Contract Drafting Fundamentals – Modernizing Execution and Delivery Provisions

Musical prodigies awe audiences with their flawless execution of challenging music. Yet, they rarely have the maturity and life experiences necessary to produce an emotionally moving performance. As 19th-century musicologist Gustav Schilling wrote, "One can execute a piece of music correctly, without necessarily giving its true expression, but not the other way around."

That gives rise to the age-old debate about whether students should be taught music before they are emotionally ready to perform it. That debate leads to the philosophical question – what is music? Is music the performance of pitches of varying lengths in a prescribed order? Or is that collection of pitches only music if it moves the listener’s soul?

Fortunately, attorneys need not consider such heady topics when preparing contracts. Although contract drafting should be both science and art, few would say that a beautifully drafted contract moves their soul.

And unlike with music, the execution of a contract doesn't involve how the contract is performed. Rather, execution is the kindling that brings the contract to life. At its simplest level, contract execution is how the contract is signed.

This article is one of a series of articles about contract drafting fundamentals. This article discusses how contract execution and delivery provisions should be updated for the 2020s.

Counterpart Execution

Traditionally, the parties met at an agreed-upon time and sat around a table, passing two or more copies of the contract from one signer to the next. After the meeting, the parties would each receive one of the complete copies of the contract signed at the meeting.

Eventually, it became inconvenient for signers to be in the same place simultaneously. So, parties started recognizing contracts as properly signed if each party had signed it, even if they didn’t sign the same. To avoid confusion or disputes, most contracts have a provision stating that counterpart contracts are acceptable.

Originals or Copies?

When parties sat around a table signing documents, the parties received contracts with original signatures. As photocopy machines became ubiquitous, parties began accepting photocopied contracts as originals. However, sometimes, courts still required originals. To clarify the parties' intentions, most contracts now state that copies are to be treated the same as originals.

There are exceptions to allowing copies to be treated as originals. Promissory notes and deeds, mortgages, and other documents that must be recorded in the county records must be original ink copies. Also, generally, only original wills may be admitted into probate, and traditionally, any notarized document had to be an original ink copy.

Yet, most contract provisions need to recognize electronic signatures, which became more popular with the pandemic. Most contracts I prepare include a clause permitting signature via DocuSign, Adobe Sign, or a similar format. Since those documents require a username and password and usually log the IP address and, sometimes, the location where the contract was signed, parties can prove authenticity.

However, parties also may add a .jpg signature to a Word or PDF document. Unless the parties password protect that document from changes (something I recommend when one’s .jpg signature is used), it’s not difficult to copy the signature and use it for other documents. So, there’s less assurance of authenticity for documents signed like this.

Whether the contract should allow parties to attach a .jpg facsimile signature depends on the nature of the contract and the parties’ comfort with this type of signature. For a real estate contract, where the parties typically email the contract to each other and quickly start performance, fraudulent use of the .jpg should be detected quickly. My real estate contracts usually allow .jpg signatures for this reason.

Regardless, all contracts should include a provision that states what types of copies and facsimile signatures are acceptable. Since copies, .jpg, and electronic signatures have become more popular, parties should state in the contract if those types of signatures aren’t acceptable.

Signing Under Seal

Sometimes, a contract will include the notation [SEAL] next to the signature line. Traditionally, a person attached an actual seal to the contract to authenticate the signature.

Although corporations sometimes use seals, individuals no longer do so. However, that doesn’t render the [SEAL] on a contract meaningless. Although some jurisdictions no longer attach meaning to seals, in some states, signing a contract with the [SEAL] designation may change the parties’ rights.

For instance, in Maryland, a contract signed by an individual "under seal" is subject to a 12-year statute of limitations rather than the usual three-year statute of limitations for contracts. In New York, the statute of limitations for contracts is six years, but an action on a document under seal has a 20-year statute of limitations.

There may be additional technical requirements for a valid contract under seal. Sometimes the bracketed "SEAL" may not be adequate to alter the parties’ rights. Still, parties should not sign a contract that says it is "under seal" unless they intend the contract to be "under seal.”

Notarization and Witnesses

Parties should consider whether to require that their contract be notarized. Some contracts, such as those that will be recorded in the county real estate records, must be notarized. But most contracts need not be notarized to be effective.

Some parties add a notary block to contracts because they believe it authenticates the signer's identity or makes the contract more "official." I recommend against adding notary blocks that aren't legally required.

Likewise, I recommend against requiring witnesses on contracts unless legally required, as is the case for some mortgages. If a contract requires witnesses, the witnesses should actually see the party sign the contract.

© 2023 by Elizabeth A. Whitman

Any references clients and their legal situations have been modified to protect client confidentiality

DISCLAIMER: The content of this blog is for informational purposes only and does not provide legal advice. No one should take any action regarding the information in this blog without first seeking the advice of an attorney. Neither reading this blog nor communication with Whitman Legal Solutions, LLC or Elizabeth A. Whitman creates an attorney-client relationship. No attorney-client relationship will exist with Whitman Legal Solutions, LLC, or any attorney affiliated with it unless a written contract is signed by all parties.