Counterparts
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Boilerplate Anatomy™
From our finance contract envy™ series
JC clause suggestion
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The remainder of the contract might be an absolute shower of confusions, contradictions, misconceptions, failures of consideration, unenforceable half-promises, paralytic indemnities, absurd disclaimers of liability and outrageous derogations from the perfectly sensible allocations of risk vouchsafed by the common law of contract, but be assured: there will be a counterparts clause and it will be bullet-proof.
It’s for leases, peeps.
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. If yours does — and if you are still reading, I can only assume it does, or you are otherwise at some kind of low psychological ebb — a “counterparts” clause is as useful to you as a chocolate tea-pot.
Indeed: even for land lawyers, all it does is sort out which, of a scrum of identical documents signed by different people, is the “original”. This is doubtless important if you are registering leases in land registries, or whatever other grim minutiae land lawyers care about — we banking lawyers have our own grim minutiae to obsess about, so you should forgive us for not giving a tinker’s cuss about yours, die Landadler. [1]
ANYWAY — if your area of legal speciality doesn’t care which of your contracts is the “original” — and seeing as, Q.E.D., they’re identical, why should it? — a counterparts clause is a waste of trees. If the law decrees everyone has to sign the same physical bit of paper (and no legal proposition to our knowledge does, but let’s just say), a clause on that bit of paper saying that they don’t have to, is hardly going to help.
Mark it, nuncle: there is a chicken-and-egg problem here; a temporal paradox — and you know how the JC loves those. For if your contract could only be executed on several pieces of paper if the parties agreed that, then wouldn’t you need them all to sign an agreement, saying just that, on the same piece of paper? And since, to get that agreement, they will have to sign the same piece of paper, why don’t you just have done with it and have them all sign the same copy of the blessèd contract, while you are at it?
But was there ever a logical cul-de-sac so neat, so compelling, that it stopped a legal eagle insisting on stating it anyway, on pain of cratering the trade? There are little eaglets to feed, my friends.
Are you, like, sure?
It is fun[2] counting the client bulletins that say “while a counterparts clause may not be strictly necessary, it is best practice.” Then you realise they all say this.
But it isn’t best practice. It is stupid practice. It is feeble, lawyering by rote. It is not-quite-premium mediocre.
If you work inhouse and if any of your contract forms have counterparts clauses in them — and let’s face it, they all do, don’t they? — then you are not thinking hard enough about your job.
Normal contracts — even spicy ones, like deeds[3] — do not need a counterparts clause.
How so? Well, think back to your first contract law lecture: for a contract to be effective you need an offer, acceptance and consideration.[4] “Execution”, however you manifest it, is simply a way of indicating acceptance. Acceptance does not require a quill. It does not require a signature at all. One may accept orally, by a 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 oneself — and the court from whom you are praying aid — 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.
Why do you care so much, JC?
This is a fair question. Does a counterparts clause hurt anybody? Other than the incremental trees sacrificed to print out that extra four lines of text — and our children’s children, who will expire on a desiccated savannah we once knew as Tottenham Hale as a result — no-one. But it is the mediocrity; the lack of gumption, the unquestioning, following-everyone-else-by-rote that gets me.
Have some professional pride, fellow eagles! Dare to know your stuff! Have no truck with this timid nonsense.
Odd spot
The Counterparts is a Canadian hardcore punk band from Hamilton, Ontario. True. We think they had trouble getting the guys together in the same room in the early days for rehearsals.
Second odd spot
It is well-settled that a single individual cannot grant a lease to himself: Rye v Rye [1962] AC 496. This is from the “thanks for phoning it in, judges” department. You have to wonder what kind of a confused client brought that kind of case to the judiciary, let alone appealed the goddamn thing.
See also
- In your face
- Counterparts and Confirmations - ISDA Provision
- Counterparts in the 2010 GMSLA
- Those Great Lakes hell-raisers The Counterparts
References
- ↑ The JC has great friends in the land law game, back home in New Zealand, and he doesn’t want to upset them — not that they are the easily upset types.
- ↑ Not for long, but for about five minutes.
- ↑ See Osborne Clarke as authority for this.
- ↑ No, you do not need the intention to create legal relations.