A recent decision in the High Court in Bibby Financial Services and others -v- Magson and Others [2011] EWHC 2495 (QB) has highlighted an important issue in relation to signing an agreement as a deed.

In this case, personal guarantees were signed and witnessed as deeds by two individuals and handed to the other party (Bibby Financial Services) as an act of good faith to illustrate their intention to proceed with the transaction. The deeds had been amended by hand, and it was intended that such amendments would be incorporated into final versions of the deeds which would then be signed again. The amended versions of the deeds were never signed and Bibby Financial Services sought to rely on the signed deeds which had been amended by hand.

The High Court decided that the deeds were not enforceable, as they had not been intended to be delivered as deeds in accordance with the meaning of Section 1 of the Law of Property (Miscellaneous Provisions) Act 1989. To be delivered as a deed, there must be an indication by the person signing it that he wishes to be bound by the terms in the document.

This case highlights the need to ensure that simply signing a deed and handing it to the other party is insufficient. There must be a separate indication that the person signing intends to be bound by a deed in order for it to be ‘delivered’. Parties may seek to prevent any difficulties in this respect by making it clear in the deed that it is intended to be delivered on the date it is signed, or by obtaining separate written confirmation that the parties intend it to be delivered.

Please note that this information is provided for general knowledge only and specific advice should be sought for individual cases.

 

For further information, please contact Peter Francis at