Electronic deeds and execution in counterpart

The Legal Writings (Counterparts and Delivery) (Scotland) Act 2015 (“the 2015 Act”) has been passed and received Royal Assent on 1 April. It is expected to be in force from early May. This change to Scots law sits alongside the changes introduced by Part 10 of The Land Registration Etc. (Scotland) Act 2012. Part 10 of the 2012 Act essentially e-enables all the documents referred to in s 1(2)(a) of the Requirements of Writing (Scotland) Act 1995 and thus permits electronic documents to have equivalent status and standards of validity and authenticity to paper documents. The Electronic Documents (Scotland) Regulations 2014 set out the requirements for electronic signatures. It also provides for electronic registration in the Keeper’s registers.

Once the 2015 Act is in force, parties to documents governed by Scots law will be able to be sign a separate identical copy of the document rather than all parties to the document signing the same physical document either at the same time or at different times. This brings Scots law into line with the position in English law. In addition, any paper document will be able to be delivered electronically with full legal effect. Indeed, the document can also be signed electronically if a qualifying electronic signature is being used. For comment on the secure digital signature facility contained within The Law Society of Scotland’s Smartcard see www.lawscot.org.uk/smartcard  

A document executed in counterpart will only become effective if delivery (which can be by electronic means) is made by each party of its signed counterpart to the other party or parties. It is possible for the parties to any document to agree that the document or obligations in it will not become effective until a later specified date.

Once all parties have signed, the document will consist of either (i) all of the signed counterparts put together in their entirety or (ii) simply one full copy of the document attached to the signing page from every counterpart signed by the parties.

As mentioned above, the new law makes it clear that documents created and signed on paper can be delivered electronically and have full legal effect.  This removes concerns that existed that electronic delivery was not sufficient -  a view, whilst correct, that was out of step with modern business methods.

A document once executed in counterpart can be delivered electronically without any need for special clauses or changes to the  document itself.  It is, however, essential that it is clear from looking at a document when it came into effect. Therefore, the date when the document has legal effect will need to be inserted. This date will either be the date when the last of all counterparts have been delivered or a separate later date as agreed  by the parties. In either case, that date needs to be inserted in the document. It will be interesting to see if practice develops along the lines of that which is common in England where a date is inserted on the first page of the text of the document. Above all however, parties and their solicitors must ensure that there is no dubiety as to when the document actually came into effect.

The introduction of execution in counterpart in Scots law is a welcome development which is widely supported by both business and the legal profession. The Scottish Law Commission is to be congratulated for advancing its consideration over a relatively short period of time.