Tuesday, September 20, 2011

Counterparts help speed up contract signing.

Many companies and procurement groups follow a serial form of signature process. They send the contract out to the supplier for signature,and then wait until they get the handwritten signed copy back, which they sign and distribute.If the contract is with more than one party such as a buyer,a supplier and a number of the supplier’s subsidiaries in various countries around the world,even with express delivery that process can frequently take a long time.

If you are contracting in a jurisdiction where the laws recognize other reliable means of documents as an original (such as photo or scanned copies that are faxed or e-mailed), you can shorten the time it takes by moving to a parallel process.

To do that in the contract you need language that documents the intent of the parties that anything made by reliable means shall be considered as an original. That allows you to use either photocopy that is faxed or scanned copy that emailed. Both document approaches would be considered as creating originals. You also need to include language establishes the parties intent to allow the agreement to be signed in what’s called “counterparts” and have each counterpart be deemed as an original. For example: “This Agreement may be signed in one or more counterparts. Each counterpart will be deemed to be an original. All counterparts when taken together will constitute the same agreement.”

You can use this approach where its just you and the supplier. Send the supplier the agreement to be signed. Have them sign it, scan it and send it back to you. Print out the signed, scanned copy.
Sign that and scan it and send that signed scanned copy to the supplier. Both of you know have what would be deemed to be signed originals. Where it becomes even more of a time saver is when there are multiple parties such as a buyer, supplier and a number of supplier subsidiaries.
Adding those statements to the agreement would allow you to electronically send the agreement to each of those entities. They would sign the agreement in their appropriate signature block and would send the copy they signed back electronically (fax or scanned copy). You can sign and send that back electronically to them following they same manner or via hard copy. That creates one counterpart agreement. The same process would be done in parallel with all the other parties. If you had a supplier and 5 subsidiaries, you would have the agreement created in six counterparts. Those six counterparts constitute the same agreement per the terms of the agreement.Suppliers may want to collect all of them and send it as a package or buyers may want to await receipt of all of them before they sign each of the counterparts. By doing it in parallel rather than serial, as long as all the signatories are ready to sign when they get it you get an agreement signed in a matter of minutes or hours, not many days.

Always check with your local legal support to ensure that they agree with using this approach and that it would be enforceable in your jurisdiction and the jurisdiction of other signatories to the contract. .

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