COVID-19: Signing or executing documents - Kuits Solicitors Manchester

COVID-19: Signing or executing documents

COVID-19: Signing or executing documents

22nd April 2020 - Published by Kuits banking team

Although not entirely new, it is perhaps appropriate to remind ourselves how parties might address the difficulties of signing or executing deeds and documents whilst in lockdown.

There may be logistical problems in getting documents signed:

  • It may not be easy or possible, with lockdown being the perfect live example, to get everyone who needs to sign a document physically present for signing or completion meetings.
  • Posting documents for signature may not be feasible or desirable because of, for example, time constraints, availability of regular postal or courier services, content security or complexity of signing requirements for multiple documents.

Historically, and to address this problem, it became a reasonably common practice for signature pages to be drawn up and executed in advance, and then transferred to the engrossment once ready to be completed. However, this practice was considered in the High Court decision in R (on the Application of Mercury Tax Group Limited and another) v HMRC [2008] EWHC 2721. It was held that the signature on an incomplete deed or contract cannot be transferred to effectively execute a complete and amended final version. The final form of the deed was held not to be valid.

The Mercury decision caused widespread concern and many people have, as a result, organised physical signing meetings to conclude transactions, which otherwise would have been completed less formally. Fast forward to now and COVID-19, which has resulted in a UK-wide lockdown. Now is the time to remind ourselves of some of the options considered appropriate and in line with best practice and UK law.

Executing a document using Mercury rules

In February 2010, a joint working party of the Law Society and the City of London Law Society published a note on execution of documents at a virtual signing or completion. The note can be found by clicking HERE.

The note confirms that:

  • The Court of Appeal decision in Koenigsblatt v Sweet [1923] 2 Ch 314 remains the leading authority on the applicability of the principles of authority and ratification to the creation of legally binding written agreements.
  • The Mercury decision should be viewed as limited to its particular facts and, to the extent that it is inconsistent with Koenigsblatt, a Court of Appeal decision, Koenigsblatt should prevail.

The note provides a non-exhaustive range of options that are available to facilitate virtual signings or completions where one or more signatories are not physically present at the same meeting. The option that will be chosen will depend on the type of document: deed, guarantee or contract.

Deeds

Procedure:

  • The final version of the deed is circulated to parties who are not able to join the physical meeting;
  • The absent signatory(ies) print the signature page (or the entire deed), sign the deed and scan the signature page (or entire deed) in;
  • The scanned signature page (or entire deed) is sent back to the lawyer who circulated the deed, together with the final form deed;
  • For deeds, the signatory(ies) must confirm whether the deed is deemed to be delivered and/or when it is deemed delivered;
  • At or shortly after signing/completion, to evidence the execution of the final document, a final version of the document, together with copies of the executed signature pages may be circulated by one of the law firms.

All contracts and guarantees (but not deeds)

Option 1:

  • The final version of the document is circulated to parties who are not able to join the physical meeting;
  • The absent signatory(ies) print the signature page, sign it and scan it in;
  • The scanned signature page is sent back to the lawyer who circulated the final document, together with the written consent of the signatory(ies) to the attachment of the signature page to the final form document.

Option 2 (this does not apply to real estate contracts):

  • A signature page is circulated while the document is still being negotiated;
  • The absent signatory(ies) print the signature page, sign it and scan it in;
  • The scanned signature page is sent back to the lawyer who circulated it, to be held to the order of the signatory(ies) until the final form document is circulated;
  • Once the document is in final form, it is circulated to the absent signatory(ies), who confirm that their
    signature page may be attached to the final form document.

Ultimately, it is important to check whether the document is a deed or not and ensure the appropriate formalities for signing are properly followed.

To speak to an expert advisor about the signing or execution of documents, for example if a deed has been correctly executed or not, please contact our head of banking & real estate finance George MacMillan on 0161 838 7998 or at georgemacmillan@kuits.com.

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