CONTRACTS: WHY USE A DEED?

Study Unit CONTRACTS: WHY USE A DEED?

The following article about contracts executed as deeds is from ‘netlawman’, a UK-based legal- service website which aims to provide ‘real law in plain English’.

(A) My word is my bond “Sorry, but I do not trust you. Sign here.” The law at its most basic is that if you put your name to a document you are bound by it. Today you can also be bound by an electronic signature provided it is clear that you intended to be bound. Lawyers like certainty and safety, so they often use a deed because it costs nothing to do so, avoids the slightest risk, and adds an aura of “legal mystery”. Deeds are often used unnecessarily. This article explores the real differences between the two and explains when to use a deed.

(B) Creating a deed In any UK jurisdiction, a document need only be “signed as a deed and delivered” to be a deed. Signing as a deed requires those very words and the signature of the person “making” the deed. The signature should be on the document itself approximately in the space provided. The words of execution should name the signatory or otherwise make clear who has signed the document. For obvious reasons, the signature ought to be in ink or some other indelible medium. The signature should be witnessed. The witness must write his or her name and address below or very near the maker’s signature. The law says that the witness must “sign”. That means he must write his name. It does not mean that an illegible scribble is satisfactory. He is not a party to the document. He is there to be able to confirm at a later date, that the person who signed was the person named. So, an illegible signature would not help to find him! The witness must also add his private address - again to facilitate finding him later. The witness must not be a spouse or close relative; and best not a life partner either. Most deeds also use the word “deed” in their title. That is helpful, but not strictly necessary.

(C) Delivering a deed Long ago, it was necessary to confirm delivery by spoken words as well as by handing your deed to your counter party. Gradually, the process has become simpler. Now, all that is required is to demonstrate an intention to be bound by the deed in order for delivery to take place. You do not need spoken words. It is enough to hand over the keys, or take some other action indicating your intention. So, although “delivery” has become virtually taken for granted, it is still good practice to use the words “and delivered” in the attestation at the end.

(D) What are the advantages of a deed? Why use one rather than an agreement? • Signing as a deed requires a witness, and having a witness around makes it very difficult indeed for anyone to deny that such a document was properly signed and as to when it was signed. That was more important before the days of electronic communications, but the principle is the same today. • A deed is binding without “consideration”. That means one party (or maybe more than one if there are many parties) gives no value. • Deeds are often mistakenly used instead of an agreement under hand because consideration required in an agreement is assumed to be money or equivalent (market) worth. However, value is rarely a problem and shouldn’t be a deciding factor in whether to sign the document as a deed. Consideration can be any value, whether “a peppercorn”, or “one pound” or “the goodwill I know this gift will foster”. • You can have a single party to a deed. An agreement under hand requires at least two parties (because you cannot agree with yourself to do something). • You have twelve years in which to enforce the breach of a term in a deed. It is six years in an agreement under hand.