What are signatures by counterparts?
Typically contracts will be made in writing, on the basis that this provides a written record of the terms of the contract agreed between the parties.
A Counterparts clause states that parties need not sign the same copy of an agreement and any of the copies can be treated as an original for evidentiary purposes. Sometimes it includes a statement that signatures delivered by fax or email/pdf are valid.
This clause permits the agreement to be executed in multiple, identical copies, allowing the parties to sign the document in the different locations on different dates. The signed copies will together form a single binding agreement.
What would be the reasons to execute a contract with signatures by counterpart?
They are primarily used in large transactions involving multiple parties where not all the parties will be physically present at the signing and therefore there will be no single agreement that contains all the signatures of the signing parties
There are two main rationales for the counterparts clause.
The first is that the counterpart clause ‘makes it clear that each party need not sign the same copy of the document in order to have a legally enforceable agreement.’
The second rationale, taken from The American Bar Foundation’s Commentaries on the Model Debt Indenture Provisions states (p. 590) which states that “it is highly desirable to include a provision relating to counterparts in order to avoid any problem as to which of the several signed copies of the Indenture is the original.”
Counterpart clauses are also useful where the parties to an agreement want to be sure that each copy of it is recognised as an original. Parties often require more than one original copy of an agreement for tax, regulatory or other administrative purposes. Technically, where all the parties execute a number of copies of the same document, the copies are duplicates rather than counterparts and accordingly, some lawyers also refer to duplicates in the counterparts clause.