Legal Drafting Tip: "Counterparts" clause

Wednesday, January 21, 2015

Given its brevity and the almost universal practice these days of executing agreements in multiple parts, you should include a counterparts clause in every agreement you draft in the event that it is not signed “traditionally” (that is, in person by all parties). Such a clause ensures that the agreement will be held to constitute one original document, regardless of how or in what form the counterparts are actually delivered to the other parties.

In the absence of such a clause, you may need to go to court to establish proper execution of your agreement. While there is case law finding that there was a binding agreement in the absence of a counterparts clause, one never wishes to have to go to court to resolve an issue that could have been handled briefly at the drafting stage.

We recently updated the Boilerplate Agreement’s Counterparts clause, which now reads as follows:

This agreement may be signed in any number of counterparts, each of which is an original, and all of which taken together constitute one single document.

You will note that this clause no longer includes language that

  • references any specific means of delivery of the counterparts (such as “by fax or telecopier or in electronically scanned form”), or
  • suggests that original counterparts will follow (regardless of whether the agreement includes a statement that non-delivery would not invalidate the agreement).

We recommend you not include any such language. As to the first point, it is not necessary for an enforceable agreement and, in fact, it is imprudent to refer to only certain means of delivery, since this may create ambiguity if other means, not referenced, are used.

As to the second point, not only is it an unnecessary administrative burden to request or be required to deliver original counterparts, but it also has the potential to create uncertainty as to the validity of execution if, for example, one of the parties does not in fact forward original counterparts after the fact.