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Conclusion of Contracts Bill - 17th September 2013 - Click for larger version Conclusion of Contracts Bill - 17th September 2013

Scottish Government targets modern and efficient contractual process for companies in Scotland.

On 3rd September 2012 the First Minister, Alex Salmond unveiled his new legislative programme to the Scottish Parliament against the backdrop of the looming referendum on Scottish independence. While many commentators and analysts have been quick to scrutinise some of the more contentious proposals, one area of particular interest to the legal community and their clients in Scotland is the Conclusion of Contracts Bill.

This bill seeks to place on the statute book the recommendations outlined in the Scottish Law Commission’s Report entitled ‘Formation of Contract: Execution in Counterpart’. There are no less than twenty five propositions for reform of Scots contract law listed in the SLC’s report, all of which aim to harmonise the signing of contractual documents with the modern era of expeditious business dealings.

The main provision of the bill looks to create a system where parties to a contract can sign separate copies of the contract and exchange them to produce a valid contract, thereby ending the need for the parties to meet in the same place to sign the same document. This is known as counterpart execution of documents and is already a valid form of signature in England. In order to further facilitate the process, parties will be able to deliver the subscribed documents to each other by e-mail or fax for contractual purposes. Parties will then be able to economise in executing their deals, saving money that would otherwise have been spent on travel, accommodation and legal costs to sign the document together in one room.

Indeed, many clients and contacts of our firm may recall the complicated logistics we’ve had to put in place from time to time in respect of their transaction, just to comply with the current Scots Law set-up on execution of agreements.

Due to the current inflexibility of the Scottish setup, it could be argued that some companies are dissuaded from conducting and concluding transactions under Scots law and therefore elect to adopt the more contemporary English rules as the law governing their contract. Many business and legal entities strongly believe this state of affairs is hamstringing growth and opportunities in Scotland and have consequently welcomed the changes envisioned by the proposals. A modernised contractual procedure which permits counterpart signing will ultimately make Scotland a more attractive arena for the staging of business negotiation, regardless of Scotland’s constitutional status following the referendum in 2014.

Last updated: 1.52pm, Tuesday 17th September 2013

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