Counterpart clauses permit contracts to be signed by multiple parties at different times. They are useful when the signatories are in different locations and (because of geographic or time restrictions) it is not practical to bring them together to execute the contract.
In theory, it’s a pretty straightforward matter. But, like many boilerplate clauses, failure to give a counterpart clause sufficient attention can create future headaches. Lawyers and clients should have due regard to a number of considerations, including:
How will the executed contract be delivered? If the parties aren’t in the same location, at least one of them will have to deliver the contract to another party and it’s entirely possible that delivery by regular mail or courier won’t be timely enough. As a result, your counterpart clause should say that delivery of a faxed version of the signature is deemed to be the same as delivery of an original signature.
Assuming that you’ve joined the 21st century, your counterpart clause should also contain language that envisions the use of an electronically-scanned version of a signature in lieu of an original, not just a facsimile version.
Faxed or PDF versions are great for convenience’s sake, but you’re probably going to want the originals at some point. Consider adding wording to the effect that the parties will undertake to deliver original documents as soon as possible.
Hang around a lawyer long enough and you’ll hear the phrase “out of an abundance of caution” (usually this takes about five minutes). If the document in question is a contract, it wouldn’t hurt to clarify that acceptance may be validly effected by a fax or PDF version of the offeree’s signature.
Consider when delivery will be effective. For letters, we have the postal box rule: acceptance occurs when the letter is placed in the mail. In the case of faxes, courts have looked to when the recipient had actual notice of the document (as opposed to the time at which it was transmitted). With e-mail, The Electronic Commerce and Information Act (Manitoba) deems acceptance to occur when an e-mail enters a recipient’s e-mail inbox, as opposed to when the person actually opens and reads the message.
Finally, you may wish to consider to whom the fax or e-mail is to be transmitted, and whether this requires revision to your contract’s notice clause, if it has one. The last thing you want is a fax sent to a dark corner of the office to the fax machine that time forgot (we’ve all got one).
So there you have it, counterparts in a nutshell. Or Formicashell. Or graniteshell. You get the point.
This article was prepared by: