Investing in Infrastructure | International Best Practice in Project and
Construction Agreements | January 2016
Counterparts
boilerplate
clause
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Counterparts boilerplate clause
Need to know
This clause permits the execution of multiple copies of the same agreement or deed. It is prudent to include this
clause if parties wish to execute multiple copies of the same agreement or deed in counterparts (ie because not
all parties can sign in the same place and at the same time).
The sample clause
This [deed/agreement] may be executed in any number of counterparts, and this has the same effect as if the
signatures on the counterparts were on a single copy of this [deed/agreement]. Without limiting the
foregoing, if the signatures on behalf of one party are on different counterparts, this shall be taken to be, and
have the same effect as, signatures on the same counterpart and on a single copy of this [deed/agreement].
1 What is this clause and why is it used?
The purpose of a counterparts clause is to facilitate commercial arrangements where it may not be practical for
every party to sign every copy of an agreement or deed, and to enable each party to retain an executed copy of
the agreement which may then be produced as an original if required for evidentiary purposes or, in the case of
real estate transactions, stamp duty.
A counterpart of a document is a copy. It is usually created:
(a) to accommodate situations where parties are unable to execute a single document at the same time or
place – because they may be, for example, located in different cities, countries, time zones or otherwise
unavailable at the time of signing
(b) so that each party may retain their own original.
Using a counterparts clause clarifies that:
• multiple copies of the same agreement or deed, known as counterparts, may be executed by the parties
• each signed copy will be treated as an original
• together the counterparts will comprise a single legal instrument.
The result is that each party retains an ‘original’ of the same agreement, executed by all parties, once the
counterparts are exchanged.
1
1
Sindel v Georgiou (1984) 154 CLR 661.
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Counterparts boilerplate clause
2 How effective is it?
2.1 Counterparts clauses are generally effective
A counterparts clause ensures that the intention of the parties to sign an agreement using counterparts is clear.
However, exchange of counterparts, whether there is a counterparts clause or not, will normally be enough to
form a contract given that exchange generally constitutes acceptance.
2
Therefore, the inclusion of a
counterparts clause is not strictly necessary.
Decisions involving counterpart clauses consistently apply the seminal case of Sindel v Georgiou,
3
which
provides authority for the principle that a legally binding contract can be formed by the exchange of written
documents, or ‘counterparts,’ each of which is considered an original.
As each counterpart may be treated by the court as an original document,
4
and as one deed or contract, the
court is able to look at each counterpart to ascertain the proper construction of the contract.
5
It is therefore
unnecessary to state that each counterpart when executed is an original, although to do so might be said to
clarify the intention of the parties.
Barrett J in Investmentsource Corporation Pty Ltd v Knox
6
affirmed that swapping counterparts is a well-
recognised method of exchanging contracts, particularly in conveyancing transactions. His Honour also said:
“I am satisfied that the absence of a ‘counterparts clause’ (ie a provision expressly recognising that several
parts may be executed are together to make up the agreement) does not detract from the reality that a
contract was formed by the exchange.”
7
It is now well established that the exchange of counterpart identical contracts brings a binding contract into
existence in land transactions.
8
The practice of exchange is also commonly followed in general commercial
transactions
9
either to create a binding contract or to formalise contracts already binding.
10
It is also now
recognised that any non-material discrepancy between the counterparts may be remedied through rectification
and that a discrepancy does not defeat the intention of the parties to be bound in committing to an exchange.
11
The principal document and counterparts need not be executed at the same time to be effective.
12
When all
parties execute each document, each document is considered equally to be the principal (except in the context
of leases where the principal lease executed by the lessor and retained by the lessee will be presumed to be the
correct version as explained below).
13
If using a counterpart, it is important to ensure that there are no rules affecting the execution of the instrument
for other purposes, for example copies for stamping or registration (see further discussion below).
2 Investmentsource Corporation Pty Ltd v Knox [2002] NSWSC 710.
3 (1984) 152 CLR 661.
4 Colling v Treweek (1827) 6 B&C 394.
5 Matthews v Smallwood [1910] 1 Ch 777.
6 [2002] NSWSC 710.
