What is a deed?

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.

This article explains what a deed is, according to Australian law.

Author: Farrah Motley, Director of Prosper Law and a commercial contract lawyer.

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.

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 in deeds

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 claims or actions can be commenced. They are:

1. in Queensland – the Limitation of Actions Act 1974 (Qld)
2. in New South Wales – the Limitation of Actions Act 1969 (NSW)
3. in Victoria – the Limitation of Actions Act 1958 (VIC)
4. in South Australia – the Limitation of Actions Act 1936 (SA)
5. in the Australian Capital Territory – the Limitation of Actions Act 1985 (ACT)
6. in the Northern Territory – the Limitation of Actions Act 1981 (NT)
7. in Tasmania – the Limitation of Actions Act 1974 (TAS)
8. 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:

1. It needed to be written on parchment, vellum or paper;
2. A personal seal was put on the document; and
3. 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 is not met, the document is not enforceable as a deed, but may be enforceable as a contract.

Those requirements are, generally speaking, that a deed must be:

1. 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 the 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;
2. in writing;
3. 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
4. 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?

Prosper Law is Australia’s online law firm. We provide legal advice to businesses and individuals across Australia. Our areas of legal practice include contracts, eCommerce, publishing, legal counsel and employment law.

If you need to talk to a commercial contract lawyer, get in touch today.

Contact the team at Prosper Law today to discuss how we can provide you with contracts legal advice for a fixed fee or at affordable hourly rates.

Enjoyed this article? Check out 5 Things Every Author Should Know About Publishing Law.

Farrah Motley | Director

PROSPER LAW – Australia’s Online Law Firm

M: 1300 003 077

E: farrah@prosperlaw.com.au

W: www.prosperlaw.com.au

A: Suite No. 99, Level 18, 324 Queen Street, Brisbane, Queensland Australia 4000