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Is An Unstamped Contract or Agreement Valid in Malaysia?

Is An Unstamped Contract or Agreement Valid in Malaysia by TYH & Co. Trusted Litigation Lawyer in KL Selangor Malaysia

Is An Unstamped Contract or Agreement Valid in Malaysia?

Many believe that a contract is invalid in Malaysia because it is not stamped. Conversely, some would believe that it is acceptable to not make payment of the stamp duty to save money. So, is an unstamped contract or agreement valid in Malaysia?

What is the law governing stamping of documents?

Under Section 52 of the Stamp Act 1949 stipulates that documents that fall under the First Schedule of the Act must be duly stamped by the Inland Revenue Board of Malaysia.

Under the Act, if you fail to stamp the documents within the period stipulated, you will be liable to pay for the unpaid payable duty together with the penalty imposed under the Act.

  1. 00 or 5% of the amount of the deficient duty, whichever sum be the greater, if the instrument is stamped within 3 months after the time for stamping;
  2. 00 or 10% of the amount of the deficient duty, whichever sum be the greater, if the instrument is stamped later than 3 months but not later than 6 months after the time for stamping; or
  3. 00 or 20% of the amount of the deficient duty, whichever sum be the greater, in any other case (if the instrument is stamped beyond six months after the required time for stamping)

What does case law say about unstamped documents?

In Federal Court case of Malayan Banking Bhd v Agencies Service Bureau Sdn Bhd & Ors (1982) 1 MLJ 198 where it was held that unstamped instrument only affects the admissibility of the instrument in evidence, but it does not render that particular instrument to be invalid. The Court further held that “the stamp objection really relates to the safeguarding the government revenue, unless if the non-stamping goes to the root or validity of the instrument or the case is on a revenue dispute.”

Conclusion

Based from the above proposition that an unstamped document does not render it to be invalid and it only affects the admissibility of the document as evidence in Court.

The information in this article is intended only to provide general information and does not constitute professional advice or legal opinion. Please consider seeking legal advice and/or other professional advice and assistance in relation to any particular matter you or your organization may have.

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