This Deed of Release (Mutual) is for use when two Parties are both releasing each other from certain obligations or 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.
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.
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.
How to use this document
Use this Deed of Release (Mutual) when Parties wish to release each other from certain obligations or liabilities. Record the various details of the final agreement between the Parties.
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.
Importantly, it is worth noting that this Deed serves to "release" the Parties from some of their respective obligations. 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. Because of this, the Deed also includes a clause confirming that the Parties have had the opportunity to obtain legal advice (and either took that advice, or chose not to obtain advice). If either Party has not had the opportunity to obtain legal advice, then they should not sign the Deed.
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 who is also the secretary, 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.
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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