{"id":939,"date":"2020-12-08T03:47:01","date_gmt":"2020-12-07T14:47:01","guid":{"rendered":"http:\/\/nz.legalvision.com.au\/?p=939"},"modified":"2024-12-19T11:27:17","modified_gmt":"2024-12-18T22:27:17","slug":"difference-between-deed-and-agreement-new-zealand","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/commercial-contracts\/difference-between-deed-and-agreement-new-zealand\/","title":{"rendered":"What Are the Differences Between an Agreement and Deed?"},"content":{"rendered":"\n<p><span style=\"font-weight: 400\">In the commercial world, a variety of terms, such as agreements or deeds, are used to refer to the legal promises you may make. Although both may appear to refer to the same promise or subject matter, a deed and an agreement have different requirements to be legally valid and binding. You must be aware of these differences when entering into your particular arrangement. You must be aware of these differences when entering into your particular agreement. This article will detail what a deed and an agreement are and the differences between the two.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">What is a Deed?&nbsp;<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">A deed, or a &#8216;document under seal&#8217; is a legal document that contains a binding promise or commitment. More often than not, this promise concerns the passing or affirming of an interest, right or property.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">In New Zealand, you may use a deed for:&nbsp;<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"margin: 0px;padding: 0px\">a<\/span>&nbsp;<a href=\"https:\/\/legalvision.co.nz\/commercial-contracts\/deed-assignment\/\">transfer<span style=\"font-weight: 400\"> of an interest in land<\/span><\/a><span style=\"font-weight: 400\">, through a settlement deed;&nbsp;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">settling disputes or potential claims in court;<\/span><\/li>\n\n\n\n<li>gifting assets; and<\/li>\n\n\n\n<li><span style=\"font-weight: 400\">entering or leaving a position of status. <\/span><\/li>\n<\/ul>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>For example, a trustee may only be able to retire or be appointed by a deed.<\/p>\n<\/div>\n\n\n\n<p>Additionally, <span style=\"font-weight: 400\">you may want or need to use a deed because:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">your circumstances may legally require you to use it<\/span>;<\/li>\n\n\n\n<li><span style=\"font-weight: 400\">you need to enter into a binding agreement where there is no \u2018consideration\u2019 (usually payment);<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">it may be traditional in your line of dealings to do so; or&nbsp;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">you may wish to reap the benefits of using a deed over other document types.&nbsp;<\/span><\/li>\n<\/ul>\n\n\n\n<p>Deeds are often used to provide clear evidence of an agreement, ensuring accountability and clarity, especially for formal arrangements such as land transfers and asset gifting.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">What is an Agreement?<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">Although sometimes we call a deed a type of agreement, most often, when lawyers talk about an agreement, they mean a contract. A contract is a <\/span><a href=\"https:\/\/legalvision.co.nz\/commercial-contracts\/legally-binding-agreement-new-zealand\/\"><span style=\"font-weight: 400\">legally binding arrangement<\/span><\/a><span style=\"font-weight: 400\"> reached by two or more parties.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">To enter into a contract at common law, there must be:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">an offer, for example, your friend offers to bake you a cake;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">acceptance of this offer, for example, you accept this offer to receive a cake;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">something in exchange for this offer, which is also known as consideration. For example, in exchange for the cake, you will pay them $20 or promise to bake them cupcakes; and<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">a shared intention by the parties to enter into this agreement.&nbsp;<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">Contracts can take many forms. However, so long as they meet the core legal requirements above (and some other minor technical ones), they will generally be binding if the parties have agreed to it:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">in writing, through a written contract or email;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">orally; or<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">through partly written and partly oral agreement.&nbsp;<\/span><\/li>\n<\/ul>\n\n\n    <div class=\"my-7 lg:my-10 border-y-2 border-gray-100 py-7 lg:py-10 flex flex-col sm:flex-row items-start gap-10\">\n                    <img decoding=\"async\" class=\"w-52 mx-auto my-0! rounded\" src=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/2\/2021\/12\/22115855\/cytonn-photography-GJao3ZTX9gU-unsplash-e1640129621597.jpg\" alt=\"Front page of publication\"\n                 loading=\"lazy\" width=\"208\" height=\"298\">\n                <section>\n            <div class=\"text-2xl font-bold\">Commercial Contracts Checklist<\/div>\n            <div class=\"body-text\">\n                <p>To protect your business, ensure supplier contracts meet your business\u2019 needs. 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Execution is the process by which a party to a deed shows that they intend to be bound by it. Importantly, there is also no need for consideration in a deed.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">To demonstrate that you, as an individual, wish to be bound by a deed, you must follow specific steps:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">the deed must be in writing;<\/span><\/li>\n\n\n\n<li><a href=\"https:\/\/legalvision.co.nz\/commercial-contracts\/5-steps-business-contract\/\"><span style=\"font-weight: 400\">you must sign it<\/span><\/a><span style=\"font-weight: 400\">;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">someone who is not a party to the deed must witness you sign it, and provide specific details about themselves including the name of the city they live in, and their current job or description; and<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">the deed must be delivered. That does not necessarily mean that there must be a physical delivery. Instead, it will be \u2018delivered\u2019 when it is apparent from the circumstances that the party intends to be bound by it. Alternatively, if your deed will only come into force on one or more conditions, it will be \u2018delivered\u2019 when these conditions are fulfilled.&nbsp;<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">Similarly, if you are a company wishing to execute a deed, it must be signed in the name of the company by one or more of the company&#8217;s directors. If there is only one director, then another individual must witness its signing. If there are two or more directors, then at least two must sign it.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Differences Between an Agreement and a Deed<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">There are three key differences between an agreement and a deed. We explain these differences below.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">1. Consideration to Enter Into a Binding Agreement<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">One of the requirements for a valid agreement or contract is consideration. Consideration is usually in the form of a:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>promise to do something;<\/li>\n\n\n\n<li><span style=\"font-weight: 400\">exchange of money or services;&nbsp;<\/span>or<\/li>\n\n\n\n<li><span style=\"font-weight: 400\">commitment to refrain from doing something.