Deed of Agreement

What is a Deed of Agreement?

A deed of agreement is a type of legal instrument commonly used in Australian government procurement to formalise the contractual relationship between a procuring agency and a supplier. Unlike a simple contract, a deed does not require consideration (an exchange of value) to be enforceable, making it the preferred instrument for certain types of government arrangements.

How Does a Deed Differ from a Contract?

The key legal distinctions between a deed and a contract in Australian law are:

• Consideration — a contract requires consideration (something of value exchanged between parties), whereas a deed is binding without it. This is relevant for arrangements like Standing Offer Arrangements where there may be no guaranteed work
• Limitation period — the statute of limitations for enforcing a deed is typically 12 years, compared to 6 years for a simple contract (this varies by state and territory)
• Execution formalities — deeds require specific signing formalities, including witnessing, that simple contracts do not
• Delivery — a deed must be “delivered” (communicated as binding) to take effect

When is a Deed of Agreement Used in Government Procurement?

Deeds are commonly used for:

• Standing Offer Arrangements and Deed of Standing Offer — where the supplier offers to provide goods or services if and when the agency requests them, but no work is guaranteed
• Panel Arrangements — establishing the terms under which panel members may be engaged
• High-value or long-term contracts — where the longer limitation period provides additional security
• Multi-party arrangements — where the deed structure better accommodates multiple signatories

Key Components of a Government Deed of Agreement

• Recitals — background context explaining why the deed is being entered into
• Operative provisions — the substantive terms, obligations, and rights of each party
• Schedules — detailed specifications, pricing, KPIs, and other technical content
• Execution block — signing provisions that comply with deed formalities

Tips for Tenderers

• Understand the legal structure — know whether you are entering into a deed or contract, as this affects your rights and obligations.
• Seek legal advice on execution — deeds have strict signing requirements; errors can make them unenforceable.
• Review the limitation period implications — a 12-year enforcement window means obligations persist longer than under a contract.
• Check for guaranteed minimums — deeds for panel or standing offer arrangements may not guarantee any work volume.