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Understanding the differences between an agreement and a deed: lessons from 400 George Street (Qld) Pty Ltd v BG International Ltd

In a unanimous decision,[1] the Queensland Court of Appeal held, amongst other things, that a deed is binding after it has been signed by all parties and physically delivered to the other parties.

The case highlights important principles that can be applied to determine whether a document is an agreement or a deed - and what turns on the distinction.

The case confirmed that, in general, deeds and agreements are distinct in two principal ways:

  1. for a document to fit the description of a deed, it must address certain formalities; and
  2. unlike an agreement (or contract generally), parties to a deed can enforce it against one another, even if the parties are not required to pay one another (or provide goods or services to one another under) the document.
Kate Hocking

Overview

Significantly, the Court:

  1. found that whether a document is a deed or an agreement will depend on the parties' intention as well as the language of the document. If they intend to create a deed, simply including execution blocks for a deed, and describing the document as a deed, may not be sufficient. The clauses of the document, including its opening statements, must be consistent with the language of a deed.
  2. confirmed that a deed binds the parties to it whether or not they are required to pay one another (or provide goods and services to one another) under the deed. This concept of parties being required to pay money, or provide goods and services, is referred to as 'consideration'.

The facts

This case involved negotiations between parties on a large commercial lease. 400 George Street (Owner) was one of the registered owners and the developers of a new commercial office building in Brisbane.

BG International (BGI) applied to lease 4 floors on completion of the construction of the building and signed a letter of offer. The letter contained a special condition in clause 37 which stated that:

'No legally binding agreement is made by the parties' execution of this letter. All documentation is subject to a mutually agreed legal document by both parties.'

After months of negotiations, the Owner's solicitors sent BGI's solicitors copies of an Agreement for Lease and a Lease for signing.

The Agreement for Lease was executed by BGI's attorney on 9 October 2008 and returned undated to the Owner's solicitors for signing.

The Owner and the other owners took a number of weeks to execute the documents. The history of signing of the Agreement for Lease by the owners was as follows:

 

Lawyer in Profile

Paul Ellis
Paul Ellis
Special Counsel
+61 3 9258 3524
paul.ellis@maddocks.com.au

Qualifications: LLB, Deakin University, BA (Political Science), Monash University

Paul is a Special Counsel in Maddocks Government and Not-for-Profit Commercial team. He specialises in:

  • the establishment, governance, operations, regulation and administration of charities and other not-for-profit entities,
  • in commercial arrangements for the procurement or supply of goods and services, including technology services, and
  • in compliance and enforcement activities undertaken by government agencies.

Paul is Maddocks' main authority in relation to the Personal Property Securities Act 2009.

He has an in-depth understanding of the government sector, as his experience prior to Maddocks includes 13 years with the Victorian Department of Justice.