Guidance On Virtual Signing And Closing

In the current economic climate, where many logistics and

transport professionals are seeking to reduce business travel that

can be expensive and time consuming, in order to focus on operating

more efficiently and effectively, we look at the latest guidance

for lawyers from the Law Society1 on the best practice

for executing logistics contracts and commercial agreements at a

"virtual signing or closing".

There are often logistical problems in getting logistics

contracts and commercial agreements signed, whether physically

assembling everyone together or issues such as time constraints,

security or the complexity of signing arrangements which preclude

the use of post or courier. Therefore it has become reasonably

common practice for signature pages to be drawn up and executed in

advance and transferred to the final form of the contract once it

is ready for completion.

However, this practice was considered by the High Court in

Application of Mercury Tax Group Limited v HMRC [2008] EWHC

2721 (Admin) where it was held that a signature on a draft

agreement would not be good evidence that the signatory had

approved the final form version and that the agreement was

therefore not valid. As a consequence of the concern this caused,

many people reverted to holding physical signing and closing

meetings.

The Law Society has now prepared guidance for lawyers on virtual

signings and closings in order to address many of the concerns

raised in the Mercury case. The guidance sets out a range

of options for dealing with these situations which are governed by

English law. Each transaction must be dealt with according to its

own individual facts and circumstances, some of which may need to

be given precedence over the options suggested by the guidance. The

formalities for the execution of deeds and documents need to be

followed correctly in any event.

One option which offers practical advantages and a prudent

approach to virtual signings and closings follows these suggested

steps:

The proposed arrangements for the virtual signing/closing are

agreed between all parties' lawyers before

signing/closing.

The final execution version of the logistics contract or

commercial agreement is emailed to all absent parties and/or their

lawyers whether as pdf or Word attachments. The relevant execution

page may be attached separately.

Each absent signatory prints and signs the execution page.

Each absent signatory then sends an email to its lawyers, or

the lawyer...