Q&A #101 – What does it mean to sign a contract in counterparts?
Question: My organization is reviewing a contract with a new vendor and noticed a provision stating that the contract can be executed in counterparts. What does this mean?
Answer: Executing a contract in counterparts is a very common practice that simply means that each party signs their own separate duplicate copy of the agreement rather than signing together on the same page of the same document.
Most people find this practice more efficient and convenient, as it avoids the need to coordinate signing on the same page, which can be challenging to do when the parties are not together in person to execute the agreement in the traditional way.
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The term “counterparts” likely originated in the context of signing deeds for the transfer of land, where it was important to specify that each party’s copy of the deed would be considered an “original.” Today, general understanding and use of this term has expanded to accommodate current day-to-day business practices, which often involve executing documents electronically and sending scanned copies by email.
Planning Tip – Signing in counterparts is relevant not only to contracts, but also to Board actions taken by written “consent resolution” in lieu of a Board meeting. When circulating written consent resolutions for Board approval, include language that the resolution may be signed in counterparts. Make sure that each Board member’s signature page is collected and retained in the corporate records.
Including provisions in the contract that explicitly permit execution in counterparts is generally recommended to avoid any doubt about whether the parties intended a document signed in this manner to be binding.
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