Understanding Contract Language
What is the difference between an “effective date” and an “execution” date?
The effective date is the date the contract becomes effective. It may be other than execution date. Parties to the contract may specify an effective date. Execution date is the date parties sign the contract. If parties did not specify an effective date, then Contract becomes effective upon signed by the parties.
What does “Jurisdiction” mean?
A jurisdiction is a venue with its own laws. It may either be a state or a province. For example, New York is a jurisdiction in the United States, Ontario is a jurisdiction in Canada.
What is the “Governing Law”?
A contract is governed by the laws of the jurisdiction where the parties will perform contractual obligations, this is usually the place in which the service, sale or property is performed or located. Parties to contract may select the applicable jurisdictions. Selecting a jurisdiction may be advantageous over another. For instance, the statute of limitation for recovering a debt in one state can be less than the other or one jurisdiction may give more rights under the same contract compare to other jurisdiction.
Why do you need a written contract?
A written contract is evidence of what was agreed to and may help prevent misunderstandings later on.
Moreover, Under NY law and Uniform Commercial Code (UCC) certain contracts must be in writing to be enforceable such as a contract for the sale of goods of $500 or more, purchase or sale of a real property, leases of 1 year or more, suretyship agreements, an agreement that cannot be performed within a year etc.
A well written contract can also prevent from encountering ambiguities in contracts as indefinite terms in a contract can be the cause for conflict or litigation. Therefore, t is always recommended to consult with an experienced lawyer in drafting contracts.
What does “Time is of the essence” mean?
If the contracts dictates that “time is of the essence” this means that parties must strictly comply to the deadlines specified in the contract regarding their performance. Failure to adhere to any specified deadline will be considered to be a breach and may be a ground for cancelling the contract. If parties didn’t specify any deadline, then parties are expected to perform in a “reasonable time”. Under law a “reasonable time” means that an ordinary person would practically and realistically act in the given time under those circumstances.
What does “Joint and Several liability” refers to?
This means that all parties under the contract are equally and personally liable for the non-performance or other contractual liabilities. “Several liability” means that if one liable party is unable to pay its portion of an obligation then all remaining parties are liable for their own portion plus the other party’s portion who is unable to pay.
What does “inure” and “enure” mean?
In contract law “Inure” refers to a person’s own use, benefit or advantage. For example, if contract says “inure to the benefit of John Doe”, it means John Doe will gain the full use, benefit and or advantage under the contract. Both “inure” and “enure” have same meaning. “Enure” is just acceptable variant of the word ‘inure”.
Are faxed signatures valid?
If the contract provision indicates that facsimile signatures are acceptable, then parties may fax the signed copies to each other. If there is no such provision in the contract, the validity of the contract is determined by the state laws affecting signatures by faxes and the type of documents.
Do I need a witness, or a notary public in order to have a legally valid contract?
A contract doesn’t have to be witnessed in order to be legally valid and binding. However, there are certain contract that must be witnessed. For example, in New York, a Will must be signed by the Testator and the Testator’s signature must be attested by at least two witlessness otherwise it shall not be valid.
Notary public notarization is also not required for most contracts but some institutions, government branches and banks may require it to be notarized by a notary public.
Published by Metin Caglar, Esq/ Contract Law Articles