Deed: Difference between revisions

Latest revision as of 14:00, 15 June 2022

The Jolly Contrarian’s Glossary
The snippy guide to financial services lingo.™

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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^[1]
Security: mortgages.^[2]
Powers of attorney: powers of attorney;
Trusts: The appointment or discharge of a trustee;
No consideration: At common law^[3] 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.

References

↑ Section 52, Law of Property Act 1925.
↑ Section 101(1) and 104(1), Law of Property Act 1925.
↑ Halsbury’s Laws of England (2012) vol 32 Deeds and other Instruments para 213.

[1] Section 52, Law of Property Act 1925.

[2] Section 101(1) and 104(1), Law of Property Act 1925.

[3] Halsbury’s Laws of England (2012) vol 32 Deeds and other Instruments para 213.

[1]

[2]

[3]

@@ Line 1: / Line 1: @@
-a contract which is enforceable even in the absence of consideration or acceptance. There are additional formal requirements for it to be executed - it needs to be delivered.
+{{g}}A [[deed]] is a written legal agreement that has been signed and [[Deliver|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 [[indenture]]s. 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]]”.
-===Signed, Sealed, Delivered - I'm yours===
+Deeds are required by statute for some types of contract, including:
+*'''Real estate''': conveyances of land<ref>Section 52, [[Law of Property Act 1925]].</ref>
+*'''Security''': [[mortgage]]s.<ref>Section 101(1) and 104(1), [[Law of Property Act 1925]].</ref>
+*'''[[Power of attorney|Powers of attorney]]''': powers of attorney;
+*'''Trusts''': The appointment or discharge of a [[trustee]];
+*'''No [[consideration]]''': At [[common law]]<ref>''Halsbury’s Laws of England'' (2012) vol 32 ''Deeds and other Instruments'' para 213.</ref> any legally binding agreement for which one party does not provide [[consideration]].
-====When is a deed delivered?====
+===Signed, Sealed, [[Deliver|Delivered]] - I’m yours===
+Is a Stevie Wonder song which correctly, if figuratively, uses legal concept. More about that [[Signed, Sealed, Delivered|here]].
+====When is a deed [[deliver|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 “[[Deliver|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.
-Historically, [[delivery]] occurred when the document was received by the other side. 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 2006 (UK)|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 {{casenote|Mercury Tax Group Limited|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.
-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.
+===[[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 [[Mediocre lawyer|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]].
-====Bibby v Magson====
+{{sa}}
+*{{casenote|Bibby Financial Services Ltd|Magson}}
+*{{casenote|Mercury Tax Group Limited|HMRC}}
+*[https://www.lawcom.gov.uk/project/electronic-execution-of-documents 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]]
-''Bibby Financial Services Ltd v Magson [2011] EWHC 2495''
+{{c3|Deeds|Enforcement|Case Note}}
+{{ref}}
-Bibby Financial Services Ltd (Bibby) offered an invoice discounting facility to a company and, as security for amounts due to Bibby, two directors of the company were required to enter into personal guarantees and warranties in respect of sums due.
-The company defaulted. Bibby sought to enforce the personal guarantees.
-The directors argued that neither the personal guarantees were not binding. because they were executed as deeds and while all signatures had been witnessed and the documents had been handed over, the directors asserted the documents had not been delivered.
-The directors’ personal guarantees, even though signed and witnessed, were not in a final form: Manuscript amendments had been made with the intention that clean versions of the documents would be prepared incorporating the amendments, which would then be circulated and signed again.
-At trial the directors’ argument won and Bibby could not enforce the documents as they had not been delivered as deeds.
-ADVICE TO TAKE AWAY FROM THIS CASE
-Whilst the case adds nothing new to the law surrounding the execution of deeds, it is a timely reminder that delivery of a deed should not be overlooked.
-It is possible to include clauses in deeds setting out when delivery occurs, usually when the document is dated. An alternative would be for a side letter to be prepared stating that delivery has occurred.