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CS Professional · Drafting, Pleadings and Appearances · Drafting of Agreements, Deeds and Documents

An agreement between Nisha Exports and Omkar Logistics provides that 'the stamp duty on this agreement shall be borne equally by both parties'. The agreement is not any instrument specifically listed in Section 29 of the Indian Stamp Act, 1899. Why is such a clause appropriate in the body of the document?

Such a clause is appropriate because Section 29 of the Stamp Act applies only in the absence of an agreement to the contrary. The parties may therefore allocate the stamp expense between themselves, instead of relying on the default rule of the person executing the instrument.

  1. ASection 29 applies only in the absence of an agreement to the contrary, so the parties may allocate the expense themselvesCorrect
  2. BSection 29 forbids the parties from sharing stamp duty
  3. CThe clause is needed to make the agreement a valid contract under Section 10
  4. DThe clause makes the agreement registrable

Explanation

Section 29 begins with the words 'In the absence of an agreement to the contrary', so the default rule on who bears the expense of the stamp can be displaced by the parties' agreement. For an unlisted instrument the default would be the person making, drawing or executing it. The clause does not affect validity or registrability.

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