7 Ibid [27].
8 Harrison v Battye [1974] 3 All ER 830; [1975] 1 WLR 58 at 60 per Lord Denning MR (Cairns and Sir Erich Sachs JJ concurring). See also Iannello v Sharpe
(2007) 69 NSWLR 452; [2007] NSWCA 61 per Hodgson, Santow and Basten JJA and Adicho v Dankeith Homes Pty Ltd [2012] NSWCA 316 per Meagher
JA at [17] (Sackville and Tobias AJJA agreeing) and the authorities there cited including Sindel v Georgiou (1984) 154 CLR 661.
9 Butterworths Encyclopaedic Australian Legal Dictionary, Exchange of Contracts.
10 Which will depend on when the parties intend to be bound: see Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353.
11 Sindel v Georgiou (1984) 154 CLR 661.
12 Fryer v Coombs (1840) 113 ER 468.
13 Matthews v Smallwood [1910] 1 Ch 777.
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Counterparts boilerplate clause
Other considerations in relation to formation where counterparts are used include:
• when assessing whether there is a material difference between two counterparts, the court can consider the
cumulative effect of the differences between the documents
14
• in order for the exchange of documents to successfully create a binding agreement, all substantial respects of
the exchange must be correctly carried out.
15
2.2 What happens if I don’t use it?
Provided there is an exchange of the counterparts (or other clear communication of acceptance), execution can
be achieved without an express counterparts clause. However, in the property context, most States and
Territories have standard-form contracts for the sale of land which prescribe distinct procedures for the
exchange of documents which must be followed.
16
2.3 Counterpart clauses and deeds
Parties will ordinarily be bound upon their due execution of a deed. This means that a party signing an intended
counterpart will be bound without exchange of counterparts and without execution by all other parties.
17
Risks
associated with this can be managed through:
• the use of an escrow deed, so that the delivered deed is only to take effect upon the happening of a specified
event or upon condition that it is not to be operative until some condition is performed
18
• by expressly noting in the instrument that the deed is not delivered (and will not be binding on the parties)
until all parties have executed it, including all signatories required for execution by a company.
2.4 Position where inconsistency between counterparts
Where the counterparts are not identical and a dispute arises as to which version of the agreement is binding
or, indeed, whether a binding agreement exists at all, the case law presupposes that a principal agreement is
distinguishable from the counterparts and in this case:
• with respect to leases, the principal agreement will prevail unless there is an obvious mistake
• discrepancies may be remedied through rectification since the parties’ intention to be bound is
demonstrated in the exchange,
19
(although the remedy of rectification is not a pre-requisite for finding that a
contract is binding)
20
• where the discrepancy is material, it will be impossible to establish a meeting of the minds sufficient to form
a contract.
21
If the original and counterpart are inconsistent, the original document prevails unless there is an obvious
mistake or ambiguity when both copies are compared.
22
Formerly, the view was that each counterpart must be
14 Zaccardi v Caunt (2008) 15 BPR 28,403.
15 Lee v Ross (2003) 11 BPR 20,975.
16 Investmentsource Corporation Pty Ltd v Knox [2002] NSWSC 710.
17 An intention to be bound by the deed will sufficiently constitute "delivery" even though the deed is not physically delivered: see 400 George Street (Qld) Pty
Ltd and Ors v BG International Ltd [2010] QCA 245.
18 See eg Mirzikinian v Tom & Bill Waterhouse Pty Ltd [2009] NSWCA 296 at [39].
19 Sindel v Georgiou (1984) 154 CLR 661.
20 Zaccardi v Caunt (2008) 15 BPR 28,403.
21 Matthews v Smallwood [1910] 1 Ch 777; this appears to be so even if the difference is not discovered until much later and parties have assumed that there
was a binding contract (Andruce Pty Ltd v Bray (1970) 2 NSWR 525).
22 Burchell v Clark (1876) 2 CPD 88.
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Counterparts boilerplate clause
identical at exchange to be valid, but it is now acknowledged that a discrepancy may be remedied through
rectification and it does not defeat the intention of the parties to be bound in committing to an exchange.
