You have agreed the commercial terms of a deal. It might be a guarantee for a business loan, a settlement reached after a dispute, or the assignment of intellectual property between two companies you control. The other side has sent through a document headed "Deed", and you are being asked to sign it in front of a witness. Or the roles are reversed: you are preparing the paperwork and wondering whether a simple agreement will do. The choice between an agreement and a deed can look like an administrative detail. It is not. It decides whether your promise is enforceable at all, who has to sign and witness it, and how long you have to sue if the other side breaks it.
Two documents, one question
Australian law gives you two main ways to record a binding commercial promise. An agreement, also called a contract, is formed when one party makes an offer, the other accepts it, both intend to be legally bound, and each side provides something of value in exchange. That exchange is known as consideration. A deed is a more formal document. It does not need consideration at all. At common law a deed had to be signed, sealed and delivered, and while the sealing requirement has largely become a formality, the underlying idea survives: the solemnity of the deed is what makes the promise binding on its own.
So the question that actually faces your business is narrower than "agreement or deed?". It is this: does the promise involve an exchange of value, and if it does not, will you need a deed to make it stick? Two assumptions usually have to be corrected along the way. The first is that deeds are only for property transactions. They are used just as often for guarantees, settlements and indemnities. The second is that a deed is simply a fancier agreement. It is a different legal instrument, with different rules for signing, different limitation periods, and different consequences if the formalities are done wrong.
What to weigh when deciding
Work through the following five factors in order. The first will settle most deals, and the rest catch the deals where a mistake is expensive.
Is anything changing hands?
Consideration is the decisive factor for most transactions. A promise in a contract is only enforceable if each party gives something in exchange for the other's promise. If the promise is one-sided, with value flowing only one way, there is no agreement in the legal sense, and the promise will need the formality of a deed to bind. That is why the following situations are classic deed territory:
- Guarantee with no benefit: A parent or related company guarantees a borrower's debt, and nothing flows back to the guarantor. Without a deed, the guarantee can fail for want of consideration.
- Settlement after a dispute: A deed of release commits a party to giving up claims it could otherwise bring, and makes it clear the dispute is finished.
- One-sided confidentiality or indemnity: A confidentiality undertaking, or an indemnity given for no return promise, needs a deed to be enforceable.
- Variation without fresh consideration: Changing an existing contract so that only one side gets the benefit can fail for lack of consideration. A deed of variation avoids that problem.
A practical example: your parents guarantee your company's bank loan. The bank gives your parents nothing in return, so there is no consideration for their promise. The guarantee is therefore drawn as a deed, and the bank will usually insist on it. If the document is merely an agreement, the guarantors may be able to walk away from it.
How long you have to enforce the promise
Limitation periods set the window in which you can sue. In New South Wales, an action for breach of contract must be brought within six years of the cause of action accruing, under s 14 of the Limitation Act 1969 (NSW). An action on a deed gets twelve years, under s 16 of the same Act. That doubled window is one reason parties choose a deed for obligations expected to last, such as indemnities.
Queensland used to match New South Wales, but the position has changed. The Property Law Act 2023 (Qld) amended s 10(3) of the Limitation of Actions Act 1974 (Qld) so that an action on a deed must now be brought within six years, for deeds made after the amendment commenced. The transitional provision in s 51 preserves the old twelve-year period for earlier deeds. Victoria sets six years for actions on a simple contract in s 5 of the Limitation of Actions Act 1958 (Vic), and the treatment of deeds differs again across the other states and territories. Before you rely on a longer period, check the current law of the state whose courts would hear the dispute. A lawyer can confirm which limitation period applies to your document.
Who signs, and how
Execution rules are where deals come unstuck. For an individual in New South Wales, s 38(1) of the Conveyancing Act 1919 (NSW) requires every deed to be signed and sealed, and the signature attested by at least one witness who is not a party to the deed. For a company, execution runs through the Corporations Act 2001 (Cth). Under s 127, a company executes a document without a common seal when it is signed by two directors, or by a director and the company secretary, and it may execute a document as a deed if the document is expressed to be executed as a deed. Company deeds signed that way do not need to be witnessed, may be signed electronically, and do not require separate delivery under ss 127(3A) and (3B). A company can also execute documents, including deeds, through an individual acting with its express or implied authority under s 126 of the Corporations Act 2001 (Cth), provided the document is expressed to be executed as a deed.
