Deed of Release (Mutual)

What is a Deed of Release (Mutual)?

This Deed of Release (Mutual) is for use when two Parties are both releasing each other from certain obligations or liabilities.

This Deed of Release (Mutual) may be used to settle a dispute between the Parties, for example if an incident occurs, and both Parties believe that the other Party is at fault. Rather than taking legal action in the courts, the Parties may reach an agreement out of court, and may use this Deed to document that agreement. The document is designed for the resolution of civil matters between Parties. It is not intended for use for employment disputes, criminal matters, or for issues with public authorities.

For example, if there is a minor car crash, and it is somewhat unclear who was at fault, the Parties might use this Deed to record their agreement that they will both refrain from taking any legal action against the other. In some cases, the Parties might also agree that one Party pays something to the other Party, in addition to both Parties releasing each other from any further obligations. By reaching an agreement in this manner, both Parties may avoid a lot of stress, save on legal costs, and still reach an appropriate resolution.

By signing this Deed, the Parties do not actually have to admit any liability. In fact, a clause can be included in the Deed whereby the Parties specifically confirm that nothing in the Deed says anything about either Party's actual liability. However, within the Deed, the Parties can confirm that the Parties are released from all relevant liabilities towards each other. Once the Parties enter the Deed, the dispute between them will be finalised, meaning that neither Party can take any further action (in relation to the particular issue that is in dispute). This means that the Parties may be giving up some of their legal rights. Therefore, if the Parties have any concerns about this, they should seek legal advice.

What is the difference between a Deed of Release (Mutual), a Deed of Release (General One Way) and a Deed of Release for Employment?

This Deed of Release (Mutual) can be used for a wide range of situations (aside from employment situations). It is intended to be used when multiple parties are simultaneously releasing each other from various obligations and liabilities.

For employment situations (when an employee is leaving the employer), we have a Deed of Release for Employment available.

If the release is only going one way - if one party (the "First Party") is releasing the other party (the "Second Party"), but the Second Party is not releasing the First Party, we have a Deed of Release (General One Way) available.

Is it mandatory to have a Deed of Release (Mutual)?

No, it is not mandatory to have a Deed of Release. However, it is a good way to rule a line under the matter so that both parties can move forward with confidence that it has been resolved.

If the parties do not use a Deed of Release, then it remains possible that either party could come forward at a later date to make a claim against the other party.

What does the term "release" mean?

In this document, the term "release" refers to being released from any further claims. If one party (the "First Party") is releasing the other party (the "Second Party"), then this means that the First Party agrees they have no further legal claims against the Second Party.

In fact, in this Deed of Release (Mutual), the First Party is releasing the Second Party, and the Second Party is also releasing the First Party. So both parties are agreeing that they have no further claims against the other.

Therefore, in respect of a particular obligation, the Party which is "releasing" the other Party, is effectively giving up some of their legal rights. This should not be done without careful consideration. Both Parties should make sure that they understand the consequences of this. If they have any doubt, they should seek independent legal advice.

What has to be done once a Deed of Release (Mutual) is ready?

Once the Deed has been prepared, both Parties may take a copy (before it is signed) and review it to ensure that they understand the Deed and are happy with the terms of it.

There are certain formal requirements that need to be met in order for a Deed to be validly signed. This Deed will need to be signed in accordance with those formal requirements, or it may not be legally binding. For example, for an individual to validly sign a Deed, the signature clause should read "Signed Sealed and Delivered" and they should sign it before an independent adult witness, who also provides their full name and signature. The rules regarding the signing of Deeds by companies are set out in the Corporations Act 2001, and generally require the Deed to be signed by two directors, or by a director and the secretary or in the event that the company has a sole director, by that person.

Again, if the Parties are unsure about this, they should seek legal advice. If the Parties get this wrong, the Deed may not be legally binding.

Is it necessary to have witnesses for a Deed of Release (Mutual)?

For individuals or partnerships, it is generally necessary to have witnesses for a Deed to be validly signed. In many states and territories of Australia there is legislation which explicitly requires a witness. In some states and territories of Australia it is not legally mandatory, but it is still best practice to do so. Therefore, this Deed is set up to require witnesses for all individuals who sign it.

For companies that are signing the Deed under section 127 of the Corporations Act 2001 (by having the directors and/or secretary sign it) then witnesses may not be required.

What must a Deed of Release (Mutual) contain?

The Deed of Release should record various details, such as:

• Full names of the Parties.
• Contact details for each Party.
• Details about the relationship between the Parties (in other words, what has happened between the Parties, giving rise to the need for this Deed).
• Details of any payment or other benefit which is being provided from one Party to the other, in return for the release which this Deed provides.
• A confidentiality clause (although if confidentiality is important to the Parties, they may also consider preparing a separate Confidentiality Agreement).
• A release from further obligations.
• An acknowledgement from the Parties that matters are finalised.
• Confirmation from the Parties that they have had the opportunity to obtain legal advice.

Which laws are applicable to this Deed of Release (Mutual)?

If this Deed is being used by the Parties to release each other from certain contractual obligations, then general principles of contract law, as provided by the common law, may apply.

In addition, if the Deed is being used by the Parties to release each other from other legal obligations, for example, in connection with damage to property or personal injuries, then various other bodies of law may apply. For example, each state and territory has legislation and common law that deals with civil liability, and which may need to be considered.

Each state and territory has legislation that addresses the formalities that apply to the signing of deeds by individuals. In addition, the Corporations Act 2001 (Cth) deals with the signing of deeds by companies.

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