23
Rectification reforms the document not the contract made and, as such, it applies generally to documents,
contractual or otherwise.
24
It is an equitable remedy associated with mistake. The object of the order given by
the court is that an instrument is rectified or reformed so that the common mistake in it will be eliminated.
25
The decision of Hayward v Planet Projects Pty Ltd
26
provides an example of the application of principles of
rectification involving a counterpart and the surrounding case law.
Where the respective contractual documents do not perfectly correspond, it is a matter of objectively construing
documents to determine whether a binding agreement can be inferred despite the lack of consistency between
the formal parts.
27
If there is a manifest discrepancy between the principal document and the counterpart, the
principal document will prevail unless both are considered “principal” documents or duplicates, in which case
both are equal in effect and the court will need to determine what the true agreement was and in doing so the
counterpart may inform the decision.
28
Allsop P in Zaccardi v Caunt
29
considered counterparts that differed in
a material respect. His Honour stated that the correct interpretation of Sindel on this point is that the
availability of rectification is not a pre-requisite to find that the contract is actually binding.
Where a party remains unaware of a material discrepancy between the counterparts, it is impossible to suggest
that an adequate meeting of the minds ever occurred, and therefore no contract could be formed.
30
See below for how, practically, to manage the risk of inconsistency between documents, especially in a
digital environment.
2.5 Counterparts and the requirement for ”exchange”’ in land transactions
In NSW, contracts for the sale of real estate have been held to be presumed to be non-binding without an
exchange of written contracts.
31
This follows ordinary conveyancing practice in NSW and a similar presumption
may arise in other Australian jurisdictions.
2.6 Counterparts and special rules for leases
Where duplicate copies of a lease are executed, the document executed by the lessor and retained by the lessee
is the original and the other copy retained by the lessor is a counterpart,
32
although each duplicate is as effective
as the other.
33
The counterpart, as an inferior reference in this case, must yield to the principal document in any
case of inconsistency between them.
34
However, the counterpart can still be used to correct any ambiguity in
the principal instrument.
35
23 Sindel v Georgiou (1984) 152 CLR 661.
24 United States v Motor Trucks Ltd [1924] AC 196.
25 Halsburys’ Laws of Australia [110-5565].
26 [2000] NSWSC 1105.
27 Sindel v Georgiou (1984) 154 CLR 661.
28 Lidsdale Nominees Pty Ltd v Elkharadly [1979] VicRp 10; [1979] VR 84 at 86; Burchell v Clark (1876) 2 CPD 88 at 94.
29 (2008) 15 BPR 28,403.
30 Longpocket Investments Pty Ltd v Hoadley (1985) 3 BPR 9606 and De Jong v Carpenter (1982) 2 BPR 9524.
31 Hearse v Staunton [2010] NSWSC 954 (affirmed by Hearse v Staunton [2011] NSWCA 139).
32 Matthew v Smallwood [1910] 1 Ch 777 at 783-4.
33 Lidsdale Nominees Pty Ltd v Elkharadly [1979] VicRp 10; [1979] VR 84 at 86; Colling v Treweek (1827) 6 B&C 394 at 398.
34 Butterworths Encyclopaedic Australian Legal Dictionary, Counterpart
35 Matthews v Smallwood [1910] 1 Ch 777.
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Counterparts boilerplate clause
2.7 Counterparts and special rules for dutiable property
In order to be used in law or equity or to be admissible as evidence in a court, an original document relating to
dutiable property and/or a dutiable transaction must be marked (stamped) by the relevant authority in the
applicable State or Territory.
36
In this context:
• dutiable property is defined differently between the States and Territories but generally includes land,
shares, business assets and units in a trust
37
• a dutiable transaction is again variously defined but generally refers to the transfer of dutiable property or
some interest such as a partnership interest.
In general terms, if a dutiable transaction is evidenced with a document and also a duplicate or counterpart for
another party to retain, the counterpart is considered the inferior copy for the purpose of duties. The general
rules are as follows:
• a duplicate or counterpart is not usually stamped and an additional nominal duty is payable on the
counterpart when it is proved to the satisfaction of the stamping authority in the relevant State or Territory
that the proper duty has been paid on the original instrument of which it is the duplicate or counterpart.
