The Legal Writings (Counterparts and Delivery) (Scotland) Bill has now been passed. This piece of legislation allows the execution in counterpart of formal documents and contracts, and will also permit them to become legally effective by electronic delivery.
The legislation is only seven sections long, but it is anticipated it will have great impact on legal practice and business. The idea behind the legislation is to modernise Scots law and address an inconsistency with the requirements of modern business.
The new legislation focuses on two aspects of Scots law that were previously out of sync with the rest of the UK: the ability to create legally binding documents through signing in counterpart and; the ability to deliver documents electronically.
Signing in Counterpart
Prior to the introduction of the new law, it was not possible to create legally binding contracts in Scotland by having the parties sign in counterpart. The options for creating such prior to the new law coming into force are: holding a completion meeting where all parties are present to sign the document; having a ‘round robin’ where the document is passed from party to party until all parties have signed or; including a clause stating that the governing law was English law that would allow the parties to sign in counterpart.
Each of these methods carry their own specific drawbacks and thus the Scottish Law Commission created the new rules that will be more convenient for both lawyers and their clients.
Under the new law, parties can sign in counterpart to create a legally valid document. The document can be made up of all the counterparts or one counterpart in its entirety together with all the fully executed signature pages. The document will become legally binding once all of the counterparts have been delivered.
However, the parties may set a time at which the counterparts are deemed to be delivered or make delivery subject to a specified condition. This gives parties certainty as to when exactly when documents will come into effect.
If no time is specified, documents executed in counterpart are effective from the last date of delivery.
Furthermore, documents may be delivered in hard copy or electronically.
The new legislation allows all legal documents requiring delivery to be delivered by email, fax, memory stick, disc or other kind of removable or portable media.
The parties to the transaction can decide amongst themselves how they would like delivery to be made. The legislation also makes provision for the circumstance where parties do not agree on a delivery method, or where the delivery method is impractical or uncertain. Under these circumstances, will be by any means and form that is deemed to be reasonable in the circumstances. It is designed to prioritize practicality and to make it easier on parties to effect delivery. For example, it may be the case that delivery was originally to be effected by email however due to internet complications it had to be delivered on a USB stick to the office of the other party. Whilst priority is given to what the parties agreed, there is a fall back position should any difficulties arise.
As can be seen from the details of the changes, the new legislation is about making doing business easier and finally bringing the law in line with modern reality. So far the change has been welcomed by legal practitioners and those doing business with them.