deeds

In order to form a legally binding agreement in England, contractual consideration is required. Deeds however do not require consideration in order to be enforceable. Using deeds avoids the possibility of the agreement not being unenforceable for a total failure of consideration, past consideration or inadequate consideration.

Use of Deeds

Traditionally, deeds were used to (1) transfer an interest, legal or equitable right or property, (2) create a legal obligation intended to be enforceable on one or more, or all of the parties, and (3) confirm some act by which an interest, right or property has passed. Up until 1990, deeds were required to be signed, sealed and delivered.  Exceptions and presumptions have now been made to these historical rules.

The Law of Property (Miscellaneous Provisions) Act 1989 relaxed most of the formal requirements. Certain formal requirements remain in order for a document to be enforceable as a deed. Modern law does not restrict the matters upon which a deed may be made; deeds are no longer required to be sealed in most circumstances (most importantly, when signed by individuals or companies), provided that they are witnessed by a person who attests the signature, and the document states that it is intended to be a deed. The deed must also be delivered.

A deed is either deed poll or an indenture.  Deed poll is a deed signed by one person expressing an intention or a number of persons expressing the same, common intention. The other, more common form is an indenture which records an agreement or intention that is not common in the sense required by a deed poll.

Transactions which require deeds include contracts to create powers of attorney, transfers of the legal estate in land, grants of mortgages, and grants of the power of sale to mortgagees and chargees. Deeds may be used when there is uncertainty in respect to whether the contract will be supported by consideration, in cases such as:

1. variation of contracts where there is benefit only to one party;
2. where a guarantor is to guarantee payments to a financial institution;
3. where security is to be released;
4. assignments of intellectual property; and sometimes
5. settlement of disputes after litigation has been commenced.

There is no necessity to use a deed to amend a deed. The reason for this is the deeds are themselves contracts, and able to be amended if the usual requirements for variations to the contract are satisfied.

Formal Requirements

A properly drawn deed should contain:

1. Introduction: The parties names and addresses and the type of deed which follows;
2. Recitals: Usually commences with the word, "Whereas". The recitals are used to explain the purpose of the deed and/or the circumstances leading up to its execution, to give the document context.
3. Operative provisions: These are the provisions that supplement the purpose of the deed, whether promises, the intentions of the parties and/or the agreement recorded. The section commences with the words "Now this deed witnesseth as follows"
4. Testimonium: The space provided for the parties to sign, which commences with the words, (1) "In witness whereof" or similar appropriate wording, and (2) "Signed, sealed and delivered" or "Signed and sealed" or some other appropriate form of words.
5. A clear and unambiguous statement that it is a deed.

Although deeds may be sealed, it is no longer a formal requirement, other than for body corporates.

Deeds executed by individuals must also be witnessed by an independent third party. In the case of companies, two authorised signatories must sign the deed, or an authorised signatory and a witness who attests the signature. The authorised signatories include the directors and the company secretary, if the company has appointed a secretary. In the event that the deed is to be signed by the same person in different capacities (for instance, in the capacity of an individual and qua director), the document must be signed separately in each of those capacities.

Deeds may be executed by foreign companies (1) in any manner permitted by the law of the country in which the company was formed, or (2) by two persons who are authorised to sign in accordance with the laws of the country in which it was formed or two persons who act with the authority of the company (expressly or impliedly).

Sealed: means the seal of a company or other entity. Deeds must still be sealed by corporations sole.

Delivery: historically, this meant that the document must be communicated in writing by the person signing it or an authorised agent, such as a solicitor, certified notary public or licensed conveyancer. Under the Companies Act 2006, once a document is signed it is presumed to be delivered where the words "signed and delivered as a deed" appear. Once a deed is delivered, it cannot be withdrawn by a party unless a condition precedent appears in the text of the document itself.

Further Benefit of Deeds

Ordinary commercial contracts are subject to a limitation period of 6 years. Deeds are enforceable for 12 years from the date of the breach.

Download: Example Draft Deed