Counterparts Clauses: Review and Negotiate with AI

What is a Counterparts Clause?

A Counterparts clause allows parties to sign separate, identical copies of an agreement, which together form one binding contract. This is useful when parties are in different places or can't sign a single document at the same time.

The typical Counterparts clause might say something like:

This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original instrument, but all of which taken together shall constitute one instrument. Signatures transmitted by e-mail or facsimile shall be treated as original signatures for all purposes of this Agreement. This Agreement may be executed by using electronic signatures that are encrypted and digital and will be treated as having the same force and effect as original signatures.

This clause ensures the agreement is legally binding even when signed in parts, and often allows for electronic signatures.

Where To Use Counterparts Clauses

Counterparts clauses are versatile and can be incorporated into various types of agreements. Based on the provided documents, here are some common places where you might encounter or consider using a Counterparts clause:

• Master Purchase Agreements (MPAs): In the context of sales of goods, MPAs often include Counterparts clauses to facilitate execution when buyers and sellers are in different locations.
• Sales Agency Agreements (SAAs): These agreements benefit from Counterparts clauses, especially when agencies and principals are geographically dispersed.
• Software as a Service (SaaS) Terms of Service: For cloud-based service providers, including a Counterparts clause in their terms of service can streamline the contract execution process with clients from various locations.
• Master Services Agreements (MSAs): In service-based industries, MSAs often incorporate Counterparts clauses to enable efficient execution between service providers and clients.
  

These clauses are especially helpful when:

• Parties are in different locations
• There's a time crunch to sign the contract
• It's hard for everyone to sign the same physical document
• There are multiple parties involved
• Electronic signatures are preferred

Negotiating Counterparts Clauses

When negotiating Counterparts clauses, keep these points in mind:

1. Legal Validity: Make sure the clause follows relevant laws.
2. Statute of Frauds: Be aware of laws requiring certain contracts to be in writing.
3. Electronic Signatures: Clearly state if these are okay, and what types.
4. Transmission Methods: Specify how signatures can be sent (email, physical documents).
5. Formation of a Single Instrument: State that all counterparts form one agreement.
6. Number of Counterparts: Decide if there's a limit on how many can be signed.
7. Effective Date: Consider when the agreement becomes active.
8. Storage and Management: Discuss how to store and manage the signed copies.
9. International Issues: Ensure the clause works in all relevant countries.
10. Other Clauses: Make sure it fits with other parts of the agreement.

By carefully considering these points, you can create a Counterparts clause that makes signing easier, no matter where the parties are located.

AI Contract Review for Negotiating Counterparts Clauses

To give you a sense for the benefits of leveraging AI Contract Review Software trained by lawyers, we’ve selected some sample language our software presents to customers during a review of Counterparts Clauses in Master Service Agreements (MSAs). Keep in mind that these are static in this overview, but dynamic in our software - meaning our AI identifies the key issues and proactively surfaces alerts based on importance level and position and provides suggested revisions that mimic the style of the contract and align with party names and defined terms.

If you’d like to see more, we invite you to book a demo.

Sample Clause for Counterparts

This Agreement and each SOW may be executed in one or more counterparts, each of which will constitute an original, and all of which will constitute one and the same instrument. 

Sample Guidance for Counterparts Clause

In the context of the MSA, the primary legal principle behind signing in counterparts permits parties to execute the agreement separately, eliminating the need for physical presence. This approach streamlines the execution process, making it more efficient and convenient for all parties involved, especially when they are located in different geographic locations or face scheduling conflicts.

For example, when Party A and Party B, located in New York and California respectively, enter into an MSA, they can sign separate copies of the agreement and exchange them via mail or electronic means. This effectively executes the agreement without the need for an in-person meeting, reducing logistical challenges and potential delays in the project timeline

While there are no specific statutes or laws mandating the inclusion of a counterparts provision, it is a common practice in contract law and is generally recognized as legally valid and enforceable. However, parties should be aware of the Statute of Frauds, which requires certain types of contracts, including some service agreements, to be in writing and signed by the party to be charged. This may affect the execution of contracts in counterparts, depending on the specific jurisdiction and type of contract involved.

Simplifying Your Counterparts Clause Negotiations with AI

AI-powered tools like LegalOn can help legal teams:

1. Quickly spot important issues
2. Give alerts based on your situation
3. Suggest improvements
4. Ensure you're following relevant laws

The sample AI-powered insights we've shared demonstrate how LegalOn can enhance your contract review process, making it more efficient, thorough, and aligned with best practices.

To  experience the power of AI in Counterparts clause negotiations, we invite you to see it in action. Book a demo today to explore how our AI-powered contract review software can transform your approach to drafting and negotiating Counterparts clauses.