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A good deed is never lost

30th March 2021

Even though we seem to be on the route out of lockdown one minor but albeit interesting thing (I say that in the hope you find it interesting!) solicitors have had to field many questions on over the past 12 months is around the execution of deeds.

Some documents are required to executed as deeds under law and some others may be prepared as deeds for a variety of reasons.  It’s important to know the difference to ensure your documents are valid, binding and free from being challenged.

Formalities

In order to be a deed, the document:

  • must be in writing;
  • be clear on the face of it that it is intended to be a deed;
  • must be executed as a deed (with the correct formalities); and
  • must be delivered (which is a way of signifying that the person who made the deed intends it to be effective and to be bound by it).

Delivery of a deed in this context doesn’t necessarily mean actual delivery (for instance by handing over or posting) but rather when you indicate your intention for the deed to become effective so that you are bound by it, even if you physically retain it.

Companies face an added problem in executing deeds in that there is an automatic presumption that deeds executed by Companies are delivered at the time they are executed, unless there is evidence to the contrary. This can mean before the deed is dated! There are generally two ways for companies to rebut this presumption which are:

  1. ensuring the deed itself states that it is not delivered until dated; or
  2. making it clear to the other party in writing that the company doesn’t consider it delivered until it is dated.

Additionally, a deed doesn’t necessarily have to be dated to be effective, just “delivered”.  The dating of a deed is usually evidence of when it took effect but a deed becomes effective when it is delivered, even if it is not actually dated!

As deeds must be validly executed, the formalities for execution of a deed will differ according to the legal personalities of the parties to it.

Individuals and Deeds

The main way individuals enter into deeds is by signing them in the presence of a witness who then attests (bears witness to) that individual’s signature. In some instances two witnesses may be required.

In current covid times however finding someone to witness a signature has not always been easy or indeed possible. We have heard of many instances of people arranging for witnesses to attest signatures in a variety of socially distanced ways, including over the garden fence. As long as the witnessing formalities comply with the requirements this is fine.  These are that:

  1. The witness observes the signatory signing the deed; and
  2. The witness then signs the deed to attest that signature.

A witness cannot also be a party to the same deed and whilst there is no statutory requirement for witnesses to independent or not interested in the arrangements, as the main purpose of the witnessing is to give unbiased evidence of who signed what and when, then using an independent witness would always be considered best practice. However there is nothing technically preventing a spouse of one party to a deed acting as their witness, provided they are not also a party to the same deed.

Companies and Deeds

Companies execute deeds in one of three ways, either:

  1. by affixing its common seal. This is much less common these days (pun intended!) as companies are no longer required to have common seals;
  2. by the signatures of two officers of the Company (two directors or a director and the company secretary); or
  3. by the signature of a director in the presence of a witness who attest that signature (in the same way as for an individual).

It is important to note that the requirement under 2 above (execution by two officers) is for two separate people to sign.  If a person is both a director and the company secretary then they cannot sign for both.

There is also a question mark over whether the two officers actually need to sign the same physical copy of the deed for it to be valid. There is no specific authority here and so given the uncertainty that might arise over this, where two officers cannot physically sign the same document, the prudent approach would be to utilise method 3 above or alternatively, as the two officers don’t actually need to sign the deed at the same time, the deed can be signed by one officer before then being sent to the other for the second signature.

Method three above was introduced to help companies when the statutory requirement for companies to have a minimum of two officers was removed.

The Future!

Covid-19 has seen many changes in our daily lives and the way we work and this is no different in terms of legal practice and the signing of deeds and documents.  As one mobile phone operator told us in the past the future is bright and, even if it is not necessarily of a certain colour, it is almost certainly going to be “electronic”.

Signing deeds and documents electronically has been with us for some time now but has become increasingly more important over the last 12 months during lockdown. The inability to attend physical signing meetings has generally led to more and more use of this technology.

The general view is that current law permits the use of electronic signatures to sign or execute documents and is a valid and viable alternative to what are commonly known as “wet ink” signatures. This view is supported by government and whilst more work is likely to be done in the future on updating legislation to specifically deal with electronic signatures and electronic witnessing, there is no getting past the fact that it is in widespread use and here to stay.

Electronic signatures can take a variety of forms from the typing of a name into an electronic document such as an email, a scanned version of a manuscript signature placed in an agreement, the click of a website icon confirming an order to much more complex cryptographic signature systems which are in regular and widespread use.

Specifically for deeds, the same strict formalities must be observed whether or not you use an “electronic” method or “wet ink” method of execution (see formalities above).  It is therefore likely to be the case that, even when using electronic execution methods, the witness still needs to be physically present at the signing when the signatory places their electronic signature onto the deed. Whilst this may change in the future there is currently a real risk of remote witnessing for instance, via video link, being ineffective under current law.

Neil Jones is a director and joint head of the corporate team at Ansons.  If you would like to know more about our services please call us on 01543 466660.

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