Legal Definitions - composition deed

A composition deed is a type of deed that reflects an agreement between a debtor and a creditor to discharge or adjust a debt. For example, if a debtor owes a creditor $10,000 but cannot pay the full amount, they may enter into a composition deed to settle the debt for a lower amount, such as $5,000.

One example of a composition deed is when a business is struggling financially and enters into an agreement with its creditors to pay a portion of its debts over time. The composition deed outlines the terms of the agreement and how the payments will be made.

Another example is when an individual owes money to multiple creditors and enters into a composition deed to consolidate the debts and make a single payment to all creditors.