NEW WAYS TO SIGN AND DELIVER CONTRACTS AND OTHER DOCUMENTS

Doubts as to the competence of executing a document “in counterpart” will be removed under recommendations published today.  If the draft legislation attached to our report becomes law, parties will be able to create a valid contract or other document by each signing their own copy (or “counterpart”) and exchanging it with each other.  At present this is thought not to be a competent way of executing documents to give them legal force under Scots law; instead they are commonly made effective by gathering together all parties to sign them.  Our recommended reform will permit parties to sign remotely from each other, if they wish.  This option has numerous benefits in terms of time, cost and effort and is strongly supported by those who have contributed to our project.  We have also heard that the parties and their advisors often want the document to be probative and so we have designed our reform to give that result.

We also recommend, again in response to views expressed to us, that the exchange of counterparts can take place electronically; and indeed, more generally, that this should apply to any document requiring to be delivered.  Thus it would be competent to use a fax machine or to send a scan of a signed document by email.  Not only would this resolve uncertainties in the current law (eg as to whether a conveyancing missive can be delivered by fax) but it would do so in a way which permits full and appropriate use of modern technology.  Our final reform looks further into the future, to a time when digital signatures are used instead of ink ones, and we recommend the establishment of a secure and confidential repository for storing (and perhaps also for negotiating) electronic documents.

Our report, entitled Review of Contract Law – Report on Formation of Contract: Execution in Counterpart (SLC No 231) is available to
download here.  We have also published a Business and Regulatory Impact Assessment (here) and have issued a press notice (here).