Witnessing a deed: You’ve got to see it to believe it

Why the need for a deed?
One of the elements of a legally binding contract is consideration. Deeds are generally used where no consideration is provided for within the document itself, even if that document is part of a broader transaction with consideration (e.g. a guarantee of an existing debt). Sometimes, it is a legal requirement for a document to be executed as a deed, e.g. powers of attorney and mortgages.

An added benefit of a deed is that it generally has a 12-year limitation period, which means contracting parties have a longer claim period against each other.

How should the deed be signed?
When a document is a deed, one way it can be signed is for the signatory to sign it in the presence of a witness. The witness needs to be physically present and in the room with the signatory when the signatory applies their (e-)signature to the document and sees them doing this. Witnessing by video call is not acceptable.

If the party to a deed is a corporate entity, that entity can sign a document as a deed by two directors or a director and the company secretary of the entity signing the document. In this case, their signatures are not required to be witnessed as there are two signatories.

What if a document has not been correctly executed as a deed?
It may still take effect as a ‘simple’ contract provided that:

1. it is valid as a ‘simple’ contract (including that consideration has moved between the parties);
2. there is no legal requirement for the contract to be made as a deed; and
3. the document’s signatories had the authority to sign a ‘simple’ contract.

If these requirements are not met, the contract may not be enforceable.

What are the requirements for a witness?
The requirements for a witness are primarily ‘best practice’ rather than law. However, a witness to a signature may be required to testify that the signatory signed the document in their presence. The veracity of the evidence presented by a witness may be diminished if best practice is not followed, so to avoid costly allegations regarding the validity of any attestation, witnesses should:

1. Not be a party to the deed. This is a legal requirement. Counterparties cannot attest to each other’s signatures, but they can share a witness.
2. Must be over the age of 18. While not technically prohibited, choosing a minor can cast doubt on independence and reliability.
3. Be unconnected to the parties (e.g., not family members) and not benefit from the contract. Again, while not prohibited, this can cast doubt on independence and reliability.
4. Reside in the UK. It may also be more problematic to trace a witness overseas than a UK resident.
5. Be human. It has been previously decided that corporate entities cannot attest a signature as they cannot witness it.

Comment
In a transactional context, it is common for at least one of the transaction documents to be a deed (such as a director’s resignation letter or seller’s deed of release of claims). It is also not uncommon for deeds to be incorrectly executed (see our article – DocuSign: Making signing contracts easier and (sometimes) more complex). Whilst it is arguable that ancillaries form part of the broader consideration for the deal in the context of a transaction, since those documents may include waivers on which a buyer might want to rely, our general advice is to have deeds executed correctly to reduce the likelihood of their validity being challenged in the courts.