Updated November 2, 2020:

In a deed vs agreement, your choice depends on the business arrangement. A deed is a certain type of promise or commitment to engage in a certain activity and solidifies a firm commitment It is also one of the most solemn acts that a person can perform. A deed does the following:

  • Fosters an obligation that binds a person
  • Amounts to affirmations or confirmations of something in the form of a right, interest, or property

The obligations and commitments are defined within a deed, and it is enforceable in court. The deed must stress that it is a deed and contains certain wording that’s included near the signatures that confirm the document is valid.

Basic Concepts of an Agreement

The basic notions of modern agreement law include the following:

  • The intention of being bound legally
  • Offer and acceptance
  • Consideration

The idea of consideration derives from the notion that obligations or promises should be part of a bargain between all parties and must demonstrate they bought a promise by performing an act in return. You may discover you cannot challenge the contention of a friend in court since you do not have a legal document to appeal. Even if you have a document, it still entails an agreement that’s not useful if a dispute occurs.

Stark Differences

The difference between an agreement and a deed is subtle to the point of asking why certain agreements are called agreements and others are called deeds. Agreements and deeds are two common words when it comes to contacts between individuals. Regardless of what you’re purchasing, you sign all agreements containing details of an agreement between yourself and another party. With that, you have systems in each nation that determine the legality of all documents and can be challenged in the court system in case of a conflict between parties.

Differences in legality separate deeds and agreements, with deeds becoming enforceable in court to tackle disputes, while agreements mostly pertain to mutual understandings between two parties. The primary difference between an agreement and deed is that you have no mandate when it comes to binding a dead. In other words, the lack of a mandate regarding consideration is usurped by the notion that deeds are intended by the executing individual to be a solemn intention to a community that the individual intends to perform a certain act.

An agreement is an understating between all parties that may be in verbal or written form and may not be valid in court. However, a deed is a legal tool containing all obligations and rights of parties entering into an agreement, and it is legally-sound in court. When it comes to English Law, agreements are usually in written or oral form.

With that, certain contracts are mandated by law to be on paper and come in different forms. A deed mandates additional restriction pertaining to execution/signature to qualify as legitimate, and it must include more than one signature and witness. There are also contrasts in the statutory limitation windows for each one, and deeds have one of the more longer periods.

Types of Deeds

You can see the following types of deeds throughout your daily life:

  • Escrow deed
  • Indemnity deed
  • Letter of credit or financial guarantee
  • Deed poll
  • Termination deed
  • Real estate

The reason for executing such documents, such as a deed, is usually to overcome difficulties arising if there is not any consideration provided for undertaking in a document. For instance, A must provide B with a finance guarantee to secure obligation, such as a bank guarantee or credit letter from a bank or another financial institution on behalf of A. However, there is no consideration between that financial institution and B for such a guarantee in ensuring that the guarantee is binding. Still, the guarantee is will come in the guise of a deed.

To qualify for a deed under common law, it needs to adhere to certain formalities:

  • A personal seal was placed on the document for identification purposes
  • It must be sent to the counterparty
  • It must be recorded on vellum, parchment, or paper for a permanent record

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