What are the differences between a Deed and an Agreement? People often use the words, contract, agreement, deed without really knowing what it entails. One may want to enter into a contract and yet not know the intricacies of each type and what kind will protect his interest by not exposing or subjecting him to undue or undesired liability.
By the end of this article, you will be equipped with knowledge to make viable decisions as regard the kind of contract you need to make and the appropriate time to do so.
It may interest you to know that both a deed and an agreement are all forms of contract and that the bulk of it’s disparity lies in the enforceability of both and it’s attendants peculiarities flowing from the forms or features ab initio constituting either of them.
What is a deed?
A deed is a special kind of agreement that is binding upon the party executing it from the beginning (at execution) provided it is executed in accordance with all the solemnities required of a valid deed.
It can also be described as a document which binds the person signing it to carryout obligations undertaken by such party.
It is also a written agreement or document, signed and delivered, by which one person conveys certain articles such as land to another. Examples;
a) a deed of trust which is a deed that transfers the title of property to a trustee as a security
b) a deed of release that releases property from an encumbrance, such as a mortgage.
One Substantial requirement of a deed is that it ought to be intended by the party executing it to indicate that he or she really intends to fulfill the agrement between the parties.
Judicially, it has been decided that to determine whether or not a document is a deed or an agreement, the courts must have recourse to whether the person executing the deed intends for the document to be immediately binding on that person.
If answered in the affirmative, the document is most likely to be construed as a deed rather than an agreement.
A deed can perform any of the following functions;
1. Convey legal interest in a property to another
2. Create an obligation that is binding or enforceable
3. Affirm an agreement
For a deed to be binding it must comply with the following requirements;
1. Evidenced in writting
3. Delivered to the other party
Courts have pointed to many matters to construe documents as deeds:
1. Nomencleture employed: If a deed is desirable in the circumstances, it is imperative that the deed instrument clearly describes itself as one to avoid it being construed as an agreement.
The document should use languages commonly associated with deeds excluding those peculiar to an agreement e.g. “‘covenants‘” and ‘”consideration‘”.
2. Intention to be bound upon delivery should be inferrable from the surrounding circumstances
3. Conditions for delivery are expressly stipulated in the document
4. Content: That the document includes the phrase ‘by executing this deed’ at the execution panel.