Contract Start Time


Precisely, when does a contract start to run?

When does the clause time actually start?

Assume an offer is going on via fax. The Seller is in a different city. The Buyer accepted the counter offer, acknowledged and signed confirmation of acceptance on the 2nd of November. The next evening, the seller signs the acknowledgement and sends the paperwork, which is given to the buyer on the 3rd of November.

When does the clock start for the clauses period?


The strong preference would be to use a clause which contains a clear ending date. That way, the calculations are not necessary. The answer is clear and it is stated right in the clause. No need to undertake calculations!

Consider, for example, the following clause:

“This Offer is conditional upon the inspection of the subject property by a home inspector at the Buyer’s own expense, and the obtaining of a report satisfactory to the Buyer in the Buyer’s sole and absolute discretion. Unless the Buyer gives notice in writing delivered to the Seller personally or in accordance with any other provisions for the delivery of notice in this Agreement of Purchase and Sale or any Schedule thereto not later than 6 p.m. on November 14, 2020, that this condition is fulfilled, this Offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction. The Seller agrees to co-operate in providing access to the property for the purpose of this inspection. This condition is included for the benefit of the Buyer and may be waived at the Buyer’s sole option by notice in writing to the Seller as aforesaid within the time period stated herein.”

However, many agents fail to use a clause like that and continue to utilize a clause which requires computation.

And, don’t forget, so does OREA. The standard form commonly provides for the deposit to be paid within 24 hours of acceptance.

So, when is acceptance?

Acceptance itself, consists of two steps:

1)     execution of the document evidencing the contract, and

2)     communication of the signature to the offeror.

The contract is accepted and becomes firm and binding between the two parties upon completion of the second step.

Frequently, an offer will be irrevocable until 8:00 pm. It is signed at 7:59 pm, and then a phone call is placed at 8:10 pm advising the other side. This is 10 minutes too late. The offer has already expired. Acceptance required both the signature and the phone call. The signature was just part one.

So, looking at your hypothetical question, there is insufficient information to draw a conclusion.

The offer went to the buyer. The buyer signed on 2 November. I assume that the offer was still open for acceptance, that is, that it was still within the irrevocable period.

However, you miss the second step in the acceptance process! When was the seller advised that his counter-offer had been signed?

As long as we are still within the irrevocable time, that is the formation of contract and the start time for all time periods.

In the case of the deposit (assuming upon acceptance), that is measured in hours. That means it must be delivered within 24 hours of the time of that phone call, or fax communication advising of acceptance.

If you are then calculating, using days, ie. “five days for financing”, the first day is excluded and the last day is included when you undertake the computation.

In most situations, the extra day, namely the 3rd of November would be a “red herring”. The contract between the parties was formed when the buyer’s agent advised the seller’s agent of the execution of the counter-offer by the buyer. That becomes the communication or step two of the acceptance process.

This additional day, is nice to have to show that the seller does indeed have a copy of the accepted offer, but, the contract is still binding without the Acknowledgment having been signed.

Upon the assumption, that the Counter Offer was signed at 7:30 pm on 2 November, that the seller’s agent was called at 7:50 pm to advise of the signature and to constitute communication of the acceptance, the clock starts to run immediately. If you are counting time for the deposit delivery, that would be 7:49:59 pm on 3 November.

It is noteworthy that the time of that phone call is not recorded upon the document.

Brian Madigan LL.B., Broker

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