Such is the rush to complete commercial deals that the parties often look for short cuts that can be taken. Signatories may not be available at the time completion is due to take place. Also, it may be that some post-execution amendments need to be made.
The Mercury Tax Group Case4 is an important decision regarding the execution of documents. It provides that formalities must be observed notwithstanding commercial desires and the wish to complete as quickly as possible. The Court was concerned with the practice of taking a signature page from one document, and recycling it for use in another, notwithstanding the fact that in modern commercial times it is not always practical for multi-party contracts, deeds and other instruments to be signed in the same place at the same time.
The case involved the execution of signature pages whilst the deed in question was still in draft. Mercury argued that this was common practice in line with “modern commercial times”. The problem was that after execution, and without notifying the signatories, some significant changes were made to the deed and blanks in the document were filled in. The Court found that the deed was not validly executed as “the signature and attestation pages must form part of the same physical document”.
Whilst speed is always an imperative when deals are being done, the failure to execute documents in a proper way will mean that the document could be invalid.
The key point to take away from this case is that the parties should avoid signing pages that do not form part of the finalised document. If one of the signatories will not be around, when completion is scheduled to take place, then consideration should be given to arranging for a Power of Attorney to be put in place.
The judge, in Mercury, took the view that a deed has to be executed by an individual in its final version and said that validity of a document will be effected by the practice of signature pages being detached from an incomplete draft and attached to a later, and significantly different, version. Arguably, a similar position would apply to real estate contracts due to the formalities, laid down by statute, that need to be followed with their execution.
However, the decision is not of the Court of Appeal and it remains to be seen how wide its implications are or whether it is limited to its own facts. Until further guidance is obtained, it is advisable to be very careful with the execution of documents, particularly deeds and real estate contracts. If there is any doubt, legal advice should be taken at the time contracts are signed.
4 R (0n the application of) (1) Mercury Tax Group Ltd & Others v (1) Revenue & Customs Commissioner & Others  EWHC 2721 (Admin)