THE EXECUTION OF DEEDS AND DOCUMENTS BY …

1 Iii226-224-1 underhand face-value asadeed (ExecutionofDocuments) import deliveryinthecaseofacorporation? (MiscellaneousProvisions)Act(1989) (ExecutionofDocuments) (i) (ii)SECTION74(3) (i) (ii)SECTION74(4) (MISCELLANEOUSPROVISIONS) face-value EXECUTION include delivery ? (2) (3)and(4) (5)and(6) (5)OFTHELAWOFPROPERTY(MISCELLANEOUSPROVI SIONS) (1) (i) (ii) (iii)SECRETARYORDEPUTYSECRETARY? (iv) (v) (vi) foreignCompany forthepurposeoftheregulations? (5) (6) , facevalue requirementadequatelydistinguishdeeds fromotherdocuments? :SPECIFICPROPOSALSFORTHEREFORMOFSECTION3 6 AOFTHECOMPANIESACT1985 ANDSECTION74(1) executed (6)andsection74oftheLawof (6)and74(1) PURCHASER (5)and36A(6),andsection1(5)oftheLawofPro perty(MiscellaneousProvisions) (5) (6) (ExecutionofDocuments) COMPANY BEDEFINED? formula (2)(b)oftheLawofProperty(MiscellaneousPr ovisions) Act1985andsection74(1) executed (6)andsection74(1) :ExtractsfromthePrincipalStatutesandInst ruments175 APPENDIXB:TheApproachinOtherCountries187 Scotland187 CivilLawJurisdictions189 NewZealand189 Australia190 ,thoughnotall, , ,orsubstantiallythewhole,ofthecompany sproperty,andthesecuritymusthavebeenorin cludedafloatingchargeoverthecompany sproperty.

2 ( ) Administrator-aninsolvencypractitionerap pointedbythecourtundertheInsolvencyAct19 86,ontheapplicationofthecompany,itsdirec torsorcreditors, ssurvival,ormakingabetterrealisationofit sbusiness,orasapreludetoavoluntaryarrang ementwithitscreditors.( ) , ( ) ,butinthisPaperthetermisusedexclusivelyt orefertoanincorporatedbody,andgenerallyi nthesenseofacompanyregisteredundertheCom paniesActs.( )Contractunderseal-acontractenteredintob ydeed.( )Corporation-abodywhichisrecognisedbylaw ashavingaseparatelegalpersonality, ,forexample,generallyholdproperty,andmay sueandbesued,initsownname.( )Corporationaggregate-acorporationconsis tingofabodyofpersons(althoughitistechnic allypossibletohaveacorporationaggregatew ithasinglemember).Examplesincluderegiste redcompanies(bothpublicandprivate),local authorities,andbuildingsocieties.( ) ,governmentministers,andbishops.( ) deed -awrittendocumentwhichisexecutedwit hthenecessaryformality,andbywhichaninter est,rightorpropertypassesorisconfirmed, ( )Delivery-thefinalformalityrequiredforth eexecutionofadeed,bywhichthemakerdemonst ratesinsomewaythattheyintendthedeedtotak eeffectandtobebindingonthem.

3 ( ) ,however,torefertosuchaninstrumentasbein gadeedwhichisexecutedinescrow.( ) EXECUTION -thewayinwhichacorporationente rsintoadocumentbysealingit,orbythesignat ureofitsdirectorsorotherofficersoragents , , ,butthetermissometimesusedinrelationtoan ycontractordocument,whetherornotadeed.( )Face-valuerequirement-therequirement,fi rstintroducedbysection1(2)(a)oftheLawofP roperty(MiscellaneousProvisions)Act1989, thataninstrumentisnotadeedunlessitisclea ronthefaceoftheinstrumentthatthemakerorp artiestotheinstrumentintendedittobeadeed . Face-valuerequirement isnotatechnicalterm,butaconvenientshorth andforthisrequirement.( )Foreigncompanies-companiesincorporatedo utsideGreatBritain,towhichtheForeignComp anies(ExecutionofDocuments)Regulations19 94apply.( )Instrumentunderhand-awritteninstrument, suchasacontract,whichissignedbyoronbehal fofthemakerorparties,butwhichisnotinthef ormofadeed.( )Internalmanagementrule-therulethatapers ondealingwithacorporationingoodfaithisno tobligedtoenquireintotheregularityofitsi nternalproceedings.

