In Australia, the terms “deed” and “agreement” are often used interchangeably. However, there are significant differences between the two that you need to know about.
A deed is a binding legal document that requires the signatures of all parties involved and must be delivered to the other party to become effective. It is also referred to as a deed poll and is often used in situations where a more formal or solemn document is required. A deed is a promise that is made by one party to another, usually with a consideration, or benefit, being given in exchange. This consideration can take many different forms, such as money, assets, or services.
An agreement, on the other hand, is a less formal legal document that can be binding or non-binding depending on the intentions of the parties involved. Unlike a deed, an agreement does not require any formalities such as delivery or execution. An agreement can be made orally or in writing and can be as simple or complex as the parties require. An agreement can be considered binding if all parties intend to be legally bound by its terms and conditions.
One of the most significant differences between a deed and an agreement is the time limit for bringing legal action. A deed can be enforced for up to 12 years after it has been executed, while an agreement has a limitation period of six years. This limitation period means that if a party fails to uphold their obligations under an agreement, the other party has six years to bring legal action to enforce the agreement.
Another difference is the level of formality required for each document. A deed must be executed with certain formalities, such as the use of specific language and the presence of witnesses. In contrast, an agreement can be created and executed without the need for such formalities.
In conclusion, while the terms “deed” and “agreement” may be used interchangeably in Australia, it is essential to understand the differences between the two. A deed is a more formal and binding legal document that requires certain formalities and can be enforced for up to 12 years. An agreement, on the other hand, can be binding or non-binding, created without formalities, and has a limitation period of six years. Understanding these differences will help you decide which document best suits your needs.