The GULS Law Review

Getting you through the GU law degree!

header photo

Signature Changes: The Introduction of Execution in Counterpart into Scots Contract Law

This article discusses the possible introduction of execution of counterpart into Scots law by the Legal Writings (Counterparts and Delivery) (Scotland) Bill 2014. Currently Scots contract law requires all parties to a transaction to sign the same physical document, and the provisions of the Draft Bill introduces a new mechanism to Scots law, familiar in England, execution in counterpart. This would allow parties to send documents to each other by electronic means and reduce costs, and time delays, in commercial transactions. This article will involve a detailed analysis of the provisions of the Bill, their practicalities for solicitors in practice, and the perceived deficiencies at Scots law at present leading to it's introduction.

Written by Robert Oates, Diploma student and sub-editor of the Commercial Law portion of the Review. 


At present, if a written contract is to be validly executed in Scotland then both parties must sign the same physical copy. This is in contrast to the position in English law where each party may sign their own copy, a counterpart, and then exchange it with the other party (or parties)[1]. Therefore a commercial solicitor in England is clearly in a preferable position whereby clients can conclude contracts remotely on the same day, without having be present at the same place at the same time. However, under Scots law, in order for a contract to be probative which parties to sophisticated commercial transactions will require the subscription of all parties upon the same contractual document, plus the signatures of witnesses, is required[2]. This situation is clearly impractical for Scottish solicitors and clients, where there is a lack of clarity as to good practice and has led to a number of impracticable solutions.


During a consultation carried out by the Scottish Law Commission the difficulties encountered by Scots practitioners were recognized, detailed analysis of the law at present was conducted and recommendations were made. These recommendations fell into a larger mandate by the SLC to examine Scots contract law and the continuous attempts to incorporate electronic signatures into Scots law. On 14 May 2014 the Legal Writings (Counterparts and Delivery) (Scotland) Bill[3] was introduced to the Scottish Parliament following a Report[4] earlier this year from the SLC. The Bill is currently sitting at its First Reading and may, therefore, be subject to further amendment.


A Lack of Clarity in the Law

The SLC Report did recognize that, excluding requirements of probativity, it is possible to argue that Scots law recognised the possibility of execution in counterpart. However this argument is based on eighteenth century sources, and is not widely recognized, nor accepted, within the profession[5]. Ultimately it is preferable for change to be introduced through legislation to create a framework and establish limits on the capacity for this mechanism of concluding contracts.


The perceived inability to utilise execution in counterpart as a mechanism of delivery has led to some unusual solutions in practice. These include endless expense through courier companies and postal fees to send a physical document to various locations and the use of English law as an alternative to Scots law, for the sake of commercial expediency. It is clear the law as it stands has become dated and possibly restrains trade.


What about Electronic Signatures?

The need for introduction of execution in counterpart is perhaps somewhat overshadowed by the modernisation of Scots law introduced by the provision execution of electronic documents by electronic signatures in Part 3 of the Requirements of Writing (Scotland) Act 1995[6]. This permits parties to deal entirely in electronic documents, whereby parties (or their solicitors as agents) can apply their electronic signature to the agreed electronic document wherever it is. However, since there is no secure electronic document exchange facility at present, this provision sits stagnant awaiting a process in which it can be utilised. Therefore introduction of the Draft Bill would provide a superior mechanism for parties in certain transactions, particularly where parties are not located in close proximity. For example for a large multi-national commercial transaction the alternative options permitted at present under Scots law are a round robin style delivery to all parties or alternatively all parties would need to meet for a signature session. The Draft Bill includes provision for electronic documents and traditional documents.


The Draft Bill as Introduced

The Draft Bill creates a clear framework by which a document executed in counterpart will be effective under Scots law[7]. It should be noted that this framework includes a mechanism for which documents created physically on paper (termed “traditional documents”) can be regarded by electronic means for the legal purpose of concluding a contract.


Section 1 of the Draft Bill confirms the validity of execution in counterpart[8], and recognises the traditional multi-party mechanism is unaffected[9]. Section 1 Subsection 2 explains that execution in counterpart is the process whereby a document is signed by more than one party and both parties subscribes it’s own copy (“counterpart”) of the document, provided that each counterpart is a duplicate with the other. The counterparts can be signed at different places at different times. Once this execution takes place, the counterparts are to be treated as a single copy[10]. The document becomes effective upon delivery[11]. Delivery is not defined within the Bill, therefore the pre-existing law continues to apply, however the draft bill provides the requirement that the counterpart must be delivered to every other party whose signature is not on that counterpart[12], or a person nominated to take delivery or one, or all, of the counterparts[13]. Therefore execution in counterpart is subject to the pre-existing requirement of Scots law that written documents must be delivered to become effective. In this way, the general law is unaffected, and the Bill provides an additional mechanism of delivery. The Draft Bill stipulates that a document must continue to conform to any other requirements required for it to become effective[14], to ensure cohesion with the present law.


