I am confused about the effective date in TAR’s commercial contracts. The TREC contracts provide a place to insert the executed date of those contracts, and this date is defined in the contract as the “Effective Date.” There is no similar place for the brokers or the parties to insert such a date in the commercial contracts.

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  • I am confused about the effective date in TAR’s commercial contracts. The TREC contracts provide a place to insert the executed date of those contracts, and this date is defined in the contract as the “Effective Date.” There is no similar place for the brokers or the parties to insert such a date in the commercial contracts.

The commercial contracts address the matter of the effective date in paragraph 24. The task force of commercial practitioners working on these contracts felt that because of the way that many commercial contracts are negotiated it would be appropriate to provide that the time for performance of the parties should not begin until the escrow agent receipts the contract after all parties have signed. This was done to allow for delays often experienced in commercial transactions in getting the contract to the escrow agent and to allow the parties to not have to begin performance obligations until the contract was escrowed. This means that for “the purpose of performance of all obligations” the clock does not start running for the parties until the contract has been receipted by the escrow agent. This does not mean that there is no enforceable contract prior to the receipt by the escrow agent. To the contrary, the law of offers and acceptance would still control and there would be an “enforceable” contract under the statute of frauds when the last party to accept all of the terms of the contract signs the contract and communicates that acceptance and signing to the other party. Thus, while the date for the beginning of performance is handled in a different way in the commercial contracts than in the TREC contracts, the law regarding when there is an enforceable contract is the same for both. It should also be noted that the Escrow Receipt at the end of the commercial contracts has a parenthetical reference that the day of the receipt of the contract is the “effective date.”

Source: TAR

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