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How are agreements and deeds different?

Commercial agreements require a lot more than just a handshake.

For organisations that are regularly signing commercial contracts, it is incredibly important to understand the variations between types of document. Failing to understand the differences may make it much harder for your company to operate, especially if it means they are unwittingly bound to meet certain obligations.

To help, here is a breakdown of the difference between an agreement and a deed.

Agreements

An agreement is a contract that contains a number of key parts. The agreement will contain an offer that both parties need to accept, along with an intention that the end result is legally binding.

What's more, an agreement requires some exchange to take place, so that the promise to perform certain actions is met by a corresponding payment of some kind.

Deeds

While agreements require both parties to authorise them in order to be legally binding, a deed is binding on the party who drafted it without requiring a mutual exchange. As long as the document has been signed and delivered to the other parties then it will be legally binding.

Deeds can be used to address a number of different legal processes, including creating a binding obligation on one person or conferring a certain right, to purchase property for example.

Crucially, a deed in Queensland requires a section that specifically states it is a deed, so that there is no room for confusion. If a document is a deed, this will also be expressed in its construction with certain passages reflecting the legally binding nature of this agreement.

With deeds only being used in specific conditions, it is important to have a commercial lawyer involved in the process of drafting any legal document. They will be able to advise on the best way to structure a contract to avoid confusion and ensure that both parties are aware of their obligations.