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Legal Contracts

(Querist) 07 September 2009 This query is : Open 
What is the validity of a commercial contract entered between two parties by exchange of letters such as offer and acceptance with terms and conditions set out therein BUT not executed in a Stamp Paper. Will it make such contract not enforceable in courts of law ???

Thank You !riven

R.R. KRISHNAA (Expert) 07 September 2009
It is not necessary that every commercial contract should be made in the form of agreement. Communications by letter and reply letters form a contract by themselves. The terms and stipulations stated in the letters itself would be binding upon the parties. Hence it is enforceable.riven
kennii (Querist) 07 September 2009
Thanks for the immediate feedback. Will you please tell me when such a contract is required to enter into an agreement in proper stamp paper. If it is in the form of an agreement will it make a difference or same ?


R.R. KRISHNAA (Expert) 07 September 2009
It is better if it is made as a agreement so that rights and liabilities are clearly spelled out.riven
kennii (Querist) 07 September 2009
Dear Mr. Krishna

Thanks for your valuable advise. One more query in the same line is , a business agreement signed by both parties executed in a plain paper and not in stamp paper, how far can it be binding and enforceable in courts of law ?

AEJAZ AHMED (Expert) 07 September 2009
Dear Kenni,

Any Agreement Or Contract reduced in writing and signed out of free will and consent of both Parties is enforceable in the court of law.

If the particular contract requires Stamp Duty in accordance to the Stamp Duty and Registeration Act and that document is on plain paper, still the document does not become invalid or void. The Court may On application of concerned party impound such document and send it to the District Registrar of concerned dist to collect the requisite stamp duty with penalty and such document becomes a valid legal document.

Therefore the Business Agreement executed on plain paper, signed by both parties will hold the legal sanctity.

kennii (Querist) 07 September 2009
Dear Mr. Ahmed

Thanks for your valuable reply. It resolves many confusions.

Thank !!!riven
Prakash Yedhula (Expert) 07 September 2009
Section 10 of the Indian Contract Act is self explanatory.

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.riven

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