Whether you are a business owner, someone who works in the legal profession advising others, or someone who is entering into a transaction with another person, you may encounter simple contracts and/or deeds as part of a business transaction. Let’s take a look at what simple contracts and deeds are, how they differ, and why it is always important to gain legal advice when drawing up any legally enforceable document.
What is a simple contract?
A simple contract is just as it sounds: a straightforward agreement between two parties, either verbal or written. As an example, a simple contract may be discussing what someone is going to sell and the price point at which the other person will sell it.
What is a deed?
A deed is slightly different to a simple contract in that a deed can be legally enforceable even without consideration. Another key difference is that a deed must be in writing, whereas a simple contract can be verbal, although the latter can be harder to prove in the case of any dispute. Deeds may include a deed of assignment or deed of trust and are sometimes essential to a transaction.
Be mindful that deeds, unlike simple contracts, must also have a witness’s signature
When you are entering into any sort of business transaction – particularly if the transaction is for a large amount of money, such as the exchange of land, property, valuable assets, or shares – it is always worth seeking legal advice to assist you in drawing up an accurate deed or contract. Using advice from an expert such as Parachute Law or a similar legal practice can protect both you and the other party involved from the beginning of the transaction right to the end.
There is another difference between contracts and deeds, namely that a signature will suffice for a simple contract whereas a deed must be either signed by the named person in the presence of a witness or signed by their nominated representative in the presence of two witnesses.