A deed is a type of agreement, but it is considered a more formal and more sincere form of promise. This article explains what a deed is and discusses some of the important differences between a deed and an agreement.
Author: Farrah Motley, Legal Principal of Prosper Law.
Deeds do not require consideration
Unlike an agreement, a deed does not require consideration (which is an important element of a binding agreement) in order to be binding. That is, a deed can bind someone to a promise without the exchange of something (usually money).
An example of the use of a deed without consideration is where one party agrees to keep certain information confidential, without receiving anything in return.
Binding on a party who signs
It is said that a party who executes a deed is intending to make the most serious indication to the community that she or he really means to do what has been agreed between the parties.
Because of this, a deed is binding on a party when they sign the deed in accordance with the relevant requirements (see below), rather than when all parties have signed the deed (as with an agreement). This was explained in Vincent v Premo Enterprises (Voucher Sales) Ltd [1969] 2 QB 609.
In 400 George Street (Qld) Pty Ltd v BG International Ltd [2010] QCA 245, the Queensland Court of Appeal confirmed that the use of the words in a document "executed as a deed" and "by executing this deed" clearly expressed an intention that the document was a deed rather than an agreement, and was held as such.
Limitation periods
The period of time in which a claim can be brought for the breach of a term of a deed is different to the time period a claim can be brought for breach of contract.
Each State and Territory has legislation dealing with the period of time in which a claims or actions can be commenced. They are:
in Queensland - the Limitation of Actions Act 1974 (Qld)
in New South Wales - the Limitation of Actions Act 1969 (NSW)
in Victoria - the Limitation of Actions Act 1958 (VIC)
in South Australia - the Limitation of Actions Act 1936 (SA)
in the Australian Capital Territory - the Limitation of Actions Act 1985 (ACT)
in the Northern Territory - the Limitation of Actions Act 1981 (NT)
in Tasmania - the Limitation of Actions Act 1974 (TAS)
in Western Australia - the Limitation Act 2005 (WA)
This table provides a snapshot of the different time limitations between each Australian State and Territory (to save you time trawling through legislation!).
Legislative formalities of deeds
The Common Law had previously specified that for a document to be considered a deed at law, the document needed to comply with the following formalities:
It needed to be written on parchment, vellum or paper;
A personal seal was put on the document; and
It needed to be delivered to the counterparty of the deed.
The requirements for a valid deed are now set out in State and Territory legislation, which do not require a deed to be 'sealed'. However, if one of those requirements are not met, the document is not enforceable as a deed, but may be enforceable as a contract.
Those requirements are, generally speaking a deed must be:
expressed as a deed (for instance, by adding "executed as a deed" above the signature block). In 400 George Street (Qld) Pty Ltd v BG International Ltd [2010] QCA 245, the Queensland Court of Appeal stated that where document contains the words “executed as a deed” and “by executing this deed” this clearly expresses an intention that the document is a deed and not an agreement;
in writing;
signed by the party and witnessed by someone who is not a party to the deed (or, in the case of a company, executed in accordance with the Corporations Act 2001 (Cth)); and
delivered to the counterparty. Executing a deed does not equate to delivery. In determining whether a deed has been delivered, the court will generally look at whether the party executing the deed intended to effect delivery and this can be inferred by the court from any fact or circumstance including words or conduct.
An example of the formalities required for deeds executed by individuals can be found in the Property Law Act 1974 (Qld), which states:
45 Formalities of deeds executed by individuals
(1) Where an individual executes a deed, the individual shall either sign or place the individual’s mark upon the same and sealing alone shall not be sufficient.
(2) An instrument expressed—
(a) to be an indenture or a deed; or (b) to be sealed; shall, if it is signed and attested by at least 1 witness not being a party to the instrument, be deemed to be sealed and, subject to section 47 , to have been duly executed.
(3) No particular form of words shall be requisite for the attestation.
(4) A deed executed and attested under this section may in any proceedings be proved in the manner in which it might be proved if no attesting witness were alive.
(5) Nothing in this section shall affect—
(a) the execution of deeds by corporations; or (b) how instruments are validly executed under the Land Title Act 1994; or (c) any deed executed before the commencement of this Act.
How can Prosper Law help?
If you need a deed that is robust, enforceable and easy-to-read, contact the team at Prosper Law.
We provide fixed-fee legal services to businesses across Australia.
Want to continue reading? Check out another of Prosper Law's articles about the enforceability of electronic signatures (including for deeds).
Author: Farrah Motley | Legal Principal
PROSPER LAW - A Law Firm for Businesses
M: 0422 721 121
A: Suite No. 99, Level 54, One One One Eagle Street, Brisbane Queensland Australia
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