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Running a business comes with plenty of paperwork, especially regarding compliance and record-keeping. However, legal documents are an equally important part of your business as they govern your commercial relationships and help to manage legal risk. You may commonly find yourself entering into agreements, contracts and deeds. But what is the difference? This article outlines what a deed is and how you can properly execute one.

What is a deed?

A deed is a binding commitment or promise to do something. It is a formal, written document which shows that the signing party intends to follow through with what they have promised. Common deeds include:

• Deed of Assignment: Used to transfer or assign legal rights to another party, such as intellectual property or contractual rights.
• Deed of Termination: Used to terminate a previous contract or commercial relationship.
• Deed of Confidentiality: Where a party agrees not to disclose certain confidential information of the business.
• Deed of Variation: Used to vary clauses of an existing agreement, such as a lease or shareholders’ agreement.

What does ‘executing a deed’ mean?

Executing a deed means signing and completing it as a legal document. Without proper execution of your deed, it may not be enforceable or legally binding. Ensuring your deed is properly executed can also help you avoid unwanted legal disputes in the future.

What is the difference between an agreement and a deed?

The main difference between a deed and an agreement is the legal concept of ‘consideration’.

• A contract or agreement requires ‘consideration’ to be legally binding. This means the parties exchange something for the commitment. For example, a vendor sells goods to a purchaser in exchange for money.
• A deed does not require something valuable in exchange for the commitment. For example, in a confidentiality deed, one party may agree not to disclose certain information without anything in return.

How do I execute a deed?

The requirements for executing a deed depend on the parties to the contract. A properly drafted deed will generally have an ‘execution block’ which sets out that the deed is ‘signed, sealed and delivered’ by or on behalf of the party.

• Execution by an individual will generally require the date, and name and signature of the individual and a witness. The witness should be someone who is not already a party to the deed.
• If a party to the deed is a trust, it is executed by the trustee on behalf of the trust.
• There are more specific rules for execution of deeds by companies, as set out below.

How does a company execute a deed?

Most commonly, companies execute deeds by following the signing requirements in section 127(1) of the Corporations Act. This requires the signature of:

• Two company directors; or
• One company director and one company secretary; or
• A sole director who is the also the company secretary (this option does not apply to public companies).

The Corporations Act also sets out how to execute a deed by common seal. This is a less popular method than signing. The common seal is a stamp pressed onto the deed to symbolise that the company has agreed. Importantly, if a common seal is used it must also be witnessed by:

• Two company directors; or
• One company director and one company secretary; or
• A sole director who is the also the company secretary (this option does not apply to public companies).

What are the common mistakes in executing a deed?

Executing or signing a deed incorrectly can make it invalid and unenforceable. Common mistakes include:

• Getting the wrong people to execute the deed (e.g. only one director when there are two, or two company secretaries sign)
• Failing to specify that a person is a sole director and secretary
• Using a common seal without the correct witnesses
• Signing as a trust instead of on behalf of the trust

How do I avoid making mistakes in deed signing?

Parties can avoid these common mistakes in executing a deed by:

• Understanding what capacity they are signing in (e.g. as individual, trustee, witness etc.)
• Ensuring they have a properly drafted deed with clear and accurate execution clauses
• Having their deeds reviewed by a legal professional prior to execution

Key takeaways

• A deed is a legal document which governs a party’s binding commitment to do something.
• Deeds may be unenforceable if executed incorrectly.
• There are different requirements for executing a deed depending on whether the parties are individuals, companies or trusts.
• Companies executing deeds under the Corporations Act must ensure that the correct people are executing the document.

Gladwin Legal are experts in corporate and contract law. We can help with drafting and reviewing your deeds, contracts and execution clauses. If you would like to speak to our team or better understand your signing obligations, please contact us at or 1300 033 934.

This article was written by Ruth Ong.