For example, where a lawyer has an option to prepare a non disclosure agreement or confidentiality deed. It can be prepared as a confidentiality deed or a confidentiality agreement.

A lawyer will know the difference but so should you, especially if you are relying on online templates.

So if you had the choice, which should you use - deed or agreement ?

Here are some features of a deed and an agreement side by side to help you decide which is best for you.

Agreement	Deed
You need: offer, acceptance and consideration (something of value) changing hands	You need: to use pen and sign on paper You need a witness in the state of Victoria (so for best practice, include a witness signature block) Witness needs to be over 18 and not a party to the deed. use "signed, sealed and delivered" above the signature block
You don't need: to use pen, you can e-sign A witness - they are optional	You don't need: Consideration. You don't need any money to change hands to use a deed.
Advantages: easy to e-sign no witness needed	Advantages: you don't need consideration (money to change hands) you have a longer time period to enforce a deed - 12 years in all states except SA and VIC which allow 15 years
Disadvantages: You have 6 years to enforce an agreement can't use them for initial discussions when money has not changed hands.	Disadvantages: Pen and paper are needed, no e-signatures allowed

Examples of when to use a deed and when to use an agreement

Below are the features that may impact your decision to select either an agreement or deed in a particular situation.

Agreement	Deed
Consideration there's offer, acceptance and consideration You are giving the agreement to someone that you will pay or someone that will pay you e.g. employee, supplier, consultant	No consideration there's no consideration (no money changing hands) e.g. prospective collaborator, business partner. You are still investigating if the party will be a good fit so money has not changed hands yet. e.g. discussing a confidential business idea.
E-signing important If e-signatures are important, use the agreement, otherwise if not, use a deed because you'll have a longer enforcement period.	E-signing is not important If you don't have any trouble getting pen signatures on paper, you can use the deed.
Enforcement: not a substantial investment, you can accept a 6 year enforcement period	Enforcement There's a substantial investment involved and you need a longer time period to enforce your agreement - the deed allows you 12 years in all states except SA and VIC which allow 15 years
Disadvantages: You have 6 years to enforce an agreement can't use them for initial discussions when money has not changed hands.	Disadvantages: Pen and paper are needed, no e-signatures allowed and this is ok with you.

What if you get it wrong ?

If you use an agreement and there was no consideration (no money changing hands) then the agreement may not be enforceable.

But, before you panic, get advice.

So given that there can be some enforceability concerns with the agreement. What's safer?

The safer option

In this way, deeds are a safer option - you don't need to worry about a lack of consideration e.g. discussing a business idea without money changing hands because the deed covers you regardless.

But... as discussed above, you'll need to sign a deed with pen and paper and if you are in Victoria, you'll need a witness.

So, if speed is a factor in getting a document executed, these extra steps could make a deed a hassle for you.

As always, if you are in doubt, get advice.

I wish you success in your ventures!

I need help with a contract

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About the author

Vivian Michael

As founder and lawyer at Michael Law Group, CPA and owner of a business consultancy, Vivian is well-positioned to advise Australia's top entrepreneurs. Entrepreneurs benefit from Vivian's commercially focussed legal advice, business experience, and commitment to deliver the best quality business legal services to entrepreneurs, wherever they may live in the globe.