan Sir
So many advocates may be Bogus but a few are not.
I am not saying it about you. You are much senior and respectable to me.
Regards
SANJAY SINGH (Querist) 05 January 2018
Sir, Please make me understand why prevailing practice of getting an Agreement on Judicial Stamp is limited to work/service/consultancy contract etc. and is not used in case of contract for Supply of Goods.

Example: If I place a order for supply of goods on Flipkart/Amazon website based on the information provided on their website and due to any dispute I go to court then due to unavailability of contract agreement, will my case not admissible ?
Vijay Raj Mahajan (Expert) 05 January 2018
Mr J.K. Agrawal,
Why you name me as bogus lawyer when I have not named you, You talk about written contract u/s 25 of the Indian Contract Act, where read it yourself it speaks of agreement WITHOUT consideration is VOID unless written and REGISTERED. No where the section 25 say all the contracts have to be written?
Secondly even if the agreement or contract is in written form no where it is mentioned that it has to be on Non-Judicial Stamp paper unless it has to be registered. The Registration Act does not say all contracts have to registered under the Act. Registration of any Contract is optional and if parties want to register the written contract it has to pay stamp duty as applicable.
The Indian Contact Act applies to all Contract In India.
Better check your own facts clearly then talk here.
Vijay Raj Mahajan (Expert) 05 January 2018
Sanjay Singh,
If each and every daily routine transactions are done in written form contract and that too is NJ Stamp Paper than the whole business will come to stand still in India. The concept of going for written form of contract is just done to keep record of the transaction between parties. The buying online through Flipkart/Amazon is also recorded on your system and payment made by you is also have bank account details at your end. In case of litigation the electronic records of the contract/payment etc, between the buyer and seller is admissible under the Indian Evidence Act and sufficient proof of the contract between both parties.
R.Ramachandran (Expert) 05 January 2018
Dear Mr. Sanjay Singh,
There are only certain instruments which require stamp duty, not all.
While there may and can be written agreement in regard to sale and purchase, specification etc. etc. and other conditions attached to it, relating to goods and merchandise, the same is specifically exempted from stamp duty vide Article 5 of the Indian Stamp Act. That is why there is no practice of getting an agreement in Stamp Paper in regard to contract of supply of goods.
As regards your query, whether in the absence of contract, one will not be able to approach Court in case of any dispute with regard to purchase effected through Amazon/Flipkart etc., the answer is an emphatic NO. One can approach the Court (in this case consumer courts) in such cases, in spite of there being any contract agreement, provided there are other evidences to prove ones claim.



You need to be the querist or approved LAWyersclub expert to take part in this query .


Click here to login now



Similar Resolved Queries :





Post a Suggestion for LCI Team
Post a Legal Query