A simple guide to navigating contract execution in Scots law vs. English law

While Scots law and English law share many similarities in commercial contracts, neglecting the small differences when finalising a contract governed by Scots law could render the document legally invalid. Understanding these intricacies is crucial for businesses creating contracts in Scotland. This guide delves into the key nuances of document execution in Scots law that are essential for creating legally binding contracts.

Evolution of execution requirements in Scotland

Historically, executing legal documents in Scotland presented challenges due to strict laws requiring all contracts to be signed by the parties in a single document and delivered physically. However, legislative changes in July 2015 addressed these issues by allowing execution of a contract in counterparts in different locations. This offers more flexibility, allowing each party to sign a separate, identical copy of the contract. It's important to note that the signed counterpart must still be delivered to all parties, but this can now occur electronically, such as by sending a PDF via email or using an e-signature platform like Docue.

Counterpart: In legal terms, a "counterpart" refers to one of several identical copies of a contract. When parties execute a contract in counterparts, each party signs a separate copy of the contract, and each signed copy is considered equally valid and binding as if all parties had signed the same physical document together.

Key contract term differences: English vs. Scots Law

Here are some of the key terminology variations between English and Scots contract law:

1. Signed by (English version) = Subscribed by (Scottish version)

2. Signee (English version) = Granter (Scottish version)

3. Witnessing (English version) = Self-proving (Scottish version) (more on this below)

In English law, parties to a contract may say they “entered into the contract”. However, in Scotland, the correct terminology is “subscribed to the contract”. Subscription by an individual, or on behalf of a company, is essential for creating a legally binding written contract.

Types of contract execution under Scots law

The execution requirements for contracts in Scotland are outlined in the Requirements of Writing (Scotland) Act 1995. While these requirements are technically only mandatory for certain categories of contracts, it is best practice to follow them for all written Scottish contracts to ensure legal validity.

1. Valid execution

If a company follows the requirements for valid execution, the contract will be legally executed. This involves the contract being signed (i.e. subscribed in Scots law) on behalf of the company by a director, company secretary, or an authorised signatory.

2. Probative execution (i.e self-proving)

Probative execution adds an additional layer of formality and legal strength to the contract. This method goes beyond simple valid execution by requiring the contract to be "self-proved."

To "self-prove" a contract, the contract must not only be signed on behalf of the company but also witnessed properly.

Here’s how you can ensure a contract is self-proved:

• the contract is signed by a director, company secretary, or authorised signatory, and their signature is witnessed by another person; or

• the contract is signed by two directors of the company, two authorised signatories, or one director and the company secretary.

  

What is self-proving?

Self-proving is a "belt and braces" approach used in Scottish contract law to verify that the person signing the contract actually signed it and that this signature was physically witnessed by another person present in the room at the time of signing. The witness will also sign the contract to confirm they witnessed the original signature.

If a company meets the requirements for probative execution, it is presumed that the contract was validly executed. Should someone challenge the validity of the contract in the future, the burden of proof falls on the challenger to demonstrate that the contract was not properly executed. Legal experts typically recommend this approach for more complex or higher-value contracts to provide an added layer of security.

What are the benefits of self-proving?

While signing a document creates a valid contract in Scotland, it could still be disputed whether the person who signed the document was the actual person that signed it. Self-proving shifts the burden from the granter to prove they signed the document to the party challenging the contract's validity.

Self-proving is particularly useful in high-stakes transactions, remote signing scenarios, complex agreements, long-term contracts, and regulated industries. It provides added assurance in situations where disputes over signature authenticity or contract validity are foreseeable.

Another increasingly popular tool to authenticate the granter's signature is using a qualified electronic signature (QES). Docue is not currently a QES provider. For more information about QES requirements, check out the Law Society of Scotland's guidance.

The importance of signature placement in Scottish contracts

In Scotland, for valid execution, a document must be signed at the end of the main body on the same page as the last operative clause in the main body of the contract (e.g. after the boilerplate clauses, such as the governing law and jurisdiction clause). For more information about ensuring the execution clause is on the same page as the last operative clause, read this guide.

Conclusion

In summary, the evolution of execution requirements in Scotland, especially the shift towards permitting execution in counterparts and the acceptance of electronic delivery, has significantly enhanced the flexibility and efficiency of the signing process. This evolution underscores the importance of staying informed about legal developments to ensure compliance and validity in contractual dealings.

How can Docue help?

Docue’s Scots law compliant templates can easily be customised to suit your business needs. All you need to do is answer a series of simple questions, and the template will be automatically updated in real-time to create a document that's tailored to your circumstances.

Docue’s e-signature tool can be used to get your legal documents signed via the platform. Unlimited e-signatures are included in all Docue plans.

Do you want to ensure your signed documents are easily accessible but also stored securely? Use Docue Drive to store your documents safely. Docue Drive brings your contracts and other documents to one secure and manageable place. It doesn't just archive your documents, it brings them to life with reminders, dates, attachments and tags.

Sign up now to try Docue's templates that comply with Scottish laws.