May 9, 2022
When it comes to deeds, the devil is in the details. The effect and execution of these documents are significantly different to contracts or other agreements and careful consideration should be given to whether the outcome you are seeking aligns with the document you are signing.
Over the next three weeks this article series will explore:
- the general operation of a deed and when they typically arise during construction projects (Part 1);
- commonly used deeds within the construction industry, including deeds of assignment, novation and variation (Part 2); and
- key considerations to make when drafting deeds of settlement and release.
What is a Deed?
A deed is a type of legally binding promise which requires specific formalities that must be complied with to ensure its validity and enforceability. These formalities include:
- deeds must be executed in writing and signed;
- attested (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; and
- supported by evidence that the parties intended to execute the document as a deed and be legally bound by it.
Differences between Deeds and Contracts
When determining whether to use a deed or contract it is important to consider the differences to ensure the enforceability of the agreement and success of a project or transaction.
There are three core differences to consider:
- Deeds must be in writing whilst contracts do not necessarily need to be written (unless specified by statute) to be valid and legally binding.
- Contracts require consideration to be valid whereas deeds do not.
- The limitation period applied under State and Territory legislation is double, or more, of that applicable to contracts (6 years), for example, in Queensland, the limitation period for deeds is 12 years.
When to use a Deed
Deeds are an effective tool to use in situations where concerns arise regarding the existence of consideration and/or when a party or parties wish to make it more difficult to ‘get out’ of their obligations.
Within the construction industry, deeds are used for various purposes, including to:
- transfer legal rights and obligations to another party;
- formalise the terms of an agreement to settle a dispute;
- discharge an existing subcontract and enter a new one on the same terms; or
- formalise an agreement for one party to be responsible for and cover any loss or damage incurred by the other.
Lamont Project & Construction Lawyers
The LPC team has extensive knowledge regarding the operation of deeds and their applicable use in matters. Further, our team has experience and a comprehensive understanding of the intricate risks related to deeds. With this knowledge and experience, LPC Lawyers can provide the required support and advise on major projects with respect to whether a deed is the appropriate legal mechanism for your specific needs.
If you would like to discuss any matters raised in this article as it relates to your specific circumstances, please contact Lamont Project & Construction Lawyers.
The content of this article is for information purposes only; it does not discuss every important topic or matter of law, and it is not to be relied upon as legal advice. Specialist advice should be sought regarding your specific circumstances.
Contact: Peter Lamont or Quinn Hironaka
Email: [email protected] or [email protected]
Phone: (07) 3248 8500
Address: Suite 1, Level 1, 349 Coronation Drive, Milton Qld 4064
Postal Address: PO Box 1133, Milton Qld 4064