Deed vs Agreement: Understanding the difference
When entering into a contract or formal arrangement in the UK, it's important to understand whether you are executing an agreement or a deed.
While both are binding legal documents, the differences between the two can have significant implications for enforceability, limitation periods, and the formalities required for execution.
This is a topic that is not well understood at all outside of legal professionals, so we hope to make it clearer and less scary!
What is an Agreement?
An agreement (a term that is generally interchangeable with “contract”) is formed when certain legal elements are satisfied:
Offer
Acceptance
Consideration (something of value exchanged, usually money)
Intention to create legal relations
These elements are the backbone of contract law. If any one is missing - particularly consideration - a simple agreement may not be enforceable.
Contracts can be verbal (i.e. a handshake agreement) or in writing - all that matters is that the four elements above are met.
Example: A service contract between a marketing agency and a client for a campaign project.
What is a Deed?
A deed is a special type of legal document that does not require consideration to be binding. In practice, this usually means contracts where no money is being exchanged.
Instead, deeds must be executed with additional formalities, which typically include:
Being in writing
Clearly stating it is a deed
Being signed and witnessed
Being delivered as a deed
Because of these formalities, deeds carry a higher standard of seriousness and are often used in situations where there is not consideration or additional legal weight is required.
Example: A deed of trust for holding property on behalf of another party, or a deed of gift where one party transfers ownership without receiving anything in return.
Key Differences Between Deeds and Agreement
Feature Agreement Deed Consideration required Yes No Execution formalities Signature only Signature, witnessed, and stated as a deed Electronic signature allowed? Yes No Limitation period 6 years 12 years Common uses Employment contracts, service agreements Property transfers, powers of attorney, guarantees Legal weight Standard Greater enforceability and seriousness
When Should You Use a Deed?
Use a deed in situations where:
No consideration is being provided (e.g. gifts)
There is a statutory requirement (e.g. land transfers under the Law of Property Act 1925)
You want to extend the limitation period for enforcing the document
You need to emphasise formality and intent
When is a Standard Agreement Sufficient?
Use an agreement when:
All parties are providing consideration
The matter is relatively straightforward
You do not need extended limitation periods
The law does not require a deed
Final Thoughts
While deeds and agreements both serve to record legal obligations, understanding their differences is key to choosing the right approach. Using a deed where necessary - or failing to do so when required - can determine whether your document is enforceable.
At Hemisphere Consultants, we assist clients across sectors with tailored legal support, including document drafting, review, and compliance. If you're unsure whether your contract should be an agreement or a deed, we're here to help.