Signing a Contract with a Party Overseas? Sign it in ‘Counter-parts’

One of the common conundrums facing an e-commerce entrepreneur in India today is that of signing contracts with parties overseas. Typically, two issues crop up – the first relates to the drafting of the contract in a manner in which your interests are protected.

The other issue relates to the signing of the agreement. Let us say for example that the other side is in Sydney and you are in Bangalore.

Signing the contract in such a case becomes difficult – after all, the value of the contract may not be high enough to justify travel to Sydney. (If it is, we strongly recommend that you go).

The law has two ways of getting around this – one way is to sign the contract by clicking on a checkbox online. The seller normally has a clause that states “By clicking on this box, you hereby accept and agree to abide by all contractual terms and conditions”.

This first route does not work for more complex, customized contracts which parties may sign. In such a case, there is only one solution: “counterparts”.

What is an agreement in counterparts?

An agreement in counterparts basically means that the agreement is not physically signed by both parties at once.

To make it clearer, let us look at what a counter parts clause reads like:

“Counterparts

This Agreement will be executed in counterparts, each of which so executed will be deemed to be an original, and such counterparts together will constitute one and the same agreement.

Let us go back to the example of you being in Bangalore and the other party being in Sydney. You will print the agreement at your side in Koramangala and sign it.

3000 miles away, the other party will also print the agreement and sign it. When the two of you sign it at your respective ends, a valid contract has been formed between the two of you.

Do I need to scan my signed copy and send it to the other side and vice versa?

No. A common misconception is that you need to scan and send the document to the other side and they need to do the same.

The whole point of having “counterparts” is that the agreement is in parts, and each part is equally valid.

There is no need to scan your signed agreement and send it to the other side.

What if a dispute crops up? Will this agreement be valid?

Yes, this agreement will be perfectly valid and effective. As far as dispute resolution is concerned, the clause in the agreement will be the defining clause.

So for instance, if your agreement contains a clause which reads:

This Agreement is governed by the laws prevailing in the State of Karnataka, India. The parties agree that the entire cause of action in relation to this agreement (including all discussions, execution and part counseling and Services) has occurred in Bangalore, and hereby submit to the exclusive jurisdiction of the courts in the City of Bangalore only.

If your agreement contains a clause like this, no matter which parts of the world the parties are in, the dispute will be fought in the Courts in Bangalore city only. So if your contract contains a clause which states that disputes will be fought in some other country, think twice before signing – the clause can be enforced against you.

[About the author: Contributed by Hrishikesh Datar, founder of vakilsearch.com, online legal services provider (Legal Advice, Legal Documents & more.]

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