Digitally Thinking

​Mercury – small planet, giant headache for lawyers everywhere

Following on from my previous article regarding the execution of deeds and documents, with a focus on the electronic execution of deeds and documents (thrill-seekers in need of a real adrenalin rush, click here), I thought it may be a good idea to discuss a further aspect of the same issue, namely virtual signing and completion.

Those lucky souls reading this who have engaged lawyers for various matters, whether they be buying or selling a house, documentation relating to businesses, or private law matters, will have needed to, at some point, sign a document. The other party or parties to those documents will also have signed a further copy of that document, a counterpart.

It is quite rare for all of the parties to documentation to physically sit in the same place and sign the same copy of a document, although it does of course happen, and frankly is significantly more straightforward.

I am not now necessarily talking about electronic signatures, although the same court rulings and guidance apply to those documents.

Pre-2008, lawyers were all merrily obtaining signatures to documents, often prior to those documents being in final form, keeping them in a file, and then at or around completion, they would take those pre-signed pages, and append them to the now agreed form of documentation. I am sure it was a simpler time, although I was not yet practising law (quiet in the back, it’s true).

Then Underhill J (that’s Mr Justice Underhill to you) in Mercury[1] unleashed a bag of cats into a flock of pigeons by saying, obiter (comments in passing, and not binding) that the addition of a previously signed signature page from an incomplete version of a deed to a later, complete version, was not effective, and so lawyers, or anyone for that matter, were not able to do this anymore.

Chaos ensued, lawyers charged lots of people lots of money arguing about this point, and it was subsequently affirmed – the purpose of this article is not to put you to sleep with a dissertation on the case law, but instead to provide you with the one way in which all documents (deeds, simple contracts, real estate contracts and guarantees) can be dealt with, as it is very important.

As an aside, this is the gold standard, which applies to all of these documents, and there are slightly simpler ways for simple contracts and guarantees, but it is often more straightforward and safer just to adopt this in all cases.

First and foremost, everyone should agree what is to be done. The last thing you need is some renegade sending his document in a different manner and delaying completion.

Once all documents are in absolute agreed form – no further amendments, everything sorted, all I’s dotted, all T’s crossed – the final versions of the relevant documents are circulated to everyone who will not be physically present signing documents. My personal preference, given the various different versions of word-processing software, is to circulate pdf versions to avoid formatting nightmares from that one person who is still using Notepad.

Each party is then able to print just the signature page that they need to sign. For convenience, the person(s) circulating the final form documents can send the entire document, and then as a separate file, but preferably in the same email, send just the signature page.

Each person then signs the relevant signature page (for guidance on proper execution, in particular with respect to deeds, please see the author’s previously published work, as noted above), and returns the signed signature page, and the full agreed form document, in the same email, to either their lawyer, or the person it is agreed will co-ordinate this party.

Read that again… the signature page, and the full agreed form document, in the same email. This is important to ensure that a document is properly executed.

My personal preference, although I do not believe there is any legal precedent on this point, is that the signatory also includes a statement in their email to the effect that the signature page that has been signed is the signature page of the specific document.

Also, some confirmatory wording regarding when the document is to be delivered and thus when it is to take effect is important, more to make sure that the signatory has not “delivered” the deed and is not immediately bound by the document they have just signed.

Once all signatories have signed their counterparts and followed the above steps, the parties can agree completion, dates are inserted on to all documents, and all parties are bound by the documentation. Completed, dated copies are usually then circulated to all, or a “bible” created with everything.

So that’s it – very straightforward, but crucially important.

Oliver King is a Senior Associate within Berwins’ Commercial department. If you need advice or support on any of the above, call the team on 01423 542 777.

[1] R (on the application of Mercury Tax Group Limited and another) v HMRC [2008] EWHC 2721 (Admin) – Ooh, check you out, reading the citations. Bet you’re going to look it up…

Don’t. It’s a torrid, horribly boring case about a tax avoidance scheme.

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