The practical comparison looks like this:
- Agreement: May be oral, in an email, or signed in writing. No witness is needed. A company signs by two directors, or a director and the company secretary. The parties can usually sign in counterparts.
- Deed: Must be in writing. An individual's signature must be witnessed by someone who is not a party. A company signs under s 127 of the Corporations Act 2001 (Cth), with no witness required. The document must be expressed to be a deed.
Electronic execution is possible in New South Wales: s 38A of the Conveyancing Act 1919 allows a deed to be created in electronic form and electronically signed and attested, but the signature must still be attested by a witness. Other states have their own rules, so check the legislation that applies where the deed is being signed. If a document intended as a deed is executed without the required formalities, it may still take effect as a contract where consideration exists. If there is no consideration, it may be worth nothing at all.
Does the law force the choice?
Sometimes a deed is not optional. In New South Wales, s 23B of the Conveyancing Act 1919 provides that no assurance of land is valid to pass an interest at law unless made by deed, although land under the Real Property Act 1900 (NSW) is transferred by registration instead. Counterparties also drive the choice. Banks and lenders routinely require guarantees to be given by deed, and a purchaser of a business may insist that releases and indemnities take deed form. Assignments of intellectual property between related companies are commonly documented as deeds precisely because no value changes hands, even though no statute demands the deed form. Deeds also appear in more administrative settings, such as deeds of termination, escrow deeds and deed polls, where the formal instrument is used because the law or the institution involved expects it. Where legislation or a counterparty imposes the requirement, the question is not which document you prefer, but whether the document you sign satisfies the rule.
How you will sign and hold the document
Agreements are flexible in their logistics. They can be executed in counterparts, with each party signing its own copy and the signed copies together forming the contract, which suits parties in different locations. Deeds are subject to stricter rules about how they are signed and delivered, which is why the execution logistics need to be planned before the signing session. A company deed executed under s 127 of the Corporations Act 2001 (Cth) takes effect on execution, with no separate delivery. For an individual, the witness requirement remains, even where the deed is signed electronically. If the other party is in another state or overseas, the practical question of how the deed will be witnessed needs an answer before you commit to deed form.
How an Artificer Legal lawyer helps you make the call
A commercial lawyer can settle both halves of the decision: whether you need a deed, and whether the one you have signed is valid. An Artificer Legal practitioner would start by stress-testing the consideration analysis, mapping what each side gives and receives and flagging any promise that would fail as a contract. They would then advise whether a deed is required, optional or unnecessary for your transaction, having regard to the state involved and who the counterparty is. If a deed is the right path, the lawyer drafts it, makes sure it is expressed to be executed as a deed, and supervises the execution: the witness for an individual, the correct s 127 signatories for a company, and compliance with the electronic execution rules of the relevant state. If you are on the other side of the problem, with an agreement or deed already signed and a dispute brewing, a lawyer can check the limitation window before you issue proceedings, and advise whether a document that was meant to be a deed can be enforced at all. Where a deed was executed incorrectly, the lawyer can also advise on what can be salvaged, including whether it can be re-executed properly before a dispute arises, rather than discovering the defect when you try to enforce it.
The formalities are where deals come unstuck
The consideration question decides which document you need, but the execution formalities decide whether you actually have one. A deed that is signed without a witness, or by the wrong people for a company, can be unenforceable even though everyone intended it to bind. That is the detail to check before the document leaves the room, and the reason a lawyer's review of an executed deed is worth having before you rely on it.
In short: an agreement needs an offer, acceptance, an intention to create legal relations, and consideration, and it can be informal. A deed needs no consideration, but it must be properly executed: witnessed for individuals, signed under s 127 of the Corporations Act 2001 (Cth) for companies, expressed to be a deed, and delivered where the rules require it. Deeds are the right choice for one-sided promises such as guarantees, for settlements and indemnities, and where a longer New South Wales limitation window matters. If you are unsure whether your document was validly made, or whether a deed is needed at all, have a lawyer review it before you sign or before you rely on it.