<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">You can think of consideration as a party to an agreement &#8216;buying&#8217; the proposed offer. It demonstrates that both parties intend to enter into the agreement.<\/span><\/p>\n\n\n\n<div class=\"box box--icon box--star\">\n<p><span style=\"font-weight: 400\">Unlike in contracts, you do not need to provide consideration when executing a deed. This is one of its benefits.<\/span><\/p>\n<\/div>\n\n\n\n<p><span style=\"font-weight: 400\">For example, if you are entering into an arrangement where it is not clear that you are providing something of value in return, you may need a deed. For example, when giving up a court claim against someone without any exchange of money, you guarantee debt or assign property without a transfer of funds. If you are entering into an arrangement where you are provided with goods or services in exchange for money, you usually need a contractual agreement<\/span> rather than a deed.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">2. A Deed Has to Be a Written Document That Is Signed<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">As there is no exchange of consideration when executing a deed, it must be in writing and signed. This is to demonstrate that you intend to be bound by its contents.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Although contractual agreements do not have to be in writing, it is quite useful if it is. This ensures that:&nbsp;<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">there are less legal disputes in the future as you have a tangible document to go back to;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">the terms of the agreement are clear to both you, and any other party agreeing to the contract; and&nbsp;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">there is clear evidence of those terms, meaning that it will be easier to prove and enforce the contract (including in court, if necessary).<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">There are also certain types of arrangements that the law specifically requires to be in writing. For example, an agreement for your insurance or to buy or sell your house, would have to be in writing.&nbsp;<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">3. Equitable Remedies&nbsp;<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">When deciding between an agreement and a deed, consider the availability of equitable remedies. Due to your deed not including consideration, equitable remedies will not be available. Deeds are usually not enforceable for equity purposes due to the maxim \u201cequity will not support a volunteer\u201d.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Therefore, if you want to include a clause revolving around equitable remedies, you will need to draft a binding agreement instead. Your equitable remedies can include:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">monetary compensation;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">specific performance of a contract; or<\/span><\/li>\n\n\n\n<li><a href=\"https:\/\/legalvision.co.nz\/disputes-and-litigation\/what-is-an-injunction-in-new-zealand\/\"><span style=\"font-weight: 400\">court injunctions<\/span><\/a><span style=\"font-weight: 400\">.<\/span><\/li>\n<\/ul>\n\n\n\n<div class=\"box box--icon box--info\">\n<p><span style=\"font-weight: 400\">An equitable remedy will be served by the court, meaning you will need to take legal action to receive any compensation.&nbsp;<\/span><\/p>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">How to Choose Between an Agreement or a Deed<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">There are several considerations to make when choosing between the two options. Consider the following:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">whether you want the document to include consideration;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">whether you want the safety net of an equitable remedy; and<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">your intentions for entering into the contract.<\/span><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Key Takeaways<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">Different legal documents can convey the promises you or your business make. A deed represents these binding promises through a written and signed document that is prepared and executed in a specific, legally defined way. A contractual agreement can be written or oral and requires that this promise must be accepted in exchange for something of value. If there is not an exchange of value, a deed is likely required. Further, when deciding between the two options, you should consider whether you want to include an equitable remedy clause.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">If you need help preparing, reviewing or executing a deed or a contract, <\/span><span style=\"font-weight: 400\">our experienced <\/span><a href=\"https:\/\/legalvision.co.nz\/contract-lawyers-lp\"><span style=\"font-weight: 400\">contract lawyers<\/span><\/a><span style=\"font-weight: 400\"> can assist as part of our LegalVision membership. You will have unlimited access to lawyers who can answer your questions and draft and review your documents for a low monthly fee. Call us today at&nbsp; <a href=\"tel:+64800005570\" class=\"AVANSERnumber dynamic-number\">0800 005 570<\/a> or visit our <\/span><a href=\"https:\/\/legalvision.co.nz\/membership\/\"><span style=\"font-weight: 400\">membership page<\/span><\/a><span style=\"font-weight: 400\">.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Frequently Asked Questions<\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1606880228344\"><h3 class=\"schema-faq-question\"><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong>What is a deed?<\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/h3> <p class=\"schema-faq-answer\">A deed is a written and signed legal document that contains a binding promise or commitment and is prepared and executed in a specific, legally defined way.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1606880258379\"><h3 class=\"schema-faq-question\"><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong>What is an agreement?<\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/strong><\/h3> <p class=\"schema-faq-answer\">An agreement, or a contract, is a written or oral arrangement between two or more parties. Each party possesses an intention to be legally bound in exchange for something of value.<\/p> <\/div> <\/div>\n","protected":false},"excerpt":{"rendered":"<p>In the commercial world, a variety of terms, such as agreements or deeds, are used to refer to the legal promises you may make. Although both may appear to refer to the same promise or subject matter, a deed and an agreement have different requirements to be legally valid and binding. You must be aware<a href=\"https:\/\/legalvision.co.nz\/commercial-contracts\/difference-between-deed-and-agreement-new-zealand\/\">Continue reading <span class=\"sr-only\">&#8220;What Are the Differences Between an Agreement and Deed?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13496,"featured_media":228344,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"215047,1639,202036,1288,625,1957","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[3],"tags":[24,25,41,54,102],"class_list":["post-939","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commercial-contracts","tag-startup","tag-small-business","tag-commercial-contracts","tag-medium-business","tag-deed"],"acf":[],"yoast_head":"<!-- This site is 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