Contracts serve as the foundation of agreements, offering a clear set of terms for the parties involved.
While verbal agreements do hold some merit, documenting these terms in writing strengthens the agreement and serves as evidence should a dispute arise.
However, certain contracts, like land sale or to provide a guarantee, are legally required to be in writing.
In English law, there are two types of written contracts:
i) Contracts written "under hand", commonly referred to as "simple contracts," and
Deeds are used because either the law requires their use or because a deed has certain advantages.
Understanding the Distinctions Between a Deed and a Contract
1. A simple contract can be oral, while a deed must be in writing.
2. In a simple contract, both parties must exchange something of value, known as "consideration," for the contract to be valid. Often, this will be the provision of goods or services by one party and the provision of money by the other, but it could apply to anything of value.
It is therefore advisable, for example, that a contract for the provision of a gift is drafted in the form of a deed or it is likely to be unenforceable due to lack of consideration from one party.
3. For a deed to be valid, it must explicitly indicate its intention to be a deed. This often involves specific wording above the signatures, confirming the document's deed status.
Not only that but a deed also requires additional formalities in relation to its signature/execution for it to be enforceable. Depending on whether the party signing/executing is an individual, company or other legal entity, signatures will require witnessing or more than one signatory will be required.
4. Finally, simple contracts have a statutory limitation period of six years whereas deeds have a limitation period of twelve years.
Contact Richard Jenkins on 024 7698 0613 or Richard@clariclegal.co.uk for further advice or assistance.