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  4. Counterpart Bill backed by Delegated Powers Committee

Counterpart Bill backed by Delegated Powers Committee

14th November 2014

The bill to modernise the law regarding the execution and delivery of contractual documents has received the backing of the Holyrood committee given charge of law reform measures.

In its stage 1 report published today, the Delegated Powers & Law Reform Committee supports the general principles of the Legal Writings (Counterparts and Delivery) (Scotland) Bill, which allows contracts to be executed in counterpart and contractual documents to be delivered electronically.

Under the bill, each party to a contract will be able to sign their own copy of a contract and then exchange it with the other parties, rather than having a single document that requires to be signed by all parties. It is thought that this reform has the potential to encourage greater use of Scots law for commercial transactions.

The committee considers the certainty of knowing from the outset that the contract can be conducted under Scots law and executed via the electronic delivery of a traditional document to be one of the bill’s greatest benefits.

It also supports the use of electronic signatures, considering that they can provide a secure means of agreeing contracts and help prevent instances of fraud and error, and welcomes the Law Society of Scotland’s electronic SMART card scheme which will provide all of its members with an electronic signature.

Whilst acknowledging that instances of fraud and error may still occur when parties use execution in counterpart, the committee is satisfied that sufficient safeguards are in place to guard against the risk of this happening, and does not believe that the bill will lead to an increase in such instances.

Convener Nigel Don MSP said: "While it may seem like a technical change, from the evidence we received, it was clear that it will make the process of agreeing contracts in Scots law one which has real scope to result in efficiencies and savings for businesses in Scotland.

“More generally the bill should enhance the reputation of Scots law and encourage more contracts to be signed under Scots law.”

The bill is the first Scottish Law Commission bill be considered by the committee following changes to standing orders in June 2013 which altered the committee’s remit, allowing it to take the lead role in scrutinising certain Commission bills.

Click here to view the committee's report.

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