Deed (in the context of contracts)
A deed is a documentary legal instrument which conveys a binding promise or commitment on behalf of the executing party. It serves as an indication to the community that the executing party means to do what has been agreed upon. The content of a deed may vary, but often it will confer a legal or equitable interest in property or other rights, create a binding obligation on someone, or affirm an agreement that passes a legal or equitable interest in property or other rights.
Deeds are primarily differentiated from contracts in that they do not require consideration (a bargained exchange of value) to be validly constituted. Following the judgment of Lord Denning in the case of Vincent v Premo Enterprises, deeds become binding once they are signed, sealed, and delivered to the relevant parties, even if the parties haven’t executed the deed document.
In determining whether a document is a deed or an agreement, the court will look to the intent, and whether or not the document was intended to be immediately binding. If so, it will likely be classed as a deed.
Some common deeds include:
- Deed poll
- Escrow deed
- Letter of credit
- Financial guarantee
- Deed of confidentiality
- Indemnity deed
- Deed of termination
Some documents are required by law to take the form of a deed. Specifically, in some Australian states, conveyance of land must be made by deed in order to be valid.