4 ( ) (otherthananadministrativereceiver) ( )Powerofattorney-adocumentbywhichonepers on(thedonor)givesanotherperson(theattorn ey)thepowertoactonthedonor sbehalfandinthedonor ,acompanymaygrantapowerofattorneytoenabl eanattorneytoexecuteadocumenttowhichthec ompanyisapartyonitsbehalf.( )Presumption-aconclusionorinferenceastot hetruthofsomefactinquestion, , ( ).Simplecontract-anycontract(whetherinwr itingormadeorally)otherthanaspecialty.( ) ,suchasanobligationbydeedsecuringadebt,o radebtduefromtheCrownorarisingunderstatu te(andalsoanysuchdebtitself).( )Unregisteredcompanies-certaintypesofcor porationwhich,whilstnotbeingregisteredco mpanies,arenonethelesssubjecttosomeofthe provisionsoftheCompaniesAct1985.( )Companies Act 1989, s 130(2), inserting s 36A into the Companies Act of Property (Miscellaneous Provisions) Act 1989, s 1, which was based on2recommendations in our report DEEDS and Escrows (1987) Law Com No 163.

5 Section 1abolished the requirement for sealing where the maker of a deed is an individual, but it maybe noted that the similar step taken for companies was not part of the same set of proposals. In Law Com No 163, we recommended that corporations should continue to execute underseal: para in particular, EXECUTION of DEEDS by Companies [1992] 1 LSG 28, publication of a3report by a joint working party of the City of London Law Society. By a joint reference from the Lord Chancellor and the President of the Board of Trade dated410 October 1994, requesting us to review the law on the EXECUTION of DEEDS and documentsby or on behalf of all bodies corporate and to make recommendations . , , ,theCompaniesAct1989abolishedtherequirem entthateverycompanymustkeepacommonseal,a nd,forthefirsttime, (MiscellaneousProvisions)Act1989, , ,andalsodifficulttoreconcilewithotherove rlappingstatutoryprovisions,particularly section74oftheLawofPropertyAct1925,andse ction1oftheLawofProperty(MiscellaneousPr ovisions) , , below, Part , ,wehavefoundtheretobealackofconsistencya nduniformityinthepresentlaw, ,aswehavejustexplained, ,itisnowsomeyearssincethosechangeswerema de,andwewouldparticularlyliketohearhowth epresentrulesareoperatinginpractice, ,andshouldnotbedisturbed, , ,thelevelofformalitiesrequiredforacorpor ationtoexecuteadeedorotherdocumentaffect sboththecorporationitself, ,andsowhetheradocumentwillbeeffective, ,orwherealegalopinionhastobegivenastoits validity, , ,theyareofparticularrelevancetoanumberof differentareasofpractice.

6 Mostobviouslytothosepractisingcompanyorc ommercialpropertylaw, , , ,withwhichsection36 Aismainlyconcerned, of Land: Formalities for DEEDS and Escrows (1985) Working Paper No 93; Deeds6and Escrows (1987) Law Com No Companies Act 1985, s , eg, the practice note issued by the Joint Contracts Tribunal in November 1990 on how9the attestation clauses to the JCT standard forms of building contract should be amendedfollowing the 1989 reforms, describing the new statutory provisions as difficult to interpretin detail , and advising employers and contractors to take legal advice where they wish toenter into what had been commonly referred to as a contract under seal : PracticeNovember 1990, RIBA V and VI , , , ,wedoaddressa6limitednumberofissueswhich arerelevanttodeedsgenerally,whereitappea rstousthattherulesinrelationtocorporatio nscannototherwisebesatisfactorilyexamine d.

