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Prior to 1 July 2015, many solicitors in Scotland, and potentially some clients too, will have felt the challenge at times of getting corporate deals over the line and validly signed in Scotland. It was previously thought by many in Scotland that “wet ink” signatures of all parties were required on the same copy of a contract, resulting in agreed form contracts being prepared ahead of completion (and sent round each party to sign independently) or large completion meetings being scheduled to allow all parties to sign at the same time.
With the coming into force of the Legal Writings (Counterparts and Delivery) (Scotland) Act 2015 (the “2015 Act”) on 1 July 2015, there is now certainty that contracts can validly be signed in counterpart in Scotland. This is something solicitors south of the border have been able to do for some time, often to the envy of those to the north. Counterpart signature is where the parties to an agreement sign separate physical copies of the same document. The counterpart agreement is treated as a single signed document, comprised of each counterpart in its entirety or one counterpart in its entirety to which a signature page for each party has been attached. Parties should note that when signing a document in Scotland, it is necessary to sign the whole document and not merely the signature page and the introduction of counterparts will not change this approach.
Where a document has been signed in counterpart, the fall-back position under the 2015 Act is that the contract is effective from the date all counterparts have been delivered. Delivery of counterparts is possible by either:
- each party delivering a signed counterpart to all other parties; or
- a nominee being appointed to receive counterparts from all parties and deal with onward delivery of the counterparts to all parties (and in practice this is likely to be a solicitor for one of the parties).
Delivery of documents can take place by traditional means (post or hand delivery) or, with the introduction of the 2015 Act, by electronic means (including email, scanned attachment, fax, memory stick etc). This applies whether or not a document is signed in counterpart (so will apply to all legal documents where delivery is required).
Where parties do not intend to use the fall-back position, and have agreed on a later date for the contract to come into effect, it will need to be clear from looking at the document when the effective date is intended to be. With that in mind, it might be useful to adopt the same approach as English lawyers, dating the agreement on the front cover.
Finally, parties should note that where a document requires to be registered (for example in the Land Register of Scotland), such registration will still require all “wet ink” signatures to be on the same version. It is possible to sign in counterpart, but the agreement should be made up of one counterpart with all original copies of the signature pages attached. It is also recommended that where such a document is signed in counterpart, a counterpart clause is included within the contract.
The new legislation brings Scotland in line with the rest of the UK and aims to make executing contracts in Scotland much easier and far quicker. It does not prevent the more traditional method of signing from taking place and parties can, if they choose, still opt to have completion meetings to sign the documents at the same time. There is now, however, a less cumbersome, and a less costly, process for execution, providing greater flexibility to those involved and hopefully encouraging companies to do business in Scotland.
Solicitor – Corporate & Commercial