Closing or execution of a contract – every party's dream come true!
Contracts are like a childbirth – so much of expectations, precautions, treatments, pain and what not.
Prior to agreeing on a final version of a contract (i.e ready for execution version) - parties go through multiple rounds of negotiations and interactions and put a lot of effort, time and money in preparing such final version.
Having said that, the execution process is as important as other components of the lifecycle of a contract. Proper execution of a contract is crucial to make a contract valid and binding on the parties –no scope for any negligence or error in the execution of a contract can be afforded as it could make the contract void. Such a situation would cause considerable loss of effort, time and money placed by the parties in shaping the final version of a contract (i.e ready for execution).
As a professional, your endeavour must be to ensure an effective, economical, and seamless process for contract execution. Following are certain procedures and systems that will help to build a process for proper execution of contracts:
1) Coordination with Client: It is important to coordinate with the Client to seek / reconfirm the following information about the process
a) Mode of execution of contracts (Manual or Electronic)
b) Date and Timing of execution process
c) Correct Names and titles of the Signatories and entities names
d) List of documents needs to be signed
e) If any, conditions precedents or subsequent to be fulfilled.
2. Preparation of documents:
Preparation of documents includes listing out various Contracts (if multiple contracts being executed simultaneously as a part of a composite transaction) to be executed
Confirming Number of copies (hard copies and electronic copies) to be prepared for execution,
Details of persons
(i) who will sign the contracts;
(ii) checking authority of these persons for execution;
(iii) to whom such contracts need to be forwarded (if need be) for execution;
(iv) with whom the executed copies of the contracts to be shared.
3. Checking of the documents:
After listing out the contracts, each contract needs to be thoroughly checked for:
i) any water marks, versions, codes and other details in the contract (including header and footer) and remove them to the extent they are not required in the document.
ii) Details of signatories (name and title), company name, date etc., to ensure details are accurate and legible.
iii) Pagination and section numbering to ensure they are accurate
iv) Indexing correct clause and page numbering
v) Each page and paragraph to ensure none is missing
4. Determining satisfaction of Conditions precedents:
List out all conditions precedents (i.e conditions to be fulfilled prior to contracts' execution) and tick all of them one by one after going through the evidence / confirmation of its satisfaction by the concerned party / parties.
5. Execution: Initiate the execution process - for hard copies, arrange a venue for signatories to be present and physicall sign the contracts; for electronic copies, send (via email or other electronic mode a final version of the contract for signatures to the signatories.
6. Circulation : Once the contracts are signed by the signatories, executed copies need to be shared with all recipients who are intended by the parties to share a copy of execution version.
7. Storage: Executed contracts needs to be stored in appropriate places for easy access by the parties as and when required for legal, regulatory and compliance purposes.
8. Fulfilment of Conditions subsequent: It is crucial to list out all conditions subsequent (i.e conditions to be fulfilled after execution of contracts) and make sure Client has fulfilled all conditions subsequent post execution of the contracts.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.