What is the Difference Between Deed and Agreement

Deeds and agreements are both methods for formalizing a deal between parties, which makes it legally binding. They may seem alike, but there are some important differences in how they are created and executed.

What is the difference between deed and agreement? A deed doesn’t require consideration, whereas agreement, always require consideration for validity.

Key Areas Covered

1. What is a Deed  
     – Definition, Features
2. What is an Agreement
     – Definition, Features
3. Similarities Between Deed and Agreement
     – Outline of Common Features
4. Difference Between Deed and Agreement
     – Comparison of Key Differences
5. FAQ: Deed and Agreement
     – Answers to Frequently Asked Questions

Key Terms

Agreement, Deed

What is an Agreement

An agreement, often called a contract, is a mutual understanding or arrangement between two or more parties. In an agreement, the parties must agree that one will do (or refrain from doing) something in exchange for something valuable provided by the other. This “something of value” is legally known as “consideration.” It is sometimes described as “quid pro quo,” meaning “something for something.”

Once all parties accept the terms, either verbally or in writing, the agreement becomes legally binding. If any party fails to meet their obligations under the agreement, they are considered to be in breach of contract.

What is a Deed 

A deed of agreement is a formal promise to carry out specific actions. In business, signing a deed shows a serious commitment by an individual or company to fulfill certain responsibilities or obligations.

A deed can serve various purposes, such as

• Transferring legal ownership of property or rights
• Transferring equitable ownership of property or rights
• Creating legally binding obligations for a party
• Confirming an agreement that involves transferring legal or equitable ownership of property or rights

Deeds of agreement are commonly used in commercial contexts. For instance, in insolvency situations, a deed of company arrangement outlines how a company will operate while under voluntary administration. Once the company meets its obligations under the deed, control typically returns to the company’s directors.

Some examples of frequently used deeds include deeds of termination, deed poll, deeds of indemnity, deeds of forbearance, deeds of settlement, deeds of confidentiality, deeds of guarantee, deeds of novation, deeds of escrow, and deeds of release.

Deeds are often preferred in situations where no “consideration” (something of value) is exchanged. They are also generally harder to revoke compared to regular agreements.

Similarities Between Deed and Agreement

1. Deeds and agreements are both methods for formalizing a deal between parties, making it legally binding.
2. Both can involve transferring rights or obligations.
3. Moreover, they require the consent of all parties involved.

Difference Between Deed and Agreement

Definition

• A deed is a formal, written document that creates binding obligations or transfers rights without requiring consideration. An agreement, on the other hand, is a mutual understanding between parties, either written or verbal, that involves consideration and creates enforceable obligations.

Consideration

• A deed doesn’t require consideration, but in an agreement, consideration is essential for validity.

Execution Requirements

• Deeds must always be in writing, while agreements can be verbal or written unless the law specifies otherwise.

Longer Limitation Period

• Actions under a deed have a longer limitation period compared to agreements. However, the exact timeframe varies across different jurisdictions.

FAQ: Deed and Agreement

1. What makes a partnership agreement?

A Partnership Agreement is a legal document that defines the rights, duties, and responsibilities of partners in a business. Moreover, it covers important aspects like profit distribution, decision-making powers, dispute resolution, and the process for partner withdrawal or retirement.

2. What is a written agreement called?

A written agreement is typically called a contract. It is a formal document that outlines the terms and conditions agreed upon by the parties involved.

3. What is assignment of agreement?

An assignment of agreement refers to the transfer of one party’s rights and obligations under a contract to another party. This means the original party (the assignor) transfers their benefits and responsibilities to a new party (the assignee), while the original contract remains in effect.

Reference:

1. “Agreement“. Contract Book.

Image Courtesy:

1. “Agreement contract” (CC BY-SA 3.0) viaPix4Free