What Is A Deed?
By Hailey, published: 2023-11-13
Deeds are distinct legal documents that impose additional legal obligations, and specific scenarios necessitate using deeds over simple contracts.
The nuance between a deed and a standard contract executed underhand is often overlooked but is a critical point to comprehend before engaging in any transaction.
What is the purpose of a deed?
In UK jurisprudence, a deed is a legal document that transfers, affirms, or validates an interest, right, or property and is characterised by being signed, witnessed, and delivered.
Deeds are predominantly employed in significant transactions, like conveying an interest or property from one individual to another.
Examples of deeds
Examples of deeds vary widely, encompassing numerous types of legal transactions. Beyond the well-known conveyancing deeds in property dealings, other forms include:
- Partnership Deed: This legal document outlines the rights and responsibilities of the partners of a business, the terms of the partnership, and details of profit and loss distribution.
- Deed of Accession: Often used when a new individual or entity agrees to become a party to an existing series of agreements or contracts by adhering to the current terms and conditions.
- Deed of Adherence: Similar to a deed of accession, this document is used when a new party is joining an existing agreement, such as a shareholders’ agreement, and needs to agree to the same terms as the current members.
- Deed of Novation: This is used to transfer the contractual obligations and rights from one party to another, effectively replacing one of the original parties to the contract with a new party.
To execute any deed, the document must capture the signatory’s mark in the designated ‘execution’ section towards its conclusion.
Moreover, the execution must be witnessed, with the witness providing their full name and home address next to the signatory’s mark, usually just below it. The witness’s signature should be legible and written to authenticate the transaction and the signatory’s identity when needed.
To preserve the deed’s integrity, the witness should not be closely related or connected to the signatory.
In addition to the examples provided, deeds are also instrumental in:
- Assigning intellectual property rights between associated companies.
- Enacting non-disclosure agreements to ensure the confidentiality of sensitive information.
- Documenting agreements reached post-dispute.
- Issuing financial guarantees or letters of credit.
- Transferring property, evident in the sale of a house.
The difference between a deed and an agreement
Contracts, or agreements, are established through an offer, acceptance, and a definitive intention to develop legal relations, confirmed by the consideration given in exchange for an offer, typically monetary.
In contrast, deeds do not necessitate consideration to be legally valid, as their formality signifies the intent to be legally bound.
Delivery and execution of a deed
To enact a deed, it must be signed, witnessed, and delivered. The modern interpretation of ‘delivery’ implies an intention to be bound by the deed, such as handing over property keys or demonstrating another binding action.
Commercially, a company may execute a deed with the signatures of two directors or a director and the company secretary without the need for a witness or the other party’s signature, thereby making the deed legally binding upon execution.
What does a deed look like?
A deed is a formal document, and its presentation reflects its importance.
Typically, it is titled as a ‘Deed’ at the outset to differentiate it from other legal documents. Here are the key elements that constitute the physical appearance and structure of a deed:
- Title: The document is clearly labelled as ‘Deed’ at the top, often followed by the specific type of deed, such as ‘Deed of Sale’ or ‘Deed of Trust’.
- Parties: The deed identifies all the parties involved, using their full legal names and addresses, and defines their roles (e.g., ‘Grantor’ and ‘Grantee’ in a property transfer).
- Recitals: This section provides the background information necessary for understanding the deed’s purpose. It may describe the history of the property or the reasons for the deed’s execution.
- Operative Part: The core of the deed, this section includes the precise details of the transaction, such as the rights, interests, or properties being conveyed or affirmed.
- Testatum: This part begins with ‘Now this deed witnesseth’, leading into the agreement’s specifics and each party’s obligations.
- Execution Block: It is a clearly defined space at the end of the deed where the parties will sign and date the document. It may also include statements indicating the parties’ intention to be legally bound by the deed.
- Witness Section: Adjacent to the execution block, this section is for the witness to sign, indicating that they have observed the signing of the deed. It includes space for the witness’s name, address, and the date of witnessing.
- Attestation Clause: Sometimes included as part of the witness section, this clause confirms that the deed has been properly executed in the presence of the witness.
- Annexures or Schedules: If the deed refers to additional documents or lists that are too lengthy to include in the main body, they will be attached as annexures or schedules.
- Notarisation: In some cases, a deed may be notarised to authenticate the document further. This involves a notary public witnessing the signing and affixing their seal.
- Seal: Historically, a physical wax seal was used, but now a company seal or the phrase ‘signed, sealed, and delivered’ is often enough to signify the deed’s completion.
- Formatting: Deeds are typically drafted with particular attention to composition, including numbered paragraphs, indented recitals, and sometimes printed on high-quality paper to signify the document’s significance.
- Language: The language used in a deed is formal and precise, with terms of art with specific legal meanings.
A deed’s physical appearance and contents are designed to ensure clarity, formality, and legal efficacy. Each component plays a crucial role in the deed’s function and enforceability.
Advantages of a deed
Utilising a deed offers extra assurance due to the witnessing requirement, making contesting the document’s legitimacy or signing challenging. The absence of consideration as a necessity makes a deed binding without the traditional value exchange, an appealing aspect for certain parties.
Limitation period for deeds
Deeds have a 12-year enforcement period for breaches, double the six years for standard contracts. Limitation periods safeguard defendants from outdated claims, where administering justice might be problematic due to the elapsed time.
Deeds, with their unique binding nature, are essential in high-value transactions to exhibit a formal commitment.
For advice on whether a deed or agreement is more suitable for your next endeavour, seek guidance from Zegal’s experienced team.