A plea for an amendment that reflects
business transactions in the 21st century from Keith
Wilson
In the ‘Mercury’ case (R (on the
application of Mercury Tax Group and another) v HMRC (2008), a
signature page to a deed attached to an earlier draft was signed by
a party. Later it was, with the signing party’s approval, attached
to a later, amended version of the same deed. HMRC argued that the
document had not been validly executed and it had no legal effect.
The court agreed.
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The case turned partly on the fact that the
document in question was a deed and partly on the wording of a
statute. The statute dictated how to execute a document for it to
be a deed. The relevant section refers to “the document” and to
signing “it”.
The court held that on an ordinary meaning
this meant the document itself had to be signed. “The signature and
attestation must form part of the same physical document” – not a
separate signature page which is later appended.
Thus parties to a deed find lawyers sending
them the whole document (usually as a PDF file), asking them to
print it and then execute the signature page of the document while
it is loosely attached to, or is with the remainder of, the
document. Contracts for the sale of real estate are similarly
affected even if not by way of deed.
In practice we have seen some shortcuts
emerging which go against the case law. For instance, arranging
that whole documents are signed and sent as emailed PDFs but then
only original signature pages returned and a composite original
with signature pages from different parties assembled.
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By GlobalDataAt a common sense level this is very
attractive, but it is inconsistent with the ‘Mercury’ judgment and
probably means there are no properly executed originals. Whole
counterpart originals should be returned where the
document is a deed.
Not all contracts are, or need to be, created
by way of deed. The rules relating to signing a contract “under
hand” are less formidable in the sense that it seems possible for
signature pages to be attached to a contract made “under hand”.
In any case, generally, a contract under hand
could be made orally so that if it were shown that a contract had
not been executed correctly it could still be argued to be valid as
a written memorandum of an oral contract.
The deed issue is a creation of the particular
wording of the statute – we need an amendment that allows
commercial parties to document their transactions in a way
consistent with business in the 21st century.
Keith Wilson is a partner with
Berwin Leighton Paisner