7 ,andwehavetakenitasbeingbeyond7ourremitt oproposeanychangeinthesituationswhenthel awrequiresadeedtobeused, , , , , ,whethermadebyanindividualoracorporation , , , ,acompanymayexecuteadeedbythesignatureof twoofitsPart can lead to difficulties in practice where conveyancing practitioners may find it15frustratingly difficult to establish how a deed should be correctly executed when property ispurchased from a company in liquidation or ,itseemsthattheconsequences-forexampleas regardsdeliveryofthedocument-maydifferde pendinguponhowacompanyexecutesadeed(name lyundersealorotherwise). ,wherethereareagainoverlappingstatutoryp rovisionsfordifferenttypesofcorporation, beforeexaminingtheexecutionofdeedsonbeha lf13ofacorporationbyanattorney,liquidato r, , , ,ourconcernwithexecutiononbehalfofacompa nybyaliquidatororadministrativereceiveri smorewithpotentialtechnicaluncertainties withtheirpowersundertheInsolvencyAct1986 , , , , ,inPartXIXwesummarisethemattersuponwhich weinvitecomments, ,andweaddbriefnotescomparingthepositionw ithotherjurisdictions, , May 1996.

8 The relevant parts of the decision have so far only been noted in (1996) NPC1781. Other aspects of the decision are reported at [1996] EGCS 87. We have based ourcomments on the transcript of the judgement. The decision has not been appealed. Thejudgement is also of particular interest as regards the scope of Law of Property(Miscellaneous Provisions) Act 1989, s 2, holding that the correct approach in determiningthe application of s 2 is to examine the contract as a whole, and that the purpose of s 2 is notto strike down business contracts merely because they might contain some land sale ordisposition ,whohasdrawnourattentiontoanumberofthedi fficultieswiththepresentlaw, ,JohnseyEstates(1990)LtdvNewportMarketwo rldLtdandOthers, , ,butwehaveendeavouredtotakefullaccountof it, , the term instrument we simply mean a formal legal document in writing. For a fuller1definition see Halsbury s Laws of England (4th ed 1975) Vol 12 paras further below, paras - , and particularly paras - A contract made2orally and not reduced to writing (also known as a parol contract) is also, of course, a type ofsimple corporation may be defined as a body of persons (in the case of a corporation aggregate) or3an office (in the case of a corporation sole) which is recognised by the law as having apersonality which is distinct from the separate personalities of the members of the body or thepersonality of the individual holder of the office in question for the time being.

9 For a fullerdefinition of a corporation aggregate, see Halsbury s Laws of England (4th ed 1974) Vol 9 para1204. Such a corporation may be either a mere body, composed of constituent parts no oneof which differs substantially from the others, or it may be a body with a head or otherdistinct member, the existence of which is essential to the corporation (eg, a dean andchapter). See Law of Property Act 1925, s 180 for the position where there is a vacancy atthe head of a corporation aggregate of the latter type. For corporations sole, see below,paras - below, para , and see S Kyd, A Treatise on the Law of Corporations (1793) pp 267-268:4 A corporation aggregate, being considered as an indivisible body, cannot manifest itsintentions by any personal act or oral law, therefore, has established anartificial mode, by which the general assent of the corporation to any act which affects theirproperty, may be expressed.

10 This is by affixing the common seal. This once widely , , , underhand solemnform asdeeds,andotherinstrumentswhicharegener allyreferredtoasbeingin simpleform ,thisisrecognisedbythedistinctionmadebet weenacontractexecutedasadeed,whichisaspe cialty,andaninstrumentunderhand, , , ,but,notbeinganaturalperson,canonlyactei therbyresolutionofitsmembersingeneralmee ting, , has, however, been described as an eighteenth-century rationalisation of a technical rulewhose historical origins lie in the fact that the early common law provided no remedy for thebreach of parol contracts, whatever the identity of the maker: see the Law ReformCommittee s Eighth Report (Sealing of Contracts by Bodies Corporate) (1958) Cmnd 622 p 3. See also Chitty on Contracts (27th ed 1994) Vol 1 pp 21 - 22, pointing out that in earlytimes an executory contract was only given effect if sealed and delivered.