What Is A Deed Of Release?

When solving disputes, it’s essential to ensure you release yourself from current and future obligations. One way of doing this is by signing a deed of release. So, what exactly is a deed of release and how do they work?

A deed of release is a legal document signifying the end of an agreement. The deed must clearly indicate the termination of an existing partnership or agreement. If you’re looking to create or sign a deed of release, it’s a good idea to consult with an experienced dispute lawyer to confirm the document fully releases you from all current and future claims. 

In this article, we’ll explain more about a deed of release in Australia and the instances in which you can use it, the risks involved with the document, and what happens if a deed of release is breached. 

Understanding Deeds Of Release In Australia

A deed of release is an agreement between two or more parties to resolve a dispute or release each other from legal obligations. This document allows the involved parties to end an existing agreement. 

The deed of release can be useful when you need to discharge yourself from obligations and prevent the other parties from raising future disputes. It also helps save time and money that would’ve gone to litigation and dispute resolution. 

What Are The Contents Of A Deed Of Release?

The contents of a deed of release vary depending on the parties’ agreement and what they intend to achieve with the deed. In most cases, an effective and enforceable deed of release will contain the following: 

  • Basic information: The deed must include the information of the involved parties, which might be the parties’ legal names or companies’ ACN and corporate names. 
  • Release clause: It’s the main element of a deed of release that outlines that one or all parties are released from the agreement’s obligations or claims. 
  • Recitals/Preamble clause: A factual statement explaining the agreement or dispute the deed seeks to resolve.
  • The settlement clause: The deed may include a settlement clause if one (or more) parties are required to make a payment or settlement. 
  • Confidentiality: Deeds of release are usually private, and the terms and agreement should be kept confidential. 
  • Execution clause: The execution clause provides a section for the involved parties to sign and actualise the deed. 

When solving employment disputes, the deed of release may include a section requiring the involved employee to hand back company property. A deed of release can also contain other clauses like non-disparagement and a bar to proceeding.

When Can You Use A Deed Of Release?

A deed of release is an important legal document that you can use to permanently resolve disputes, end contracts, or forego various obligations. Below, we’ve explained the situations where a deed of release is commonly used. 

Employment Contracts 

When ending an employment contract, the employer can request an employee to sign a deed of release. The deed protects the business by removing the employee’s rights to make claims after the contract ends or is terminated. 

Commercial Disputes 

Partners in a commercial partnership can use a deed of release to resolve their dispute and end the disagreement legally. In commercial relationships, the deed may be signed together with a settlement agreement. 

For example, if a company breaches a contract, it can offer to pay for damages and sign a settlement agreement after both parties are satisfied. After signing the settlement agreement, the company would sign a deed of release, formally ending the dispute and preventing future claims. 

Mutual Release

Use a deed of release to terminate a personal guarantee and remove any legal obligations contained in the agreement. The deed of release is useful when the involved parties want to mutually release each other from a contract, liability, or agreement. 

Loan or Credit Agreement 

If you’re in a financial agreement, you can use a deed of release to end the agreement. The deed can also be helpful when ending a loan/credit agreement, such as a mortgage, after settling all the payments. 

How To Sign A Deed Of Release

You might need to seek legal advice when signing a deed of release to ensure the document is valid and will be enforceable after signing. Some general tips when signing a deed of release in Australia include:

  • Ensure there are neutral witnesses (uninvolved parties) during the process.
  • The deed aligns with the company’s rules and has the signatures of key people like directors and secretaries. 
  • Thoroughly read the deed’s terms or hire a legal expert to explain unclear clauses. 
  • Sign all the copies 
  • Keep the signed copies safely in case you need them in the future 

What Are The Risks Of Signing a Deed Of Release? 

While a deed of release is important in ending disputes or liabilities, it can also carry some legal risks. For example, it can prevent you from making future claims even if you believe the other party owes you. 

Before signing the deed, it’s essential to understand its terms and implications fully. Hire an expert dispute lawyer to review the deed of release and help you avoid any associated legal risks. 

What Happens If The Deed Of Release Is Breached? 

If one of the involved parties breaches the deed of release, the other partners can claim damages caused by the breach. The affected party can begin litigation to recover the damages or losses incurred. Working with an expert lawyer is essential to ensure the best possible outcome. 

Aditum Lawyers Can Help Deal With Deed Of Release 

Whether you’re dealing with or drafting a deed of release in Australia, Aditum Lawyers can help you confidently navigate the process while safeguarding your best interests.

Our team of commercial lawyers has years of experience helping clients and businesses deal with contracts and resolve disputes. Book a free consultation, and let’s help you deal with deeds of release.

Resources & Further Reading 

  1. https://www.aigroup.com.au/resourcecentre/resource-centre-blogs/hr-blogs/deed-of-release-or-a-settlement-agreement/
  2. https://www.fairwork.gov.au/tools-and-resources/fact-sheets/minimum-workplace-entitlements/ending-employment
  3. https://lawpath.com.au/blog/whats-a-personal-guarantee

Disclaimer: The information provided in this article is for general informational purposes only and should not be construed as legal advice. Consult with a qualified commercial lawyer for personalised advice regarding your specific situation.