When it comes to signing a contract, you might have some questions as to who should put their name to it first. In most cases, it doesn’t actually matter so as long as both parties sign the contract. In this article, we’ll discuss which order certain contracts should be signed in.
General Rule
A general tip is to never sign a contract that you do not fully understand. This includes situations where another document is referenced in your contract and is described as being incorporated in the contract. Always make sure that you are reading all the documents carefully before signing the contract.
Business Transactions
There is no general about which party should sign the contract first. From a business perspective, it is recommended that the supplier sign the contract first. If the buyer signs first they lose their leverage. When a buyer signs the contract first, it represents an offer to the supplier. This offer will remain open and is open to negotiation or dispute.
The supplier has the right to accept or reject the offer within a reasonable period. A disreputable supplier may withhold signing the agreement as leverage to negotiate better terms because the buyer wants or needs to get the work performed.
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Position
Where the buyer takes the position that the supplier has to sign the agreement first, if the supplier delays in signing the contract, the buyer could hire another supplier to perform the work. If the buyer signs it first, the buyer would need to provide notice to the supplier to rescind their offer. That would need to be done before the supplier signs the agreement. Since there is no notice requirement in place that would require written notice if you felt that the supplier was playing games with the signing, you could always call them with a witness listening on and ask them the status. If they say it hasn’t been signed yet, you could give them a verbal notice that you are rescinding the offer and confirm that in writing.
Time Frame
Where subcontractors sign their contracts within a reasonable time frame and wanting to negotiate further. Requesting a letter of intent is appropriate. Since a letter of intent can be binding its not a lot different than signing the contract first, however it is not binding. This merely weakens your position. Set requirements where the subcontractor is to sign within a short period of time.
If the supplier does not hire. Notify the original supplier that they did not get the job because they did not sign the agreement on time. It may cost you a little more that time, but it send a strong message that they can’t hold you up and play games.
Amendments
You may be concerned that amendments arise once you’ve made the offer. However, if amendments were to occur you would still need to countersign those changes. A successful agreement only proceeds if both parties, the owner and seller signs the contract.
Furthermore, the negotiating period will lead to a back and forth over the stipulated money amount offered and/or timing for the close of the transaction as such. Both buyers and sellers have to agree, in writing to all items in the order for the contract to come into effect.
Counterpart Clause in Contract
Counterparts languages are used so that the agreement can be signed in parallel rather than one after the. In locations where it is legally acceptable, the use of counterparts language to expedite contract signing. What counterparts language does is allow copies made by any reliable means be considered to be an original. Where counterpart language really works well is when you have a number of entities that need to sign the agreement where you can do the signing in parallel with all of them rather than serially having to send copies to one and have them transmit it to all others for their signatures.
Conclusion
The bottom line is that both must agree to the terms and sign the contract. Therefore, the business issuing the contract generally does not sign it until it is accepted by the other party and signed. Sometimes what is legally necessary and what is practically advisable are different, as in the case of who should sign a contract first. As in all legal matters, if you have any questions or any concerns or doubts, speak to a lawyer.
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