A New Dawn for Deals
Published byGraham Bell
It's finally happened!
On 1 July 2015, Scotland's legal system entered a new age, when the Legal Writings (Counterparts and Delivery) (Scotland) Act 2015 was brought into force. Similar rules have been in force in England for years, but Scotland has now caught up.
The Act allows for the exchange of documents (such as sale contracts, loan agreements and the like) to now be carried out electronically. It’s the exchange which makes the contract binding.
Until the Act came into force, these documents had to be physically delivered by one party to the other, which often led to hold-ups in deals being completed, and of course the risk that the document would be lost in transit.
Now, documents can be executed and delivered "in counterpart", meaning that both parties can sign their own copy of the document which, taken together, then become the "single document" so long as each copy is then delivered to the other party. Such delivery can now take place by electronic means.
In a further change, the Act also allows for completion of electronic documents in this way, in addition to "traditional" documents. An electronic document is one which is created electronically, rather than on paper. To sign an electronic document, the signature must be authenticated by having the signature incorporated into the electronic document itself, but once this is done, the new Act says that the electronic document can be delivered in counterpart form.
The new Act will make it easier for corporate documents, loan deals and other transactions to be settled without the need for physical delivery of the document itself.
This will potentially help all deals. Also, as Scotland's economy becomes more outward-facing, entering into inward investment deals with US, European and Asian businesses, this flexibility makes the process of contracting so as to allow access to those markets so much easier.
The information contained in this newsletter is for general guidance only and represents our understanding of relevant law and practice as at July 2015. Wright, Johnston & Mackenzie LLP cannot be held responsible for any action taken or not taken in reliance upon the contents. Specific advice should be taken on any individual matter. Transmissions to or from our email system and calls to or from our offices may be monitored and/or recorded for regulatory purposes. Authorised and regulated by the Financial Conduct Authority. Registered office: 319 St Vincent Street, Glasgow, G2 5RZ. A limited liability partnership registered in Scotland, number SO 300336.
