This note offers general guidance only. A particular document may require specific execution formalities or may specify its own procedures, restrictions or requirements and so every transaction must be approached on its facts. Also, this note does not address regulatory or tax considerations which may be relevant to execution and completion.

This note applies only to the execution of a document that is governed by the laws of Ireland. This is an evolving area of law. You should keep up-to-date with any relevant developments.

The 2008 English case R (Mercury Tax Group and Another) v HMRC ¹ (“Mercury”) has cast doubt on the effectiveness of the practice of “virtual” signings and completions where some or all of the signatories involved are not present either physically or by attorney at the same meeting.

In circumstances where it is not practical to have all parties in attendance at completion, parties to a transaction often arrange for:

• signature pages to transaction documents to be executed in advance and then transferred to the final form of the documents once the transaction is ready for completion (the signature pages being then circulated by e-mail or fax to the various parties upon completion); and/or
• final form documents to be emailed to the parties by the lawyers drafting them and executed by the parties remotely (the signature pages being then circulated by email or fax upon completion).

Background

Mercury was a first-instance decision and the comments concerning virtual execution were obiter dicta.  The Court in Mercury held that the signature on an incomplete draft deed could not be transferred to execute a complete and amended final version of the deed because section 1(3) of the English Law of Property (Miscellaneous Provisions) Act 1989 required the signature and attestation to form part of the same physical document when the deed is signed.  Accordingly, the Mercury decision, while concerned with very particular circumstances, has led to discussion about the effectiveness of the use of pre-signed signature pages and virtual signings and completions where signature pages are sent or transmitted by e-mail or fax.  The Mercury decision is a cautionary tale against the practice of the transfer of signature pages from one version of a written contract to another without proper procedures being agreed in advance and complied with at completion.

English Guidance

In response to concerns raised in England, the Law Society of England and Wales (“LSEW”) has issued guidelines outlining a non-exhaustive range of options for the execution (by virtual means) of documents governed by English law (the “Guidance”) ².

The Guidance was drafted to allay concerns following the Mercury case and with a view to facilitating the continuation of the practice of virtual signings and closings.

The Guidance confirms that the decision in Koenigsblatt v Sweet ³ remains the leading authority on the execution of documents, that Mercury should be seen as limited to its particular facts and that, to the extent that Mercury is inconsistent with Koenigsblatt, the latter should prevail. Koenigsblatt upheld a contract that had been altered by a party’s agent after signing, the party having ratified the alteration thereafter.

The approach in Ireland

The Law Society of Ireland, mindful both of Mercury and also of the potential interpretation of the execution provisions of section 64 of the Land and Conveyancing Reform Act 2009, endorses the position adopted in the Guidance in respect of documents governed by the laws of Ireland, but, in respect of Irish law, the Law Society advises that Options 2 and 3 below may also properly be used to execute real estate contracts (which the LSEW excludes from Options 2 and 3 on the basis of English law ⁴).

Post-Mercury Case Law

Since 2008, there has been case law in both Ireland and in England which has cited Mercury, and although not overruled, the following notable decisions did distinguish it:-

1. in Ireland,in the case of Patrick Jennings and Mary Jennings v Bank of Scotland Plc., Kieran Wallace and Patrick Donohue (“Re Diorama Limited”) ⁸ an application was made objecting to the validity of the appointment of receivers in circumstances where the receivers had initially signed a copy of the appointment documentation (signed on behalf of the bank and sent by email) on the date of their appointment and subsequently signed the original documentation on receipt three days later.  The court distinguished Mercury on the basis that there were no formal requirements necessary in the case in respect of the signatures of the receivers, which merely signified their acceptance of the appointment – the court therefore found the receivers were validly appointed and refused the application.
2. in England, in the case of Chapman (t/a Chapman & Co Solicitors) v Wilson Chancery Division ⁶(“Chapman”), the applicant sought to rely on Mercury in order to support his argument that he did not validly execute a loan agreement as he only signed the signature page and not the entire document as a whole. This was rejected because of the fact that the applicant knew the terms of the loan agreement and no substantive changes were made to the document after he signed the agreement (it was only dated thereafter). The court commented that if this process were regarded as invalidating a commercial agreement, it would be impossible for solicitors to do business efficiently.

