Monday, 13 July 2015

What is the Law in your Life?

5 things you should know about The Legal Writings (Counterparts and Delivery) (Scotland) Act 2015:

1.   This eagerly awaited piece of legislation finally came into force on 1st July 2015.  In short, this means that execution in counterpart in now recognised in Scots law. For a brief overview of this Act, please see our blog “Electronic deeds and execution in counterpart”.

2.   Nominee: Under section 2 of the Act, the parties to a document executed in counterpart can nominate someone to take delivery of the counterparts. It is perfectly competent for a solicitor acting for one of the parties to take on this role and indeed this is what was envisaged when the Act was drafted.  With regard to the scope of the nominee’s role, the Act makes it clear that the nominee’s duty is to “hold and preserve” the counterpart(s) for the benefit of all the parties.  If a solicitor does take on this role, they should take care so as not to inadvertently breach their duty as a nominee. A solicitor could not, for example, withhold a counterpart on a client’s instructions without breaching their duty under section 2 of the Act.

3.   Delivery by electronic means: It is clear under the Act that parties can agree to deliver by fax/email only the signing page of the contract, once signed in counterpart. The Act also makes it clear that there must be something beyond the signature to show it is part of the correct document. One possible solution to this would be to insert a footer/header which would set out the full name of the contract, the version of the contract, and the date it was transmitted etc.

4.   Counterparts clause: Under the Act, there is no requirement to have a counterparts clause.  However, it would be good practice to have such a clause, at the very least to serve as an explanation to third parties such as Registers of Scotland or Companies House.

5.   Assembly of the document: Under section 1 of the Act, upon execution, the counterparts are to be treated as a single document which may be made up of both/all the counterparts in full OR one of the counterparts in full, collated with the pages on which the other counterparts have been signed. For obvious reasons, the first option would be a much more unwieldy document but either is competent.