Ever wondered why these two animals exist? Here's
the short version of what distinguishes deeds from agreements, and
the reasons you might want to choose one over the
Agreements are documents that set out 'bargains' made
between parties where one party promises something to the other
party in exchange for something else. The giving of a promise under
these circumstances is often referred to as
'consideration'. Deeds however are a type of promise or
commitment that doesn't require anything in return. If
you're receiving a gift and want to be able to enforce the
promise, you need it written into a deed.
But wait! There's more.
To be properly signed, deeds have to be (in the words of Stevie
Wonder) 'signed, sealed and delivered'. This has boring
historical origins, the knowledge of which would only be useful to
the parchment workers union, so we won't go into that here.
What you actually need to know is that the signing of deeds is
dealt with under State legislation so it's always best to check
local State requirements to make sure you've signed your deed
But wait! There's even more.
Deeds are subject to longer limitation periods than agreements.
Claims following a breach of contract must generally be commenced
within 6 years from the breach occurring. By contrast, claims
following a breach of a deed can be made within 12-15 years
depending on the governing law of the document. This extended
limitation period might make a deed the much better choice for
certain types of commitments like confidentiality obligations, the
termination of agreements or financial guarantees.
Overall we think deeds are pretty great, but they can be a
little fussier to draft. If you decide to sign a document as a
deed, make sure that the document, at a minimum:
is clearly described as a deed;
does not use language or concepts typically found in
agreements, like 'consideration'; and
sets out the conditions for delivery to the other party, as
this will be the final step in ensuring that your deed is
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We discuss whether certain clauses commonly found in ordinary commercial contracts could be considered to be penalties.
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