CONTRACT-BREACH OF TERMS

Published by The Daily Star on 17th September, 2011 (Link Above)

This week Your Advocate is Barrister Omar Khan Joy, Advocate, Supreme Court of Bangladesh. He is the head of the chambers of a renowned law firm, namely, ‘Legal Counsel’, which has expertise mainly in commercial law, corporate law, family law, employment and labor law, land law, banking law, constitutional law, criminal law, IPR and in conducting litigations before courts of different hierarchies.
Our civil and criminal law experts from reputed law chambers will provide the legal summary advice.

Query
With my friend Mamun, I have made a deed of agreement. Under this agreement, Mamun has agreed to pay my money (Tk 2 Lac) which is due to him within August 30 but he did not pay it yet. The deed has signed by us and two witnesses but there was no authentication from legal practitioner. Now what would be the legal value of this deed of agreement and if I want to file a suit to recover my money what procedure have to follow?

Roni
Satmasjid Road, Dhaka

Response
Thank you very much for your query to the Daily Star’s Your Advocate column. From your query it appears that you and your friend have entered into an agreement whereby your friend has agreed to pay you Tk. 2,00,000.00 within August 2011. But, he did not pay the due amount within the stipulated time. The agreement was duly signed by the parties and witnessed by independent witnesses. Now you are desirous to know whether the agreement is enforceable under the laws of land.

Generally as per the Stamp Act a contract has to be executed in Tk. 150.00 non-judicial stamp paper. However, it is not apparent from your query whether this requirement has been met.

On the other hand, the agreement was properly signed and witnessed. Therefore, the agreement may be treated as valid agreement even if it is not executed in non judicial stamp paper. Non compliance with the requirement of stamp duty does not automatically make the agreement invalid. The only difficultly is, in case the matter has to resort to the court, the court may refuse to admit the agreement as evidence for want to compliance to the Stamp Act. The court may however, admit it by imposing a fine.

Secondly, from the given facts it is not clear why does your friend owe you the amount. If you have given a loan to your friend and have claimed interest on that, the agreement may be considered void for illegality. None other than the Banks or the financial institutions is entitled to give loan against charging interest. If, on the other hand, no interest has been claimed on the loan amount or the money s payable for some other lawful reason there would be no such problem. The agreement can be treated as valid unless it was made for any illegal purpose.

Considering this agreement as valid it can be said that the agreement is enforceable. After analyzing all the aspects including the amount of loan it is suggested to pursue him both verbally and in writing. After assessing his reply, you can serve a Legal Notice for repaying the amount. If he did not take any initiative to repay the loan after receiving the Legal Notice then you can file a money suit before the court. Assuming that the contract was made in Dhaka you should file the money suit before the District Court in Dhaka. As the amount in issue is not very significant, I would suggest you to go to the court only as the last resort.

Hope this answer will help you to take the next course of actions.

For detailed query contact: omar@legalcounselbd.com.