Counterparts

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Outside the arcane and stupefying word of conveyancing, a counterparts clause is a waste of trees. Let that not stop your legal eagles insisting on one, on pain of cratering the trade altogether, of course: a fellow has to put food on the table for his younglings.

Black’s Law dictionary has the following to say on counterparts:

“Where an instrument of conveyance, as a lease, is executed in parts, that is, by having several copies or duplicates made and interchangeably executed, that which is executed by the grantor is usually called the "original," and the rest are "counterparts;" although, where all the parties execute every part, this renders them all originals.”}}

Sometimes it is important that more than one copy of a document is recognised as an “original” — for tax purposes, for example, or where “the agreement” must be formally lodged with a land registry. But these cases, involving the conveyance of real estate, are rare — non-existent, indeed, when the field you are ploughing overflows with flowering ISDA Master Agreements, confidentiality agreements and so on. Away from the gripping world of land law, a counterparts clause is as useful as a chocolate tea-pot.

Cautious counsel (equally useful, of course) may nonetheless insist on one, against the threat of having everyone get around the same table to mark the same parchment with a feather quill.

Unless you are executing a deed of lease, THIS IS NONSENSE. Normal contracts — even deeds) do not require a counterparts clause. How so? Well, think back to your first contract law lecture:

For a contract to be effective you need:

• offer
• acceptance
• consideration

Execution, however you manifest it, is simply a means of indicating acceptance. Acceptance does not require a quill. It does not require a signature (digital or otherwise) at all. One may accept orally, by gesture, or even just by behaving in a way that can only really be explained by imputing your acquiescence to the terms of the contract being argued about. All one needs to do is satisfy a court that your counterparty communicated acceptance somehow.

A signature is simply evidence of that acceptance. Parties signing different copies of the same contract is no less compelling evidence than both signing the same one.

Note, also, that where formal execution requirements do require every hand to besmirch the same physical parchment, a counterparts clause won’t save you. This is deep magic, and no beginner’s spell will shoo it away.

See also

• In your face
• Counterparts and Confirmations - ISDA Provision