November 1, 2008 What Does One Do If a Signature Date Is Omitted?
One topic we discuss at my “Language and Layout” seminars is when it’s appropriate to have signatories date their signatures, as opposed to relying on the date stated in the introductory clause. (This is discussed in MSCD at 1.16–21 and 4.3–7.)
In a couple of recent seminars I was asked what one does if, in a contract that provides for dated signatures, a signatory fails to date their signature. Presumably this problem can arise when the signatory sends in the signature page by email or fax.
To deal with this problem, you could adjust my recommended dated-signatures boilerplate by adding the sentence in bold italics:
14. Effectiveness; Date. This agreement will become effective when all the parties have signed it. The date this agreement is signed by the last party to sign it (as indicated by the date associated with that party’s signature) will be deemed the date of this agreement. If any party signs but fails to date a signature, the date that the Company receives the signing party’s signature will be deemed to be the date that the signing party signed this agreement.
Note that my recommended language anticipates more than two parties. That means that you’d have to designate one party by name in the new language, as the non-signing parties might receive the signing party’s signature on different dates. Designating one party in this manner would only work if one party is responsible for transaction logistics.
Here’s a version for two parties:
14. Effectiveness; Date. This agreement will become effective when both parties have signed it. The date this agreement is signed by the second party to sign it (as indicated by the date associated with that party’s signature) will be deemed the date of this agreement. If a party signs but fails to date a signature, the date that the other party receives the signing party’s signature will be deemed to be the date that the signing party signed this agreement.
If you’re concerned about arguments over what date a signature was received—such an argument might arise if the signature was received on a Sunday—you could specify that receipt would be determined “in accordance with section 12 [Notices],” assuming that the notices provision is comprehensive enough to address such issues. (That’s rarely the case.) But referring to the notices provision raises the question whether sending a signature page constitutes notice of the sort that would fall within the scope of the notices provision. So I’d be inclined to omit any reference to the notices provision.
November 6, 2008 at 8:41 pm
I would suggest adding this:
“. . . and the Company is authorized to enter the date of receipt as the date of that party’s signature on this contract.”
Someone looking at the contract later wants to see the date by the signature. He will not want to have to rely on extrinsic evidence to figure out what that date is.
November 6, 2008 at 10:05 pm
yclipse: Great idea, but how about just saying and may be noted on this agreement as such? Ken
November 9, 2008 at 7:16 am
I usually overcome that trouble by putting a calendar date as “Effective Date”. So, if the Effective Date is being defined as “DD/MM/YY”, and even if parties don’t date their signature, or if there is a difference in the dates at which the parties respectively sign the agreement, the effective date is clearly defined.
November 9, 2008 at 7:34 am
Caroline: I’m not sure that using an “Effective Date” cures this problem. You sign an agreement and send it to the other side for signature, but you don’t know when they’ll be sending it back, if at all. What date would you put as the Effective Date? Perhaps the date that you signed it, but that might not work in all contexts.
And I’m not a big fan of the defined term “Effective Date,” as a contract becomes effective once it has been signed by all the parties.
Ken
February 3, 2009 at 3:24 pm
Ken, Further to Caroline’s question and your response. Most documents in major M&A transactions with which I am familiar do not use signature dates but simply state the date of the Agreement in the introductory paragraph (e.g., “This Stock Purchase Agreement is entered into as of the 3rd day of February 2009 . . .). I suspect that in most cases this does not pose a problem because signature pages are routinely “released” by counsel on the date stated in the Agreement. However, ancillary agreements or subsequent amendments to ancillary agreements are often executed by the parties on different dates, but once executed, the parties agree that the date stated in the agreement is the effective date of the agreement. Is this something that should concern me? Are you saying that you and I cannot agree, as a matter of contract law, that the effective date of an agreement is a date that precedes the date that the last party signs an agreement? Thanks.
February 4, 2009 at 9:37 am
Jeff: If the signatures are dated, the agreement is dated (and effective) when the last party signs. If the signatures aren’t dated, the agreement is dated (and effective) on the date stated in the introductory clause, absent evidence of any hanky-panky. And if ancillary documents are signed a day or two later, it’s unlikely that anyone would have cause to make a fuss about it. Ken
March 9, 2009 at 12:23 am
Ken, I do not think you fully addressed Jeff’s concern.
You mention in a previous post:
“Finally, sometimes you see Effective Date used in a contract to refer to some date in the past. For instance, the parties to a distribution agreement signed on March 31, 2007, might want sales from January 1, 2007, to be included for purposes of determining 2007 sales. It would be simpler and clearer to say as much instead of using the term Effective Date and defining it to mean January 1, 2007.”
I have two questions on your stance regarding Effective Date.
First, how is your solution simpler than defining the term “Effective Date?” You would have a date at the beginning of the contract then perhaps a different date (you suggested “Start Date”) defined later on. Now the parties have to reference the signing date and then the “start date” instead of simply looking at the first sentence of the contract for the “Effective Date.”
Second, is there any case law supporting your view?
I ask because the use of Effective Date is very common practice in contract drafting and 8,000+ contracts filed on Edgar within the last year contain the term Effective Date.
March 11, 2009 at 12:39 pm
Jason: MSCD 1.31 explains my position. Briefly stated, I think it’s misleading to put a fictitous date in the introductory clause just for administrative convenience. If you want to make some earlier date immediately accessible, then frontload it; see MSCD 3.57.
Is there any caselaw supporting my view? I’m not sure what you mean. Logic suggests that habitually backdating contracts can lead to confusion, and any number of news stories suggest that it can lead to mischief.
And if I were a slave to Edgar precedent, I’d still be using the traditional recital of consideration and any number of other dysfunctional usages. But more to the point, my objection isn’t so much to the term “Effective Date” (although it’s misleading), it’s to using as an “effective date” in the introductory clause a date significantly earlier or later than the date the contract was signed.
Ken
May 21, 2009 at 2:46 pm
[...] dating signatures can be a nuisance. As I noted in this November 2008 blog post, one problem is that parties sometimes return signed signature pages without filling in the date [...]
December 24, 2010 at 3:54 pm
Perhapse the answer may be in using the following at at the top of the first page of the document:
"THis Agreement dated this 24rd day of December, 2010, with effect as of the 15th day of November, 2010"
Then within the body of the Agreement (for example the "Terms" section of the Agreement) have the following provision"
"Effective Date" shall mean the 15th day of November, 2010.
Should the "logistics" of the Agreement execution be such that the parties are signing in different locations, and at different times, some further modification could be done as to the December 24 execution date.
Notwithstanding, the above would make it clear as to the parties intention with regard to when the terms contained within the agreement are to take effect/commence (or potentially when they did take effect/commence), while preserving some clarity as to when the document was executed (and therefore minimizing the possibility of such back dating "Hanky Panky" to the document).
Brent
January 14, 2011 at 11:54 am
When a signature/date is requested/required however the signee does not date the form, is the signature considered void if someone dates the signature?