In a unanimous decision, 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:
Significantly, the Court:
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:
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In any event, the date of signing by Trinkaus was found to be immaterial as BGI did not receive a fully executed Agreement for Lease before it changed its mind about leasing the property and indicated an intention to withdraw from the Agreement for Lease.
The issue in dispute was whether the Agreement for Lease bound the parties.
The Owner claimed that BGI was bound by the Agreement for Lease because it was executed as a 'deed', and therefore BGI could not withdraw from it.
BGI rejected the Owner's claim on the basis that the agreement between the parties was 'subject to contract' as indicated in the signed letter of offer, meaning that each party understood or should have understood, that a party could withdraw before all of the parties had executed and exchanged all legal documents, including the Agreement for Lease.
The Court of Appeal unanimously upheld the decision of the trial judge McMurdo J and dismissed the Owner's appeal.
It found that:
An application to have the case brought before the High Court of Australia was refused.
To be valid and enforceable, deeds must:
Unlike in an agreement, consideration is not required for a deed to be legally binding.
Yes. A deed can be executed on the basis that a party is not bound to perform its obligation until some condition is satisfied. Under these circumstances however, the party which has executed the deed cannot withdraw from their obligations once the condition is satisfied
A deed poll is a deed made by one person in favour of a particular entity or class of entities. It binds only one party and expresses an intention or declaration instead of a promise.
For example, deed polls are often used when someone wants to change their name.
Where the Cleardocs Deed of Confidentiality is used for a one way disclosure of information between the parties, and only the person who has received the confidential information (known as 'the Confidant') has signed the deed, then it takes effect as a deed poll by the Confidant in favour of the person who disclosed the information to them (known as 'the Discloser'). You can read more information on the Cleardocs Deed of Confidentiality here.
An agreement is governed by contract law. Under contract law, to be valid and enforceable, a contract must satisfy the following pre-conditions:
Deeds are commonly used if there is doubt about whether there is adequate consideration flowing from one party to another in a transaction.
For more information, contact Maddocks on (03) 9288 0555 and ask to speak to a member of the Commercial team.
You can read articles concerning companies here.
 400 George Street (Qld) Pty Ltd v BG International Ltd  QCA 245.
Geoff Musgrove is a partner in the Maddocks Commercial team.
Geoff's principal areas of practice are:
Geoff acts for a wide range of commercial, government, accounting, manufacturing, professional and rural industry clients.
The legal information and commentary on this site is general only. Documents ordered through Cleardocs affect the user's legal rights and liabilities. To assess their suitability for the user, legal accounting and financial advice must be obtained.
For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of their team.