The final days & hours leading up to a signing or closing usually involve a flurry of ever-changing draft documents that frequently don’t come to rest until the very last minute. Since that’s the case, and because execs have an uncanny knack for falling off the face of the earth when you need them to sign stuff, collecting signed counterpart signature pages that can be attached to the final version of the documents in advance is an almost universal practice.
Unfortunately, a recent Delaware case invalidating a fully executed warrant agreement suggests that if you’re going to engage in this common practice, you need to be absolutely certain that everyone is signing-off on the same document. This excerpt from Francis Pileggi’s blog about the case provides the key takeaway for deal lawyers:
Careful practitioners should consider the risk (in light of this case) inherent in allowing a client to sign an “orphan” signature-page as a separate page by itself–and then later attaching that page (only) to a document that the signature-page is not indubitably a part of. Rather, a lawyer should be able to prove that the signatory has read and agrees to all the terms of the agreement that the signature-page is attached to.
That may seem obvious, but the contract at issue in this case was ruled to be unenforceable because the signature-page was formatted in such a way that it could be–and was–attached to a version of the contract other than the one that the signatory thought it belonged to. This risk also applies to the common practice of allowing “counterpart signatures” that may not be attached to the agreement at the time it is signed.
These risks need to be kept in mind when thinking about the process of getting your final agreements executed – but it’s worth noting that the facts of this case were pretty bizarre. It seems that nobody involved retained any emails or other records of anything related to the negotiations except for various drafts of the agreement. What’s more, the plaintiff couldn’t even remember the name of the lawyer who represented her! So, the court had very little evidence to go on in discerning whether there had been a meeting of the minds but for competing versions of the final agreement.
– John Jenkins