When a dispute arises, the parties usually reach settlement before the matter proceeds to court and litigation. A settlement deed is a document that contain the agreement between the parties to settle the dispute. The deed usually include details about the parties, background information and the source of the dispute, information about the settlement, what the parties have agreed on and finally the signature of the parties. Witnesses are required to witness the signing of the document.
Difference between a Contract and a Deed
For a contract to be valid and enforceable between the parties there are certain requirements that needs to be satisfied, there has to be:
• two or more parties;
• an offer and acceptance in relation to the contract;
• an intention by each party to be legally bound; and
• Consideration in relation to the contract which means that the promise that are given by one party needs to be answered with a counter-promise by the opposite party.
The big difference between a contract and a deed is that consideration is not a requirement for a deed to be binding. A deed is a sign to the public that the parties intend to carry out their obligations in relation to the contract, consideration is not needed. The purpose of a deed is to overcome problems that can arise when there is no consideration in relation to the obligation in an agreement. For a contract to be valid there has to be two or more parties involved, a deed on the other hand is valid even when there is only one party.
When deciding if a document is to be regarded as a deed, the crucial element is if the party executing it intended to be immediately bound by the agreement.
After the settlement deed has been drafted, the parties may want the court to make a consent order. In relation to agreements, the consent orders are easier to enforce since they have the same status as court decisions. Once the order is stamped it becomes an order of the court. The consent order needs to be filed and may include the terms of the settlement deed if the parties agrees on it, it states what the consent order will be.
A consent order usually includes information like the following:
• Case details,
• Method of payment,
• Party to party costs or costs on indemnity basis.
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