Counterparts and Legally Binding Signatures
Are Electronic Signatures on Counterparts Legal?
In the virtual world of today, when many people work in the cloud and at a distance from colleagues, the concept of what makes a document "legal" has new meaning, and new technology has changed what types of signatures (including electronic signatures) are acceptable for legal documents.
What a Counterpart Is
In the law, a counterpart is a duplicate document. The term "counterpart" is used in legal documents to describe a copy of a contract that is signed and is considered legally binding, in the same way as the original. In many cases, several copies of a contract document are prepared, so that all parties and signatories can have a copy of the contract. After signing all copies, they can be considered the same.
Counterparts in Contracts
Counterparts are usually used when the signers to a contract are in different places, and contracts should include clauses that allow the use of counterparts. This clause typically specifies that each of the counterparts when signed "shall be deemed to be original" and that all the counterparts together is one document.
These counterpart clauses also describe what defines acceptable delivery. For example, a facsimile (copy) of a signature page might be acceptable.
Electronic Signatures on Counterparts
In recent years, more and more people are using electronic signatures (e-signatures) to sign counterparts of contracts.
An electronic signature (e-signature) is an electronic sound, symbol, or process that is attached to or logically associated with a contract or other record. It's executed (signed) or adopted by a person with the intent to sign the record.
You may also see the term "digital signature" used. Digital signatures are a type of e-signature that has a digital certificate behind them to authenticate the e-signed document.
The use of electronic signatures is allowed under several federal and state laws.
The 2000 Electronic Signatures in Global and National Commerce Act (E-Sign Act) allows the use of electronic records in consumer contracts as long as the consumer has "affirmatively consented" to its use. It says that any law with a requirement for a signature may be satisfied by an electronic signature and that electronically executed agreements may be presented as evidence in court.
The 1999 Uniform Electronic Transaction Act (UETA) provides uniform rules for states to follow for the use of electronic communications in transactions. Some states follow these rules, while others have adopted their own electronic transactions regulations.
The 21st Century Integrated Digital Experience Act applies to government customers (those with government contracts, for example) and federal public websites.
Electronic Signatures on Tax Documents
A 2019 law (the Taxpayer First Act (TFA) requires the IRS to provide digital signature options for several types of documents: Form 2848 Power of Attorney and Form 8821 Tax information Authorization. These forms give taxpayers a safe option to authorize tax professionals to represent them without having to meet in person.
If you are concerned about whether an electronic signature is legal in a specific contract, first look at the contract and the counterparts clause. If you still aren't sure, contact an attorney.
Other Acceptable Counterparts
A signed original copy of any legal document is always an acceptable counterpart. In some cases, the signature may need to be signed in the presence of a notary public or verified by an ID.
As noted above, signed fax or scanned and emailed document is often accepted as a counterpart unless it is specifically excluded in a contract. But many government agencies like a county recorder, for example, don't accept faxes and require an original signed document.
If you are signing a private contract between two parties, you can agree on what types of signatures are acceptable. Put that agreement in writing so you can take it to court if necessary. If your contract or agreement must be registered with a court, you probably will be required to have original signed documents as counterparts.
Disclaimer: The information in this article and on this site is for general understanding only, and it's not intended to be legal advice. Every case is unique, and laws and regulations change constantly. If you have questions about legal documents, discuss them with an attorney.