Practicing Scales and Signing and Delivering Contracts

One of the drudgeries of learning to play an instrument is practicing scales and arpeggios. For a violinist, the popular scale book by Carl Flesch[1] is almost 150 pages long. Flesch's book includes 12 variations, encompassing five pages, for each major and minor key. Famous violin pedagogue Ivan Galamian[2] put together a two-volume scale set. In addition to scales and arpeggios, Galamian's book includes rhythm and bowing variations for each scale.

Scales and arpeggios are the building blocks of Western classical music. So, it is important to practice them. When reading music, an intermediate student might view each note individually and play each note in sequence. But, an advanced musician knows scales well and does not need to read individual notes. Instead, the advanced musician will read the music by scale and arpeggio patterns that the musician has been practicing for years.

Viewing music as note patterns speeds up learning and works very well most of the time. But that doesn’t mean musicians can play on “auto-pilot” or assume that an entire composition is musical "boilerplate."

Sometimes, a composer will throw a curve ball and include notes that are not in the established patterns. Perhaps the composer wants to create a new mood.  Or, maybe the composer wants to make a change from the norm to express a particular idea. Musicians who are not on the lookout for these changes will play a familiar note pattern instead of what is written. 

People reviewing real estate contracts may act like advanced musicians. They may become so accustomed to certain contract clauses that they may breeze through them, thinking they are "standard boilerplate.”

"Boilerplate” sections are important. Like scales and arpeggios, boilerplate sections may not always meet the needs of the contracting parties. As a result, the contracting party can get burned by not carefully reviewing and negotiating them.

This is one of a series of posts discussing typical “boilerplate” terms and how they impact real estate contracts. In this article, we will discuss clauses that describe how a contract is signed and delivered.

What is a Contract Counterpart?

Most real estate contracts will have a “counterparts clause,” which described how the contract can be signed. A counterparts clause might read as follows:

This contract may be executed in counterparts, each of which shall be deemed an original hereof, but which together shall constitute one document.

Many years ago, contracts were signed with everyone sitting in the same room and signing the same document. When people did not all sign the same copy of the contract, there was a question whether it was a single contract or multiple contracts. This created questions whether the contract was binding. 

As business transactions became more complex and with the advent of overnight delivery services and other reliable means of getting contracts from one place to another, it became common for every party to sign a separate copy of a contract. Then, the parties sent their signed contract versions to a central location for assembly.

Now, it is rare for all parties to a contract to sign the same copy of a contract in person. In some places, however, the law has been slow to evolve. Without a counterparts clause, the parties may end up in litigation over counterpart execution.

Many courts will recognize a contract signed in counterparts even if it does not have a counterparts clause. However, it is best to make the parties’ intention to sign in counterparts clear in the contract to avoid the possibility of costly and time-consuming litigation on the counterpart issue.

Signing Under Seal

Sometimes, a contract will be written with the notation [SEAL] next to the signature line. Signing “under seal” is a way of signing the contract. A contract “under seal” is still signed by hand.

Traditionally, a person attached an actual seal to the contract. Most people do not have personal seals anymore. Therefore, they just sign on the signature line. They do not pay attention to the bracketed “SEAL” next to their signature line, thinking that as long as they do not affix a seal, the word does not mean anything.

The bracketed "SEAL" may not be as harmless as people assume. In many jurisdictions, the presence of the words seal, alone, do not add anything to a contract. But, sometimes, signing a contract with the [SEAL] designation may change the parties rights.

For example, in some states, a contract “under seal” has a different legal effect. 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 are 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 want to the contract to be "under seal".

Treating Copies as Originals

Another common clause, which describes how the contract may be delivered (as opposed to how it may be signed), relates to use of copies. That clause may read as follows:

Copies of this contract shall be deemed originals hereof.

In order to prove the existence of a contract, people used to go to Court with the original signed contract. In the absence of original signatures, it could be difficult to prove that the contract was signed. As a result, in complex transactions, every party wanted an entire set of original signatures on their documents, which was burdensome for those signing.

With the development of photocopy machines, it became easy to create copies. Copies now usually are acceptable evidence to prove the existence of a contract. However, absent language that states that copies of the contract are equivalent to originals, the rules applicable in Court may require that a party produce an original, signed contract.

As a result, in these days of photocopies (not to mention electronic storage of records), best practices are for the parties to agree in the contract that original signed signatures are unnecessary.

Distributing Contracts Via Fax and Email

Modern technology has added to the boilerplate clauses relating to contract execution and distribution. Most real estate contracts now include language similar to the following:

Signatures to this contract may be distributed via electronic means, including fax and email, via .pdf, .jpg, or another readily readable format mutually agreed to by the parties.

This clause deals with delivery, rather than signing of the contract. Unlike delivery of a paper copy of a contract (as described above), delivery of contracts electronically, via fax or email, requires use of technology to decipher the transmission.

Modern real estate contracts should include a clause like this unless the parties want to be mailing paper copies of signature pages to each other. Ideally, the clause should specify the acceptable formats in which the contract may be distributed, as some parties may not be able to open documents in less common formats.

Delivery of a contract electronically or via email is NOT the same thing as accepting an electronic signature. Electronic signatures are addressed in a federal law known as ESIGN and in various state laws and are worthy of their own article. If the parties do desire to sign a contract electronically (versus electronic transmission of contracts that are manually signed), they should insert appropriate language to that effect in the contract.

When electronic delivery clauses first came into use, it was common for the contract to require that the electronic copy be followed by a paper copy or original. That language as fallen out of favor and should not be used. It adds an unnecessary step to the contract process. Requiring a paper copy to follow also creates a risk of ambiguity whether the contract has been properly delivered should one party not deliver the paper copy.

Don’t Ignore the Boilerplate!

Parties should not overlook "boilerplate" clauses about execution and delivery of contracts.  Contract language should reflect the realities of how the parties expect the contract to be signed and delivered. Otherwise, the parties may find themselves in a dispute over whether they have a binding contract.

© 2018 by Elizabeth A. Whitman

DISCLAIMER: The content of this blog is for informational purposes only and does not provide legal advice to any person. No one should take any action regarding the information contained 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 and until a written contract is signed by all parties and any conditions in such contract are fully satisfied.

[1] Carl Flesch was a Hungarian violinist and violin teacher of the early 20th century. He taught many famous 20th century violinists, including Roman Totenberg (mentioned in one of my other articles discussing his stolen Stradivarius violin).

[2] Ivan Galamian was a 20th century violin teacher at Julliard School of Music. His pupils included many of the famous violinists and violin teachers of the late 20th and early 21st century, including Itzhak Perlman, Pinchas Zuckerman (mentioned in one of my other articles), Jonathan Carney (concertmaster of the Baltimore Symphony Orchestra, mentioned in one of my other articles), and one of my teachers, Howard Beebe.