Do you want to give someone (a relative or a friend) some money without getting anything in return? It sounds straightforward and uncomplicated. The truth is that non-bargain promises, where there is no consideration(remuneration), are generally unenforceable under the English contract law. This may not be bad for the donor however, it could mean that the receiver cannot request the promised money to be paid and, what even more important, he/she may be obligated to return the gift if the donor changes his/her mind. The law seems very cynical in this regard. It appears that the general assumption is, that nothing in life is for free. Nevertheless, there are some exceptions to this rule (like the doctrine of promissory estopel, not discussed in this paper) and there is also one way of making this kind of unwarranted promise both enforceable and non-refundable.
Deeds are enforceable despite a lack of consideration. This can be contrasted with the position for simple contracts (made orally or even in writing) which requires that valuable consideration must be given for the promises being made. A deed is a written instrument which is executed with the necessary formality. For an individual a deed will be validly executed when it is signed in the presence of a witness who attests to the signature, and it is delivered as a deed. In this case “delivery” does not mean physical delivery. A deed is delivered when a party makes clear its intention to be bound, regardless of whether that party retains possession of the document. Communication of the intention to be bound does not have to be communicated to the other party but it must be shown by some act or in words.
All necessary formality in case of deeds gives them higher evidential value, mainly because of the additional authentication requirements (witnesses). Additionally, the transaction will usually be carefully considered before executing a deed and it should be clear from the document what is the purpose and effect of it.
Important aspect of a deed is that under the Limitation Act 1980 (LA 1980), the limitation period for claims made in connection with a deed is 12 years from the date the cause of action accrued. This limitation period is twice as long as for claims under simple contracts, where the limitation period is 6 years.
Gifts have some potential tax implications, and this should be taken into account while making non-bargain promises.
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