Some contracts are called “deeds”. What does that mean? Originally, a deed was a contract that had a wax seal attached to it. These seals were usually red, but sometimes were in other colours, like black. Sometimes they were attached directly to the document, and sometimes to a ribbon that was attached to the document.
Deeds could, and still can be used in a variety of contexts. One common situation is where a person is making a promise to do something, but nobody is making a promise in return. Why is that a problem? Because the law defines a contract as a mutual exchange of promises. I give you $5, you give me a sandwich. If I am promising to give you $5 but you aren’t giving me anything valuable in exchange, it may be difficult for you to enforce my promise. (The law is complex, and this discussion is a simplification.)
But if I make the promise in a deed, and we each attach our seals to the document, then your seal is symbolically considered to be “the thing of value” exchanged by you. Problem solved. So, do people really use melted wax and big metal stamps to put seals on documents in modern times? Most of the time, no.
Seals have evolved. The first change was from a wax seal to a sticker or printed seal. You will see these, for example, on college or university degrees and other important certificates. On contracts, there was a phase in Australia where people were putting small red stickers next to their signatures. The latest version of a deed signature doesn’t need any kind of red dot or sticker (in Australia). All the parties have to do is to write on the contract that it is “executed as a deed”. It is also traditional for individuals to sign under or beside the words “signed, sealed and delivered”, instead of just “signed by” or “executed by”.
Apart from the advantage of being able to enforce a contract where it is dubious or obvious that nothing of value has been exchanged by the parties, in some places the enforcement period for a deed is longer than for an ordinary contract. In the State of Western Australia, for example, the limitation period for bringing an action to enforce a deed is currently 12 years, while it is only 6 years for an ordinary contract.
As with any contract, care must be taken to sign a deed properly. Failure to execute any contract properly, e.g. by forgetting to insert the date, or to identify the signatories properly by printing their names under or beside their signatures, can lead to problems in future.
[This post was written by James Irving, contract and business lawyer in Perth, Australia. Visit his Irving Law website for more law-related information. This post is not intended as legal advice for any particular person, and presents the law in Australia at the time of writing. Photo credit: wax seal in the Basel Historiches Museum by Mattes a public domain image published by Wikimedia Commons and used here under a CC BY 2.0 DE licence.]