A contract under seal, or a deed, is a written document that, when “sealed”, is distinguishable from a contract. A deed is a formal document that gives the clear indication that a person or entity gives its most sincere promise that they will fulfil contractual obligations. A deed has the legal of effect of either:
- Transferring an interest or a right in property;
- Creating an obligation that is binding on a person or legal entity; and/or
- Confirming an act where an interest, right or property has already passed.
Historically, the requirements that set a deed apart from other legal agreement instruments was its form, legal effect and delivery. A deed, under the common law, was required to be in writing, on paper (or parchment or vellum), sealed and delivered in order to give the desired legal effect.
The form of deeds has been significantly altered by statute and the common law requirement of sealing the deed (which was once essential for the deed’s validity) is no longer is mandated. Sealing meant that a party would fix their wax seal to the deed and do an act that either expressly or impliedly acknowledging that the seal belonged to them (e.g. by expressly stated).
In New South Wales, section 38(1) of the Conveyancing Act 1919 (NSW) has altered the traditional form of a deed and states that:
“Every deed, whether or not affecting property, shall be signed as well as sealed, and shall be attested by at least one witness not being a party to the deed, but no particular form of words shall be requisite for the attestation”.
Signing (and sealing)
The key change from the traditional approach is that so long as the deed has been signed by either an individual or by a company (in accordance with section 127(3) of the Corporations Act) and witnessed by a person who is not a party to the deed, there is no requirement that it be sealed (see section 38(3) of the Conveyancing Act 1919 (NSW)).
Another key formal aspect of the process of executing a deed is ‘delivery’. In this context, delivery does not have the meaning in the physical sense. But it does require that the legal person who is executing the deed has a clear intention to be bound by the instrument operating as a deed. A common practice is for the execution clause of a deed to begin with the words “executed as a deed” which conveys the requisite intention to be bound.
There are two main types of deeds:
- Indenture – made between two or more parties with each party representing different interests (e.g. deed of release and settlement); and
- Deed poll – made by one or more persons (usually only one), however each party representing the same interest (e.g. power of attorney).
For further information, read our blog post: What is the difference between a deed and an agreement?