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.
