UK: New Act Will Streamline Corporate Deals In Scotland

Counterpart signing and the electronic delivery of documents becomes legal in Scotland today (1 July 2015) with the coming into force of sections 1 to 4 of the Legal Writings (Counterparts and Delivery) (Scotland) Act 2015.  The signing of documents in counterpart already exists in England and Wales and, as a result, many Scottish businesses were choosing English law to govern their transactions.  Therefore, the new Act brings Scotland into line with the rest of the UK and will make it much easier to settle large corporate transactions north of the border. 

A document is signed in counterpart if "it is executed in two or more duplicate, interchangeable, parts, and no part is subscribed by both or all of the parties".  This means that each party can sign separate copies of the contract in different locations, as opposed to signing the same document.  This method of signing will make the conclusion of large corporate transactions much easier and far quicker.  It should be noted that the introduction of counterpart signing in Scotland does not displace the existing methods of signing multi-party documents, and parties can, if they choose, still decide to gather together and sign the document at the same time.

A document signed in counterpart will only become effective upon delivery.  There are two options for delivery:

1) each party must deliver a signed counterpart to every other party to the document; or

2) the parties nominate someone to take delivery of one or more of the counterparts.  In practice, this person will often be a legal adviser. 

The signed counterparts can then either be put together to make one full document or all of the signing pages can be attached to one copy of the agreement.

Although the document will become effective on delivery, it is possible for the parties to agree that the document should be held as undelivered, for example, until certain conditions have been fulfilled.

There had previously been some concern that delivery of documents by electronic means, i.e. by e-mail or fax, was not effective.  The Act now makes it clear that documents which are delivered electronically have full legal effect.  However, it may still be necessary to deliver the principal document where, for example, registration is required.

Parties should ensure that the date on which the document came into effect is clear from looking at the document (this date cannot be earlier than the date on which all counterparts were delivered).  Therefore it may be useful to adopt the English practice of including the effective date on the first page of the document. 

In most English counterpart documents, you will usually find a "counterparts clause".  Such a clause is not necessary in Scotland or England.  However, it may be useful to incorporate such a clause into Scottish documents which are to be signed in counterpart as it may avoid disputes about signing, dating and delivery at a later date.

The introduction of counterpart signing and clarity surrounding the delivery of electronic documents brings Scotland into the 21st Century and finally meets business needs.  By bringing Scotland into step with the rest of the UK, it will ensure that many continue to see Scotland as a good place to do business.

© MacRoberts 2015

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