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Execution of deeds by physically absent signatories

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30/03/2020

Why is Bioconstruct v Winspear of interest?

Transactions and legal documents are often completed in the absence of authorised signatories, with pre-signed pages sometimes still being affixed to facilitate completion where parties and signatories are not all in the same room.  In some cases, the documents in question may have been altered or amended in the last minute period between being circulated to and seen by signatories, and completion.  The recent case of Bioconstruct GmbH v Winspear [1] makes essential reading for parties and their legal representatives, as it clarifies the courts’ approach to the validation of deeds executed in this way.

What practical advice arises?

In 2008, obiter comments made in the case of Mercury [2] provided that the affixing of pre-signed signature pages to an altered version of a document rendered it invalid.  Bioconstruct now confirms that position.

So what does that mean for businesses?  Parties and practitioners must note that execution of a deed will only be valid if the finalised version is circulated before signature.  If any late amendments are required, re-execution will be necessary.

Businesses completing cross-border deals and documents might be aware that, in the US and some other jurisdictions it is common practice to have pre-signed signature pages.  Since Mercury as confirmed by Bioconstruct, however, it is clear that that is not permissible in the UK.

Parties and practitioners should also note, however, that the position is not the same where the document in question is a contract as opposed to a deed.  As Kathryn Vickers explains in her article, so long as the key elements are present (offer; acceptance; consideration (that is, money or money’s worth); certainty of terms; and intention to create legal relations), a binding contract can can be formed without any written documentation, execution or other formality whatsoever.  There are a number of execution formalities which are statutorily required in the case of deeds, however, as a particular safeguard against fraud or mistake where the instrument transfers property between parties.

WM Comment

The execution and completion of deeds and other documents is a legal minefield.  To make matters more complicated, the law in this area is currently subject to significant flux.  Apart from the Bioconstruct case explained in this briefing, Kathryn’s article covers the latest case to highlight the risks of inadvertent completion of contracts over e-mail, and other recent Walker Morris briefings address execution of documents via electronic signatures and automatic e-mail footers and the remote electronic execution of documents via video-link (or similar).

When it comes to the proper execution of documents and/or the completion of contractual arrangements or corporate deals, businesses should ensure that they take specialist legal advice.

 

[1] [2020] EWHC 7 (QB)

 [2] Mercury Tax Group Ltd v HMRC [2008] EWHC 2721 (Admin)

 

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