Often, parties to cross-border finance transactions are well versed on English signing rules. Scots law rules on document execution are prescriptive and, while similar to the English rules, have some small but important differences, which, if not followed, could have significant consequences for the validity of a document. This short guide answers commonly asked questions on how to sign documents in accordance with Scots law. Following the Scottish rules will reduce the likelihood of a document needing to be corrected or re-executed or, at worst, being considered by a court to be invalid when a party seeks to rely on it.
The principal rules on executing Scots law documents are found in the Requirements of Writing (Scotland) Act 1995. Now almost 25 years old, the Act is very specific in prescribing how different entities can validly and probatively sign documents.
More recently, the Legal Writings (Counterparts and Delivery) (Scotland) Act 2015 has been a much-welcome addition to the law of execution and allows parties to sign separate copies of the same document, avoiding the need for signing meetings and allowing remote completion. For more information on counterparts execution in Scotland, please click here.
Validity vs probativity
The 1995 Act draws a distinction between validity and probativity – what do these terms mean?
In order for a document to be valid, it must be subscribed (i.e. signed at the end of the document) by each party to it. The 1995 Act confirms who can sign on behalf of corporate entities.
In addition, the first party’s signing block must appear on the same page as operative text. In practice, this means the first signing block will appear on the same page as the last clause of the document. In some cases, the schedule to the document will also need to be signed.
The benefit of a document being signed probatively is that it is presumed to be granted by the signatory – should the document be founded on in court, the grantor would not need to prove it had been correctly signed and that the signature was that of the grantor. In addition, some documents, such as those requiring registration at the Registers of Scotland, need to be probative. We recommend Scottish documents on finance transactions are signed in a probative way to avoid any such issues in future.
For documents that require to be probative (or ‘self proving’), additional steps are required. Generally, this can be achieved by:
- having an additional person sign the document or the signature being witnessed, and
- adding the date and place of signing to the document.
Please see the table below for a summary of the signatories required to ensure that probativity is achieved.
Scots law execution: FAQs
1. I have been sent a Scots law document to sign. Can I print, sign and return the signature page only?
Unlike convention in England, under Scots law it is necessary for an entire document to be printed, even where it runs to many pages.
2. Who can sign the document?
Individual in the presence of a witness
- Two directors, one director and the company secretary, or two authorised signatories (any individual who bears to have been authorised to sign the document); or
- one of the above in the presence of a witness
Limited Liability Partnerships
- Two members; or
- one member in the presence of a witness
- Two partners; or
- one partner in the presence of a witness
Other bodies corporate
- A member of the body’s governing board (or, if there is no governing board, a member of the body), the secretary of the body or an authorised signatory in the presence of a witness
The 1995 Act also allows some corporate entities to execute documents using a seal – this is increasingly rare.
3. How should signatories and witnesses sign?
The rules on how signatories and witnesses should sign are very prescriptive and are somewhat inconsistent.
A signatory to a document can sign using:
- their full name;
- their surname with at least one forename or initial; or
- in some cases, with an initial or mark that is their usual method of signing and was intended by them as their signature.
A witness to a document can sign using their full name, or their surname with at least one forename or initial only.
4. Why are the date and place of signing necessary and what should be inserted here?
In order for a document to be probative, the date and place of execution should be present. The date should be the date on which the document is signed – this does not ‘date’ the document, for which see below. The place should be the town or city where the document was signed.
5. Won’t adding the date of signing ‘date’ the document and make it effective too early?
Confusion can arise on cross-border transactions around dating documents. For a Scots law document to be probative, the date of each signatory’s execution should be present in the document. However, parties are often concerned that by adding the date of signature to a document, they are effectively ‘dating’ the document, since parties will often sign documents ahead of the date on which they are intended to take effect.
Where a document is executed in counterpart (as most bilateral and multi-party finance documents now are), it will become effective when all parties agree it can be delivered, at which point the effective date will be added to the document for evidential reasons. The fact that an earlier date of signature is present does not mean that the document becomes effective on the earlier date.
Should you have any queries in relation to the signing requirements for a particular document, please get in touch with your usual Shepherd and Wedderburn contact or a member of the Scots Counsel team.