The addition of subsection 9 permits parties to control the date and date at which the counterpart is to be delivered, as an exception of subsection 5. Therefore parties could reach an agreement that the document is considered executed at a more specific, defined date, than the date at which possession is transferred to the parties to whom the counterpart must be delivered. This permits parties to receive a counterpart, hold it as undelivered, until a suspensive condition, for example, has been met.


Section 1 Subsection 3 provides that once the counterparts are executed they are deemed to form a single document, and this document can be made of a collated version of one entire counterpart combined with the pages of the other counterparts that have been subscribed. In this way, each party to the document can subscribe their counterpart, with a witness to ensure the probativity, and then the described collated document can be registered in Books of Council and Session. This simplifies registration and searching in the register, particularly where there is a complex multi-party contract being concluded.


Section 2 of the Bill sets out the legal framework where the parties decide to deliver documents to a nominated party[15]. Effectively one individual can effectively act as the administrator for the signing process, increasing commercial expediency. The nominated person may be one of the parties or an agent of them. A nominated person is under a duty to hold and preserve the delivered counterparts for the benefit of the parties involved.


Section 3 provides that the first two sections apply to electronic documents. Therefore the Bill clarifies that it is competent to execute an electronic document in counterpart (with the possibility of nomination). Given the fact that electronic signatures have yet to be fully fleshed out, as discussed above[16] the utility of the provisions at present await further developments. However, where the electronic documents do not require writing the parties are at liberty to determine, and agree, what kind of electronic signature is sufficient to constitute subscription in counterpart. This leaves the possibility for Scottish solicitors to develop a mechanism in practice. The practicalities of this are unclear at present.


Section 4 clarifies the mechanism for delivering a traditional document. This is achieved by delivering a copy of the document[17] or a part of the document[18] by electronic means, which could include email or fax. Therefore Section 4 creates a new mechanism for delivery for legal purposes by allowing documents to be considered validly executed following delivery using technology as a vessel. If an individual is to collate the document, however, he must obtain the pages actually signed by the parties involved. Therefore for major commercial transactions, it would be preferable if an electronic signature system could be introduced, as the continual need to send physical documents remains a burden. Section 4 Subsection 3 provides that if only part of the document is delivered then it is subject to two requirements. Firstly, it must be clear that the delivered counterpart is part of the document which has been subscribed and, secondly, it must contain the page with the subscription. The parties have the freedom to decide amongst themselves the electronic means of delivery[19]. This could include fax or a PDF file attached to an email. If the parties fail to come to an arrangement then the question of what is to be delivered will be what is reasonable for the recipient to receive, viewed objectively in all the circumstances[20].


A Look to the Future

It is unclear at present what, if any amendments, will be made to the Draft Bill as it passes through the Scottish Parliament. The introduction of execution in counterpart to Scots law is one of a number of incremental changes occurring to contract law in an attempt to ensure that the law is up and keeping with commercial transactions and technological developments. Given the endless search for an adequate system of electronic signatures the use of execution in counterpart may provide a useful mechanism in the interim for the conclusion of commercial contracts.

[1] C. Hood, ‘Execution in Counterpart in Scots Law’ 2014 Abstract

[2] Scottish Law Commission, ‘Discussion Paper on Formation of Contract’ 2012 SLC DP 154

[3] Scottish Parliament. (2014). Legal Writings (Counterparts and Delivery) (Scotland) Bill.Available: Last accessed 20th Oct 2014.

[4]  Scottish Law Commission, ‘Report on the Formation of Contract: Execution in Counterpart’ 2013 SLC 231

[5] Smith v Duke of Gordon 1701 Mor 16987

[6] Introduced by the Land Registration etc (Scotland) Act 2012, s97

[7] Legal Writings (Counterparts and Delivery) (Scotland) Bill Explanatory Notes

[8] Legal Writings (Counterparts and Delivery) (Scotland) Bill SP Bill 50, s1(1)

[9] ibid, s1(2)

[10] ibid s1(3)

[11] ibid s1(5)

[12] ibid s1(6)

[13] ibid s1(7)

[14] ibid s1(5)(b)

[15] ibid s2

[16] It is unclear at present what an advanced electronic signature is, as required by the Electronic Documents (Scotland) Regulations 2014 (SSI 2014/83)

[17] Legal Writings (Counterparts and Delivery) (Scotland) Bill SP Bill 50, s4(2)(a)

[18] ibid s4(2)(b)

[19] ibid s4(4)

[20] ibid 4(5)



Go Back