Difference Between Deed and Agreement

Deed vs Agreement
 

Difference between deed and agreement is very subtle that it is giving rise to the question why are some contracts labeled as agreements while others are called or referred to as deeds?  In fact, deed and agreement are two commonly encountered words in the context of contracts between individuals and parties. Whether you are buying property, entering into a partnership, becoming a franchisee of a company or buying stocks of a company, you sign documents to contain details of the contract between you and the other party. However, there are systems in every country to determine the legality of such documents as to whether they can be challenged in courts in the case of disputes between parties. This difference in legality is what separates agreements and deeds with deeds being enforceable in courts to settle disputes while agreement mostly being only a mutual understanding between two parties. This article attempts to further highlight the difference between deed and agreement to help the readers to decide the document they require in a particular circumstance.

What is an Agreement?

Suppose you have taken money from your friend at an interest of 24% payable per annum, and there are no papers made in this regard and the agreement is between friends and verbal only. After some time, your friend asks for an amount in the form of interest that is not reasonable and correct according to you. You find that you cannot challenge the contention of your friend in courts as there is no legal document in your possession to appeal in a court of law. Even if you have it written on a piece of paper, it is still an agreement that is useless in case of a dispute.

Agreement

What is a Deed?

On the other hand, a deed is a special document that binds two parties and clearly elucidates their rights and duties. The commitments and obligations are clearly defined in a deed and the instrument or the document is testified in front of an attorney, which implies that the instrument or deed as it is referred to in legal circles is enforceable in a court of law. Some common examples of documents that are legal and binding upon parties are indemnity deed, deed of termination, LC, and guarantees of various kinds.

This dichotomy is important in cases where there may be situations of dispute. Suppose you buy an electronic product from a retailer and then the appliance develops a snag within the warrantee period. You have the invoice duly signed by the retailer with you, which is what can become a basis of your claim in a court of law if the shopkeeper and the manufacturer refuse to listen to your legitimate grievances.

Difference Between Deed and Agreement

What is the difference between Deed and Agreement?

• An agreement is a mutual understanding between two parties that may be written or verbal. It may not be enforceable in a court of law.

• A deed is a legal instrument that contains all rights and obligations of parties entering the contract and is legally binding on both parties.

• A deed must be signed, sealed, and delivered to become a legal instrument.

 

Photos By: NobMouse (CC BY 2.0), Sarah Joy (CC BY-SA 2.0)

Further Reading:

  1. Difference Between Deed and Title
  2. Difference Between Contract and Agreement