(k) Counterparts
The counterparts clause is one of the most remarkable miscellaneous provisions in modern common law practice. Even though over the past century it has become almost completely unnecessary, it is still inserted into most contracts originating from those jurisdictions. For legal systems other than those based on the common law, the clause is superfluous.
Background. What is the background to the counterparts’ provision? In common law countries,[1] a defendant in court may require a claimant to provide evidence of the existence of a valid contract by handing over the original documents. If an original with the signatures of both parties or a counterpart with the signature of the other party could not be shown, 350 years ago, a court would have decided that no valid or enforceable contract had been entered into. At that time, halfway through the 17th century, contracts were drawn up in one of two ways: either as one document reflecting both parties’ rights and obligations and signed by each of them (each party received an identical copy, and both copies were considered to be an ‘original’); or by the combination of one document reflecting the rights of the lessor or seller (called the ‘original’) and another document reflecting any remaining rights and obligations (called the ‘counterpart’). The terminology referred to the physical presentation of contracts: the original and the counterpart were separated by a perforation for detaching the two counterparts, and each party signed the other party’s counterpart (on which its obligations were reflected). At the turn of the 19th century, contracts were typed on paper with carbon copies behind them; the carbon copies were the counterparts of the original. In those days, the need for a statutory countersigning requirement was understandable to prevent fraud.
It would suffice to hand over an original executed by the other party if a contract contains a counterpart’s clause such as:
Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, and all of which together shall constitute one and the same agreement.
Modern necessity. For obvious reasons, over the centuries, common law courts have created numerous caveats and exceptions to the burdensome countersigning requirement. The idea behind the requirement was that under the (common law) Statutes of Frauds, strict formal requirements apply to the validity and enforceability of certain types of contract. To understand these requirements better, compare the formalities applicable on the European continent for vesting a right of mortgage or incorporating a company, which are typically subject to the notarial form. But because not all Statutes of Frauds have been modernised and case law is still relatively scarce, there is no certainty that courts will reject a party’s claim in court if there is no properly executed counterpart. For the last few decades, copiers and printers have produced originals and their counterparts as if both are an original. So the counterparts clause became completely redundant.
Even today, American contract drafting books can spend pages on the uncertainties that various wording can create. When contracting with an American or common law party, the advice is to insert the simple clause suggested above, and if the clause is marked up, accept it as amended.
[1] More specifically, under the ‘Statute of frauds’ of those countries.