In addition the 2011 English high court decision Bibby Financial Services Ltd v Magson & Anor⁷ (“Bibby”) provides an additional guidance in relation to the delivery of deeds. In Bibby the defendants contended that deeds of guarantees were not binding despite having been signed, witnessed and physically handed over to the other party, as they had executed draft documentation in good faith on the basis that final versions of the deeds would be issued with agreed amendments. The court agreed that the deeds were not binding as the defendants had not intended to deliver the documents, finding the relevant test was whether the person who had signed a deed had intended to be bound by it.

The suggested procedure

The physical presence of all parties at the execution stage should always be the preferred completion method. In the alternative, attorneys should be formally appointed by the relevant parties and the attorneys should be physically present for the purposes of completion.

If, however, neither of these options is practical, then practitioners in this jurisdiction should have regard to the options as set out below and agree, in advance of completion, which option, or any other method deemed appropriate in any particular circumstance, will be employed and proceed to effect the appropriate steps:

• Option 1 (may be used for a document of any type): return the entire PDF/Word document and a PDF of the signed signature page,
• Option 2 (may be used for a document of any type except a deed): return a PDF of the signed signature page only,
• Option 3 (may be used for a document of any type except a deed): use a pre-signed signature page and an authority to add it to the document as agreed.

A detailed explanation of each option is set out in the table below.

The options suggested below are practical and are for the most part already being followed in practice in Ireland and in England and Wales. ⁸

For each of the options where a contracting party cannot attend the closing meeting in person, it is recommended that such party is made aware of the need for someone suitably authorised to be available remotely (such as online) at the time of the virtual closing in order to:

a) receive and approve final versions of the documents,

b)  sign the relevant documents under options 1 and 2, or

c)  authorise the release of the pre-signed signature pages under option 3.

For Options 1 and 2, you should ensure that signatories have access to a PDF scanner.

SUMMARY

Note: for registration and other purposes, a ‘wet-ink’ signature by every party may be required on a document, so appropriate undertakings should be sought to obtain same, post-closing.

Caution: Prior to giving any undertaking to forward original executed documents, it is recommended that the solicitor should obtain an undertaking in writing from his/her client to send the original signed document to his/her solicitor by courier/post on the day the PDF document is released or the next business day thereafter. In reliance on this undertaking, the solicitor should then only undertake to forward the original document if and when received.

Whichever option is used, the solicitor who is arranging to have a PDF version of the signed signature page sent should ensure that his or her client has approved the finally agreed terms of the entire document

TEMPLATE WORDING FOR AN EMAIL RELATING TO OPTION 1

We attach the execution version[s] of [ • ].

Please ensure that [you/your client]:

print(s) off [the/each] document in full,

sign(s) [the/each] document on the signature page,

return(s) to [ • ], by fax or email, copies of [the/each] complete document, and

return(s) the original executed of [the/each] document to [ • ], by post or courier, by [date].

The return by [you/your client] of a PDF or faxed copy of each signed signature page and each fully executed document will constitute confirmation that:

a)  [you/your client] approve(s) the relevant document,

b)  In the case of the deeds, [you have/your client has] executed each complete document in the form attached to this email,

c)  [you authorise/your client authorises] us, without further notice to [you/your client], at closing to release the copies of each signed signature page to each other party and to date each document accordingly; on our doing so, [you/your client] will be bound by the terms of that document,

d)  In the case of any document which is a deed, its release and dating constitutes delivery of the deed by [you/your client] or by the person on whose behalf the deed was signed, and

e)  [you/your client] will send each original signed signature page for the contractual documents and in the case of the deeds, the executed document to us by post or courier by [date].

Footnotes

1. [2008] EWHC 2721.
2. www.lawsociety.org.uk.
3. [1932] 2 Ch 314.
4. The provisions of the Law of Property (Miscellaneous Provisions) Act 1989.

5. [2012] IEHC  515

6. [2010] EWHC 1746 (Ch)

7. [2011] EWHC 2495 (QB)
8. The inclusion of a ‘counterparts clause’ in transaction agreements is recommended. Such a provision clarifies that separate copies of an agreement may be executed by different parties and each copy will be considered to be an original.
9. Options 2 and 3 may not be used for a deed of any type because of the view that a signature on an incomplete deed is not valid.
10. See footnote 9.

This practice note was updated in 2014.