Suppose you have an agreement in which the initial term is valid for one year from the validity date, subject to an automatic extension for later periods of one year, unless a party announces a non-renewal at least 30 calendar days before the expiry of the period. Suppose the date of the last PDF performance was January 1, 2014, and the last run date for the original was January 9, 2014. Part A is hoping for an extension as a minimum amount as part of the agreement doubled in Year 2, but Part B sends a notice of non-renewal on December 4, 2014. Part A argues that the notification is not validly issued as it was received less than 30 days before December 31, 2014 (the original due date). However, Part B argues that Part A invokes the wrong effective date, and in the morning that the correct effective date is January 9 (the last date written on the originals) and, therefore, the non-renewal was duly communicated. When signing your next contract, take the time to read the document carefully. Now that you know the difference between a validity date and an execution date, make sure the document shows exactly when it will come into effect. In many cases, the execution date of a contract comes before the validity date. Under these conditions, the date on which all parties sign the contract is different from the date on which the contract enters into force.
To understand the difference between signing a contract and entering into force a contract, there are two important concepts: the validity date and the date of execution. Finally, you will sometimes see the validity date used in a contract to refer to a date in the past. For example, parties to a distribution agreement signed on March 31, 2007 may wish to have sales included as of January 1, 2007 for the 2007 sales determination. It would be simpler and clearer to say so much rather than use the term “effective date” and define it as January 1, 2007. “This agreement is concluded and concluded on [DATE] of [PARTIES].” Ken says, “Why add an unnecessarily defined term to the reader?” “Effective Date,” July 2007. Ken Adams of Koncision argues that, in these circumstances, it is clearer to include the date of the agreement in the introductory clause and to characterize that date as “the date of that agreement”. For example, at a time when the exchange of signature copies or signature pages is more frequent (or more rarely these days, fax) followed by an exchange of signed originals, the use of “the last date written below” to set the validity date may have unintended consequences. In many cases, the delivery begins as soon as the parties have exchanged signed copies in PDF format and leave it to the contract administrators to pursue the originals at the request of one or both parties.