Simplified rules for deeds in England and Wales

The aim is to make it easier for UK businesses to conclude contracts.

Clarifying when a document is a deed is important as some transactions, such as a lease of land, can only be completed by using a deed. The period for suing on a contract is six years, but for a deed (including a contract made by deed) the period is 12 years.

The new Regulatory Reform (Execution of Deeds and Documents) Order 2005 makes it easier for companies to determine when a document is a deed and makes clear that simply affixing a company seal will not make a document a deed. It also clarifies some Acts that are inconsistent in their definitions.

The key changes introduced by the Order are:

• merely sealing a document will not make it a deed;
• third parties will be able to rely on the signatures of two directors to attest a company seal on a deed, as well as the signatures of one director and the company secretary;
• directors and secretaries of more than one company entering into a deed will have to sign separately for each company they represent;
• companies will be given the same flexibility as individuals to complete the formalities of signing a deed in advance of being bound by it;
• third parties will be able to rely on a solicitor having authority to complete a transaction in all transactions, not just when land is being sold;
• companies will have power to delegate the task of execution; and
• third parties can rely on the attestation of companies acting as director or secretary of another company when that company executes a deed.

"The Order will remove uncertainties, reduce burdens and make life easier for all concerned,” said Parliamentary Under Secretary of State Baroness Ashton.

“Every day companies enter into thousands of contracts and deeds across England and Wales. It is a commonplace but fundamental business activity. The legal rules defining when one of those documents is a deed and the consequences of it being so should be absolutely clear and simple to operate,” she added.