Lawyers sometimes choose to cast an agreement as a deed to
"be on the safe side". A recent decision of the Supreme
Court of Queensland shows that making an agreement into a deed is
not as easy as simply changing the execution block.
What you need to know?
The key points to take from the decision are:
Whether a document is a deed will depend on the parties'
intentions, simply using an execution block that states that a
document is a deed will not be sufficient to prove the parties'
deliberate intent that it operate as a deed.
If a document is intended to be a deed, then all of its
provisions must be consistent with the language of a deed
– that is, all references should be to a deed and not to
Negotiations should indicate the intention to execute a deed
(with its special characteristics) and this should be recorded in
writing - consider capturing this in the recitals.
Other key points to remember in relation to deeds:
Deed signatories need appropriate authority to sign the deed
– usually this means executing under section 127 of the
Corporations Act or having authority under a deed to execute
Once a deed is signed and delivered, it cannot easily be
withdrawn even if the other party has not executed the deed.
The decision in detail
The recent decision of the Supreme Court of Queensland, 400
George Street (Qld) Pty Limited v BG International Limited, BS
13481 of 2008, has considered the key differences between deeds and
The dispute concerned an office building at 400 George Street,
Brisbane. In late 2008, the landlords and developers (the
plaintiffs) and the tenant (the defendant) executed lease
documents. The documents were not executed at the same time. The
tenant executed the documents first. It then attempted to withdraw
from the transaction before it was informed that the landlords and
developers had executed the documents (it is unclear whether this
attempted withdrawal predated all of the parties executing the
document). The landlords and developers sought declaratory relief.
They argued that, by sending the unexecuted documents to the
tenant's solicitors for execution, the landlords and developers
had made an offer to contract which was accepted by the
tenant's execution of the documents. In the alternative, the
landlords and developers submitted that the tenant was bound by the
agreement for lease given that it was executed as a deed. The
question for the Court was whether or not the tenant was entitled
to withdraw from the transaction, and this question hinged on
whether the document in question was a deed or an agreement.
The Court found that no agreement had been reached between the
parties at the time the tenant sought to withdraw. Further, the
Court found that the parties did not intend for the agreement to
lease to be executed as a deed on the basis that:
the document began with the statement that the parties agree
"in consideration of, among other things, the mutual promises
contained in this agreement". In the court's view, the
opening references to "consideration" and an
"agreement" were inconsistent with the language of a
even though the execution page referred to the document being
"signed, sealed and delivered and executed as a deed",
the Court took the view that these words were not decisive. It was
necessary to examine the balance of the document and the
surrounding circumstances. The Court placed particular emphasis on
the reference to the inclusion of the words "in consideration
of ... the mutual promises contained in this agreement". In
the Court's opinion, this statement was inconsistent with the
landlords' and developers' argument that the tenant was
bound while the other parties were not
there was "ample consideration" for the tenant's
promises. Accordingly, there was no need for the document to be
executed as a deed
the tenant did not date the document, with the effect that some
of the promises made by the tenant, such as the provision of the
bank bond, remained undefined, and
at no stage in the negotiations between the parties or their
solicitors was there any suggestion that the document should
operate as a deed.
This decision indicates that lawyers need to give careful
consideration to whether a document really needs to take the form
of a deed. If the document does need to be a deed, then the
negotiations and the entire document need to reflect this.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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