chapter  10
30 Pages

LEGALLY BINDING THE COMPANY

Section 1 of the LP(MP)A 1989 goes on to set out how an individual complies with s 1(2) (b), that is, how a natural person validly executes a document as a deed. The rules for how a company validly executes a deed to comply with s 1(2)(b) are found in ss 44 and 46 of the Companies Act 2006. Even if ss 44 and 46 are complied with, the document must also comply with LP(MP)A 1989, s 1(2)(a): it must be clear on its face that it is intended to be a deed. Section 44 deals with execution of any document by a company and s 46 focuses on execution of a document as a deed. Section 44 provides that a document is executed by a company if either:

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1. the company’s common seal is affixed to it; or

2. it is expressed to be executed by the company and is signed by:

 two authorised signatories (two directors or one director and the company secretary); or

Section 46 then adds that for a document to be validly executed as a deed for the purposes of LP(MP)A 1989, s 1(2)(b), the validly executed document must be ‘delivered as a deed’. To deliver a deed is to evince an intention to be bound (Xenos v Wickham (1867) LR 2 HL 296). The act of executing a document indicates just such an intention unless the facts indicate otherwise. This is now captured in s 46(2) which states that a document is presumed to be delivered upon it being executed, unless a contrary intention is proved. Accordingly, although it is common in practice to state on the document the words ‘delivered as a deed’, these words are not strictly necessary. No reference to delivery needs to be made. The presumption is that the deed is delivered upon it being executed. This is very often not the intention, the intention being for the deed to take effect on an agreed date that is not to be dictated by the availability of those required to execute it. It is common therefore to expressly address delivery on the face of the deed in order to pinpoint the date upon which the deed is to become effective. Typical language used in a contract by way of deed would be, ‘This deed is delivered on the date written at the start of this agreement.’