• secondary evidence will not ordinarily be received of the contents of an unstamped document when the
original is in existence.
38
There are some exceptions to this rule (eg s 304 of the Duties Act 1997 (NSW)
permits unstamped documents to be admitted into evidence where the person producing the document is
not liable for payment of the duty and identifies the party liable).
It has been observed that where there are two or more counterparts, double stamp duty will not be required on
the executing instrument, and in conveyances, duty is only payable on the document that the parties have
determined will be the principal instrument for stamping purposes.
39
3 Drafting or reviewing the clause
3.1 About the sample clause
The sample clause is a standard clause and is representative of those widely used in contracts throughout
Australia and other common law jurisdictions.
3.2 When can or should I amend the clause?
Counterparts clauses are fairly standard and neutral in effect and so there is normally no need to amend them.
4 Other practical considerations
4.1 Executing digital and non-digital agreements by counterparts
Counterparts of a contract should contain identical terms and identical attachments/annexures. Where non-
dutiable property is concerned, to minimise the risk of inconsistency between final agreements, particularly in a
digital environment, consider taking the following steps prior to execution:
• agree on a process for document control during negotiations and amendments
36 Duties Act 1997 (NSW) s299; s304; Duties Act 2000 (VIC) s272; Duties Act 2001 (QLD) s252(2); s258(2)(a), (c), s262(1)(a), (b), s455A(1)(b), s455(1)(c),
s455(4), s487, s491(1), s492, s494, Sch 6; Stamp Duties Act 1923 (SA) s22; Stamp Act 1921 (WA) s27; Duties Act 1999 (ACT) s250; Duties Act 2001 (TAS)
s246; Duties Act 2008 (WA) s279.
37 Duties Act 1997 (NSW), s11; Duties Act 2000 (Vic), s10; Stamp Act 1921 (WA), s16; Duties Act 2001 (Qld) s10; Duties Act (Tas) s9; Stamp Duties Act 1923
(SA) s4; Stamp Duty Act (NT), s4; Duties Act 1999 (ACT) s10.
38 Dent v Moore (1919) 26 CLR 316.
39 Duties Act 1997 (NSW) s18.
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Counterparts boilerplate clause
• ensure that the final contract is clearly marked and dated as the final version for execution (eg “Execution
Version 16 September 2013”)
• check that the copies of the agreement or deed exchanged by the parties are identical, including any
annexures/attachments
• where the nature of delivery of the final version for execution is digital (eg by email or data exchange server):
– consider encrypting the file to minimise the risk of modification, and ensure any email notification is sent
to the addressee’s designated email address for that purpose; and
– ensure the email itself clearly communicates that the attached or linked file is in the agreed final form for
execution and designate the email address either for return of the executed counterpart or notification
that the executed counterpart has been uploaded to the data exchange server.
4.2 “Split” executions
A “split” execution occurs when two people who are required to sign a deed or agreement on behalf of one party
both sign on different copies of the same document, usually because they are in separate locations. For
example, s127(1)(a) of the Corporations Act 2001 (Cth) provides that a company may execute a document if it is
signed by two directors. A statutory presumption of due execution will arise pursuant to s129(5) of that Act if
the document appears to have been executed pursuant to s127(1).
There is an issue as to whether a split execution will fall within the references to “a document” and “the
document” in s127 and s129 of the Act respectively given that the signatures are on separate copies of
the document.
PwC’s position is that a split execution will fall within the statutory requirements. Although the matter is not
free from doubt, that position reflects a purposive reading of the relevant sections, and is consistent with the
only authority which currently addresses the issue.
40
To cover the situation where a party or parties will be executing by split execution, the firm recommends
including the following wording (also included in the sample clause above): Without limiting the foregoing, if
the signatures on behalf of one party are on different counterparts, this shall be taken to be, and have the
same effect as, signatures on the same counterpart and on a single copy of this [agreement/deed].
40
The only case to consider the issue is Re CCI Holdings Ltd [2007] FCA 1283.
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