Australia: Doing The Deed: A Deed, Standard Contract OR Agreement ?

Last Updated: 3 November 2008
Article by Alex Hartmann

Making the right decision on whether to use a deed, standard contract or an agreement can make a significant difference to the success of a transaction or project. In this article we look at the differences between all three, and conclude that there are particular benefits obtained by executing a deed including extended limitation periods and the ability to avoid challenges on the existence of 'consideration'. These benefits can make the use of deeds preferable to at least one of the parties in certain transactions.


Contract law requires that a 'standard' contract fulfil each of the following preconditions:

  • Offer.

  • Acceptance.

  • An intention to create binding legal relations.

  • Consideration. Consideration is the requirement that something of value must be exchanged or given in return for the promise by the other party to fulfil its obligations under the contract (for example, the payment of money for the performance of services). A unilateral promise (such as 'I will give you $1 million'), unsupported by consideration, is not a binding or enforceable contract.


A deed is a mechanism for creating a binding commitment or promise, with particular benefits in cases where the existence or passing of consideration is unclear and also for their obligations to be legally enforceable for an extended period. For example where A promises a gratuitous gift to B.

The deed can be used to pass a right or property, to create a binding obligation on a party or to be an affirmation of something which passes a right or property. Deeds must be:

  • In writing.

  • Signed.

  • Witnessed by at least one person who is not a party to the deed.

  • Expressed to be a deed.

  • Delivered to the other party/parties.

  • Supported by evidence that the parties intended to execute the document as a deed and be legally bound by it.

Deeds poll

A 'deed poll' is a deed made by one person in favour of a particular entity or class of entities. For example a building contractor working for a principal that is leading a site, may give a deed poll in favour of the owner to say that the building contractor will comply with the conditions of the lease.


Strictly speaking 'agreement' is a term used to describe a meeting of the minds between two parties. The existence of agreement is a precondition (but not in itself sufficient) for the existence of a contract, which requires each of the elements of a standard contract, for example an offer, acceptance, an intention to create binding legal relations, and consideration.

Generally all contracts are agreements, however all agreements are not necessarily legally enforceable contracts. An example of an agreement is where two friends agree to meet at a particular time and place for coffee.

In order for this promise to be a contract there would need to be consideration and an intention to be legally bound to the promise and consideration.

There are three basic differences between deeds and contracts.

Firstly, the existence of consideration is not required for a deed to be legally binding, unlike a contract. For example:

  • A promises a gift to B (who provides no consideration in return).

  • A (a parent company) agrees to pay C on behalf of its subsidiary company, B provides no consideration in return for C providing services to B.

In both scenarios, B would not be able to enforce the promise under a normal contract as it provided no consideration. However, if the agreement was made as a deed, B is entitled to enforce the terms of the promise.

Secondly, there are extended limitation periods in relation to enforcement of rights under deeds (see further below). Thirdly, a person executing a deed is also prevented (estopped) from denying facts stated in the deed.

Extended limitation periods under deeds

Each of the States and the ACT have specific legislation providing a six year limitation period in relation to claims for breach of contract. The limitation period runs from the date on which the cause of action accrues. In the Northern Territory, the equivalent limitation period for breach of contract is only three years.

In contrast, the limitation period under deeds is significantly longer, ranging between 12 and 15 years as set out in the table below:

Table 1: Statutory limitation periods for deeds










Limitation period

under a deed in years









'Long stop' limitation periods in relation to building claims

Legislation in each State and Territory, (except for Queensland and Western Australia) creates a 'long stop' limitation period for 'building actions', which overrides most other limitation periods (for example, for negligence, breach of contract and under deeds). In each case, the 'long-stop' limitation period is 10 years.

While the legislation differs between the States and Territories, each contains a specific definition of 'building action', and/or 'subdivision action' in relation to which this 'long stop' limitation period applies. Generally, the limitation period runs from the date of the occupation certificate for the relevant structure. Note that this legislation applies solely to claims falling within the definition of 'building' or 'subdivision' actions.

Voluntary extension of limitation periods

Notwithstanding the statutory limitation periods applying to claims in negligence, contract and under deeds, contracting parties are generally free to agree a voluntary extension or shortening of the relevant limitation periods in their contracts. Careful drafting is required if this is intended by the parties, particularly in relation to whether any specific statutory prohibition exists in relation to extension of relevant limitation periods.

When does the limitation period commence?

The commencement of limitation periods in negligence, and for breach of contracts or deeds is a complex issue often dependent on the facts of each case, and is consequently not covered by this article.


In some circumstances, there is no choice but to use a deed (for example, for conveyances or leases exceeding three years for real property or for the appointment of an agent whose authority is given through a deed executed by the principal).

Deeds are also commonly used where there may be dispute about the existence of consideration such as financial guarantees, confidentiality and deeds of guarantee and indemnity. The advantage in executing these documents as deeds is that the enforceability of the documents cannot be challenged on the basis that no consideration has passed between the parties.

Deeds should therefore be viewed as the contract mechanism of choice where there may be doubt about the existence of consideration (for example, conferring benefits on third parties or where an obligation is undertaken in return for past consideration that has already been provided when the reciprocal obligation is entered into).

Phillips Fox has changed its name to DLA Phillips Fox because the firm entered into an exclusive alliance with DLA Piper, one of the largest legal services organisations in the world. We will retain our offices in every major commercial centre in Australia and New Zealand, with no operational change to your relationship with the firm. DLA Phillips Fox can now take your business one step further − by connecting you to a global network of legal experience, talent and knowledge.

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication.

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