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Your Contract Right from the Start: Simple Starting Provisions to Close Deals Faster

21 Jul 2021
Adrien van den Branden, LL.M.
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Good contract lawyers tout herald clarity as their number one priority.

Today let's see how to remove unnecessary uncertainty from starting provisions.

1/ Signature Date as Effective Date

When I see the start date of a contract relative to its signature I always wonder.

Why on earth?

  • Why condition the start of the agreement upon an uncertain event? (you can't know for sure when the contract will be signed)
  • What if signatories sign the agreement at different dates — do we assume it's the last one that should be held as the start date of the agreement?
  • What if no-one signs the agreement yet parties execute it anyway — do we assume the contract... never started?!

Just pick a date to remove all potential confusion.

Effective date 1

2/ Last Signature as Effective Date

By tying a contract's effective date to that of its signature, lawyers create unnecessary blur.

You can't know for sure when a contract will be signed because you're not controlling the signatories.

You can't even be sure that a contract will EVER be signed by both signatories.

The effective date determines the term of an agreement, triggers non renewal notices or kicks off non compete obligations. It's a critical element that should be clear for all parties involved.

So don't let uncertainty as to when the contract starts seep into your contract. Spell the full date out.

Effective date 2

3/ Conditional Effective Date

Don't compound uncertainty with conditionality 🤯

Let's look at this comparison.

The agreement enters into force either at the earliest of:

  • "the execution date": i.e. when the contract is being signed by both parties — yet contracts may end up not being signed by either or both parties; or
  • when confidential information was first received by a party — so parties need to fact-check when confidential information was first received to set the effective date of that non disclosure agreement.

Again, don't let uncertainty seep in.

Pin a date, call it "Effective Date" and map all relevant provisions (duration, prior notices, renewals, surviving provisions) accordingly.

Effective date 3

That's all for today. I hope you found this piece on starting provisions insightful.

If you enjoyed this one, join the hundreds of professionals who already subscribed to our newsletter. At Canyon, we make contracts better and faster, and that’s why we share bite-sized contract drafting tips every other week.

Oh, and one last thing, if you like what you read, go ahead and follow me on LinkedIn.

Over and out — Adrien

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