A Truce in Erfworld is a mutual agreement between two or more sides to not attack each other. Like an Alliance a Truce agreement is a form of Signamancy which can contain automagically enforced penalties and restrictions. Violation of a Truce does not necessarily end the Truce.
It is likely that any Ruler may form a Truce, and probable that Side representatives such as Chief Warlord and Chief Caster can make a Truce on their side's behalf. A caster using Signamancy could likely improve, refine, or otherwise optimize a Truce agreement.
Units under a Truce still see each other as enemies, evidenced by Lilith's ignorance and violation of the Truce despite being repatriated.Erf-b3-p100