Deed vs Contract: What's the Legal Difference?

A deed can be legally binding without consideration, meaning without something of value being exchanged for a promise. It also has stricter signing requirements and can affect how long certain legal claims may be brought.

This explanation covers England and Wales. Different rules apply in Scotland.

Lowdown

A simple contract normally requires consideration. A deed can be binding without it and may also be required by law for particular transactions.^[1]

Why It Matters

For many claims based on a simple contract, the usual limitation period, meaning the deadline for starting a claim, is six years. For many claims based on a deed, the usual period is twelve years. Different time limits can apply to particular types of claims.^[2]

A deed must make clear that it is intended to be a deed and must be signed using the required formalities. It must also be “delivered” as a deed, which is a separate legal requirement. The exact signing rules depend on who is signing it.^[3]

For an individual, signing a deed normally requires a witness to be physically present and sign to confirm the signature. Companies have different signing options, such as using two authorised signatories or one director whose signature is witnessed. “Delivery” means showing an intention to be legally bound, not necessarily physically handing over the document.^[1][3]

Do not use a deed simply because it sounds stronger. Use one where the law requires it, where consideration may be missing or uncertain, or where there is another clear reason for the extra formality.

Our Conclusion

A deed is more than a contract with additional wording. In England and Wales, it can be binding without consideration, has extra signing requirements and may allow a longer period for bringing certain claims.

Sources

[1] HM Land Registry, Practice Guide 8: Execution of deeds and HMRC, Contract settlements: Deeds

[2] Limitation Act 1980, section 5: Time limit for actions founded on simple contract and section 8: Time limit for actions on a specialty

[3] Law of Property (Miscellaneous Provisions) Act 1989, section 1: Deeds and their execution and Law of Property Act 1925, section 52: Conveyances to be by deed