What Does “Effective Date” Mean in a Contract?
The date when a contract takes effect and obligations begin, which may differ from the signing date.
Detailed Explanation
The effective date is when the contract's obligations activate. It might be the same as the signing date, or it might be a future date (for planning purposes) or even a past date (making the contract retroactive).
The effective date typically starts the clock for everything - the term, notice periods, payment schedules, and other time-based obligations all usually calculate from this date.
Example in a Contract
“This Agreement shall be effective as of January 1, 2024 (the "Effective Date"), regardless of the actual date of signature by the parties.”
Why It Matters
The effective date determines when your obligations begin and when the term starts running. If the effective date is before you sign, you may have obligations you haven't performed yet.
Related Terms
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