Deed

The Jolly Contrarian’s Glossary The snippy guide to financial services lingo.™ →Go uptown Index — Click the ᐅ to expand: Glossary Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

A deed is a written legal agreement that has been signed and delivered and which is enforceable even in the absence of consideration. There are formal requirements for it to be executed. Deeds between two or more parties are called indentures. A unilateral deed is called a deed poll. Etymology corner: Originally, an indenture between more than one party had a physical “indentation” or “serration” along one edge of the document, whereas that pages of a deed signed by just one person were cut straight (or “polled”) — thus a “deed poll”.

Deeds are required by statute for some types of contract, including:

• Real estate: conveyances of land
• Security: mortgages.
• Powers of attorney: powers of attorney;
• Trusts: The appointment or discharge of a trustee;
• No consideration: At common law any legally binding agreement for which one party does not provide consideration.

Signed, Sealed, Delivered - I’m yours

Is a Stevie Wonder song which correctly, if figuratively, uses legal concept. More about that here.

When is a deed delivered?

Historically, delivery occurred when the document was received by the other side — a deed becomes enforceable once it has been shown to the other parties. As the law evolved, the concept of “delivery” became the point at which it could be shown that it was intended that the document would become binding. This is still the test used today.

For companies, a deed is deemed to have been delivered in accordance with the provisions of the Companies Act. However, no deemed delivery provisions apply to individuals.

Switching pages, escrow and all that

Market convention on big deals is for parties to execute pages ahead of finalising — this is so the principals can be loafing around on their yachts off the coast of Monte Carlo while their legal eagles are chained to their desks on a piping hot Friday afternoon, evening, yea unto the small hours of Saturday morning — but one can be too cavalier about this, especially where deeds are involved so be careful. The modern morality tale in that regard is Mercury Tax Group Limited v HMRC — this involves tax dodging, so take with some pinch of salt, but basically you can’t just staple executed signature pages from earlier drafts of the docs to the finalised ones and expect to get away with it. Who executed draft versions of legal documents? Search me — well, tax dodgers apparently do — but still.

JC’s View

The legal community wags its prudish finger and admonishes the layperson about the timely warning this case represents that one must get one’s paper work right (subtext: make sure you call a lawyer). But on its face this is a poor decision. Clearly the directors' intentions in manuscripting the changes and then executing the document evidences that they intended the documents to be binding. But ambulance chasing — or perhaps ambulance defending — members of the legal community see this as a good decision. Eheu.

See also

• Bibby Financial Services Ltd v Magson
• Mercury Tax Group Limited v HMRC
• Law commission consultation on electronic execution has a good overview of the existing law relating to deeds.
• Signed, Sealed, Delivered - Stevie Wonder’s paean to legal formalities of deed execution
• Pop songs which use legal concepts