Agreement Date or Just an Offer Date?
There is a common misconception concerning the Agreement date.
Sometimes, it’s actually just an Offer date. If there is an Agreement, it may indeed be sometime later. This runs the risk of causing confusion.
Previously, when legal stationers prepared paper based documents, often in bundles of six with carbon paper between the pages, there was no date on the front page of the document.
Later, if you wanted to refer to the date of the Agreement, you would look at the signing page and determine the date of Acceptance. Then, you would use that date as the date of the Agreement.
Now, we have a slightly different problem. The date is inserted right at the outset at the top of the front page on the standard form OREA Agreement of Purchase and Sale.
Let’s assume the following: Bob submits an Offer on Bill’s property.
The Offer is dated 1 April 2020. Bill hopes that other prospective buyers may be interested, so he lets the Offer expire, which it does on 3 April 2020.
No other Offers are received and by 8 April 2020, Bill decides to make an Offer to Bob, using Bob’s document, except for a $25,000.00 increase in price and an irrevocable on the 10th.
Bob is satisfied and accepts Bill’s Offer on the 9th.
So, what’s the date of the Agreement?
Here are the choices:
1) 1 April, that’s what it says on the front page at the top,
2) 3 April, but nothing happened,
3) 8 April, but that was just the Counter-Offer date,
4) 9 April, that was the date of the actual acceptance and creation of the contract,
5) 10 April, but that was simply expiry of the irrevocable period.
If we simply went with the time honoured system, we would look to the date of acceptance, so that would be 9 April 2020.
You appreciate, of course, that unless amended, this contract on 9 April, says 1 April at the top of the page.
Easily, we could include a clause to the following effect:
For the purposes of reference to this document, should the parties enter into a contract, this document shall be referred to as an Agreement dated as of the date specified and set forth as the Acceptance Date as noted in the Confirmation of Acceptance”.
Actually, I think that there must be a shorter way of putting that!
Going forward, the real Agreement date was 9 April 2020. The reference to 1 April 2020 was just the date of the first Offer from the Buyer. At this point, it has nothing to do with anything.
On occasion, the true date of the agreement is important. Consider, of course, the fact that the date of the agreement is often used to determine the rights and interests of the parties.
When was the property sold?
When did the Buyer acquire an interest in the property?
What are the respective financial positions of the parties?
Was the property referred to in a Will?
Would the date of the Agreement make a difference?
What about the creation and termination of joint tenancy, co-tenancy, partnership, joint ventures?
Also consider the tax implications arising upon the purchase or sale, qualification for tax rebates and grants.
There are all kinds of good reasons to know the specific date of the Agreement. There seems to be no particularly good reasons to know the date of commencement of the negotiating process. Nevertheless, that’s the date selected.
To solve this problem, the date of the Agreement could be left blank, only to be inserted once a deal has been struck. That would require an amendment to the current forms.
The document could start out with an Offer date, rather than an Agreement date, with the Agreement date to be filled in at the end of the negotiations. This would add some clarity.
Curious!
Brian Madigan LL.B., Broker
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