Deeds of release
A deed of settlement and release is a formal document that contains the agreement between the parties to settle the dispute.
Before you draft or sign a deed of release, you should get
legal advice.
For a helpful tool to use when writing a deed of release, see
Checklist: Writing agreements and settlements.
A very simple deed of release will start by naming the date it was made and stating who the parties to it are:
THIS DEED OF MUTUAL RELEASE is made on 12 October 2011
BETWEEN: John Smith of 12 Westown Street, Westown NSW ("seller")
AND: Barry Pratt of 12 Eastown Street, Eastown NSW ("buyer")
The next part is usually called the 'Recitals' and it contains background information and an explanation of the dispute:
RECITALS
A. The seller was the owner and registered operator of the red Ford Laser motor vehicle with registration number ABC 123 ("the motor vehicle").
B. On 17 August 2010 by written agreement, the seller agreed to sell and the buyer agreed to buy the motor vehicle for the sum of $10 000 (the "sale agreement")
C. On 18 August 2010 the buyer took possession of the motor vehicle.
D. On 29 August 2010 the engine of the motor vehicle seized and caught fire ("the accident"). The damage caused to the motor vehicle by the accident was irreparable.
E. The buyer and seller have agreed to release each other from all claims arising out of or in connection with the sale agreement and the accident on the terms set out in this deed.
After the 'Recitals', the parties describe the agreement that has been reached and the effect of that agreement. This is called the 'Operative Part'.
The 'Operative Part' can include sections that deal with:
- the terms of settlement (including who will pay what and what will happen when payment is received)
- definitions
- confidentiality
- taxes
- which state or territory laws apply to the deed.
For example:
OPERATIVE PART 1. Settlement of claim Without admission of liability, each of the seller and the buyer agree: a. that the seller is to pay the buyer the sum of $2000 upon the signing of this Deed. b. that upon payment of the amount at 1.a. and signing of this Deed, each party releases the other from all claims arising out of or in connection with the sale agreement and the accident; and c. that this deed may be pleaded as a bar by either party to any action, suit or proceedings by the other party arising out of or in connection with the sale agreement and the accident. 2. Confidentiality Except for the purposes of: (a) obtaining legal or accounting advice regarding this deed; (b) complying with a legal obligation; (c) enforcing the terms of this deed; each party must keep the terms of this deed confidential. 3. Proper law and jurisdiction This deed is governed by the laws of New South Wales. Each party agrees to submit to the jurisdiction of the courts of that state or territory and agrees that any proceedings arising out of or in connection with this deed may be brought in any court of competent jurisdiction in that state or territory. |
Next comes the execution, where the parties place their
signatures. A deed usually has each signature witnessed.
For example:
SIGNED SEALED AND DELIVERED by JOHN SMITH in the presence of:
Signature of witness
Name of witness
Signature of party
Name of party
SIGNED SEALED AND DELIVERED by BARRY PRATT in the presence of:
Signature of witness
Name of witness
Signature of party
Name of party |
Your signature on a deed may need to be witnessed, depending on whether you sign as an individual or on behalf of a company. If you are not sure about the signing requirements on the execution page of a deed you should get
legal advice.
When signing (executing) a deed of release, you should make sure that there are copies for each of the parties involved. Often a deed of release will be 'executed' when one party provides their signed copy to the other party, and the other party in turn provides their signed copy to the first party. This is known as an 'exchange'. On exchange, each copy of the deed should be an exact copy of the other.