What Is a Counterparts Clause?
A counterparts clause states that the parties signing the agreement don't all need to sign the same copy and any copy of it may be treated as an original.3 min read
2. When It Is Useful
3. Becoming Obsolete
Updated October 30, 2020:
A counterparts clause states that the parties signing the agreement don't all need to sign the same copy. Any copy of the agreement may be treated as an original.
About Counterpart Clauses
Some clauses stipulate that an agreement isn't effective until one party delivers its signed agreement to the second party. Because the clause is so brief and it's common to execute agreements in multiple parts, you may want to include a counterparts clause in any contract you draft in case it's not signed in the traditional way — that is, by all parties, in person.
Case law states an agreement is binding without a counterparts clause, but you don't want to go to court to resolve an issue that could easily have been handled when you drafted the contract.
If parties are executing multiple copies of a contract, the documents must be identical. However, it can be argued that the execution of a signature page doesn't equal an agreement.
Counterpart clauses are usually used in the following circumstances:
- When a large transaction involves multiple parties where all parties can't be physically present for the signing. As a result, no single agreement that has all signatures of the signing parties will exist.
- In a property sale, where parties exchange signature pages, typically under the supervision of a property lawyer, and each only keeps the signature page they receive from the other party.
- In a transaction where circumstances prevent all parties from signing on the same signing date.
You should keep in mind that this clause is somewhat outdated because many clauses contain no references to emailed or faxed signed copies. When drafting a contract, you might want to include a statement that says fax or email signatures are valid.
When It Is Useful
Typically, a counterpart clause would state something that makes it clear that the agreement may be executed in any number of counterparts, and that each part is a duplicate of the original. All parts together count as a single agreement.
When a counterpart clause is absent, that doesn't mean that an agreement with separate counterparts is invalid. However, a counterpart clause can help prevent one party from claiming that the agreement isn't binding since there's not a single copy that was signed by all parties or because he didn't know he was entering into a binding agreement by signing a contract that wasn't signed by other parties.
These clauses are useful when all parties want assurance that each copy of the agreement is treated as an original. Parties must keep multiple copies of an agreement for the following purposes:
From a technical aspect, when parties execute multiple copies of the same agreement, the copies are actually duplicates, not counterparts. For this reason, some attorneys refer to duplicates when discussing a counterparts clause.
You may omit a counterparts clause in the following instances:
- When all parties are able to sign at the same time, so each party signs all original copies he or she is required to sign.
- When parties sign original copies at different times. For instance, when each party will receive original copies to sign in succession. The agreement is then dated and takes effect on the date that the last party signs it.
- When only a single copy of the original agreement is needed. In this case, certified copies are distributed to the other parties.
Even though the counterparts clause isn't really necessary anymore, many jurisdictions still include it. In Europe, the clause is considered dispensable.
Since the counterparts clause was first used, courts have created numerous exceptions and caveats to this burdensome requirement.
Over the past several decades, technological advancements like printers and copiers have made it possible to produce original documents and counterparts that are identical. As a result, the need for the counterpart clause has become nearly obsolete.
Contract law may change over time, as is evident when you consider how unnecessary something like a counterparts clause has become. Although it had its uses in the past, most agreements don't need it anymore.
Because contract law is a complex field, you should always consult with a legal professional if you have any questions about an agreement. It's best to get sound advice before you sign.
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