Signing contractual documents in Scotland to become easier from next month

From 1 July, parties entering into contracts, guarantees and other binding legal documents governed by Scots law will be able to sign them 'in counterpart', meaning that they will be able to sign separate identical copies of the document in separate locations. Documents are regularly signed in this way in England and Wales, where signing in counterpart is explicitly permitted, according to Scots law expert Tim Dale of Pinsent Masons, the law firm behind Out-Law.com.

"Often, particularly during cross-border transactions, there have been additional logistics required to deal with the more restrictive signing requirements for Scottish documents," he said. "Those logistics will no longer be necessary, which should make it easier to do business in Scotland: it allows completion to take place more easily when the parties to a transaction are in different locations, which is so often the case in modern transactions."

The Legal Writings (Counterparts and Delivery) (Scotland) Act received Royal Assent in April. It introduces a number of changes to the way in which legal documents can be signed and brought into legal effect in Scotland, as recommended by law reform body the Scottish Law Commission (SLC) in 2013.

As well as introducing the changes allowing documents governed by Scots law to be signed in counterpart, the act ensures that any documents created and signed on paper but delivered electronically will still have full legal effect. Examples include where a paper document is scanned and then delivered by email, or by memory stick.

Scots law requires signed documents to be 'delivered' in order to be legally valid. Delivery as a legal concept generally involves some form of transfer of possession by the party signing up to the obligation. During its modernisation work, the SLC found that the existing law was not clear enough on whether paper documents could legally be delivered if copies were sent electronically, making it no longer fit for purpose in "a modern electronic age".

The SLC also found that businesses sometimes chose English law over Scots law as the law governing agreements, since English law allowed documents to be signed in counterpart before being delivered electronically. It said that this had "the potential to damage the development of Scots law and the attractiveness of Scotland as a place for business" without the recommended changes.

The new rules do not change contract rules in Scotland generally, nor rules requiring certain legal documents including wills and those for the sale of land to be signed and in writing before they can be enforced. It also works on the assumption that most commercial agreements will involve traditional 'wet ink' signatures and does not mandate the use of electronic signatures, which are covered by separate legislation.