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Why Is It Important to Clarify the Contract's Date?
by kparr on 

Contracts are frequently dated...somewhere…within the document.  The date might typically be found:


1.  In the first sentence:  “This Agreement, dated January 1, 2014 is entered between Joe Smith Enterprises and ….”

2.  It might be found in a sentence just above the signatures:  “Dated this _ day of January, 2014;” 

3.  There might be a space near each parties’ signature block for each of them to individually insert the date of signing.  The parties might insert different dates next to their signatures because they in fact signed on different dates.

4.  There might be a separate paragraph describing what the contract’s “effective date” is.

5.  There might be any combination of the above four. 


Problems can arise when more than one of these date provisions appear in a contract.  If multiple date provisions conflict, and I have seen many such conflicts, the conflict can create an immediate ambiguity in the contract’s interpretation. 


Why?  The contract might contain deadlines for a party’s performance that are measured by a number of days following “the contract date” (e.g., for example, “performance is to be completed within 100 days from the “contract date.”)  These deadlines frequently arise in contracts for the purchase and sale of real property, construction and development contracts and a wide variety of others.  If the “contract date” is unclear, disputes can easily arise as to the true performance deadline.


Careful contract drafting can avoid these problems.  The entire contract must be reviewed to determine what, if anything, is measured by the contract date. Then, an appropriate date provision can be used.


***These materials have been prepared for general informational purposes only.  The information presented is not legal advice, should not be acted on as such, may not be current, may not apply to your situation, and is subject to change without notice.  For legal advice, consult an attorney.***

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HOW ARE YOU SIGNING THOSE CORPORATE CONTRACTS?
by kparr on 

The news is currently filled with debates about whether a corporation is a “person.” The current debate arises in the context of campaign financing laws and whether corporations have equal rights with individuals to participate in campaign financing.   

 

No matter which side of the campaign contribution fence you are on, one thing is clear:  corporations (and LLC’s) perform all their acts through individuals.  A business might have officers, directors, shareholders, members, layers of management, staff, trustees, employees---all of whom are individuals or controlled by individuals. 

 

When an individual is authorized to sign contracts on behalf of their corporate business, they do so by grasping that pen---with the hands, fingers and flesh not found on corporations---and proceed with signing the contract.  But if the signer is not careful, that individual can legally bind themselves on the contract, placing their personal assets at risk in the event of a dispute with the other contracting party. Clearly, the individual does not want this result. The other contracting party might not want that result, either, since they might be limited to collecting damages from the individual whose pockets might not be as deep as the corporation’s pockets (although sometimes the individual might have more assets than the business. That can be the topic of another article on personal guarantees.)      

 

The entire contract should be reviewed to make certain that it is the business entity, and not the agent, that is incurring the contractual obligation. The mere addition of the signer’s title on the signature block (“Joe Smith, Agent,” or “Joe Smith, President”) may not be enough for the agent to escape personal liability on the contract.  The failure to use the business’ full and complete legal name (as opposed to some misdescription or abbreviated name) can also sometimes lead to personal liability on the agent’s part.      

 

How are you signing your business’ contracts?

 

***These materials have been prepared for general informational purposes only.  The information presented is not legal advice, should not be acted on as such, may not be current***

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