The Binding Date of a Purchase Agreement confirms acceptance and initiates certain time periods in the PSA. Binding Date issues can derail a contract if the parties are not operating from the same date. This can happen when an incorrect binding date is entered or if no date has been entered
1 Day Objection to the Binding Date is New in the 2022 GAR Purchase Agreement
If a party to the contract believes a binding date has been filled in incorrectly, a procedure has been created for either party to object to the binding agreement date. Specifically, if a party believes that the Binding Agreement Date was filled out incorrectly, the party has one (1) day from receiving a notice of the Binding Agreement Date to object to it by sending a Notice of Objection to the other party. If no objection is made, then it constitutes acceptance of whatever Binding Agreement Date was entered.
This change was made to avoid parties raising objections to the Binding Agreement Date well into the transaction when some of the deadlines in the contract may already have passed. The GAR contract also provides that objection will be resolved by a written agreement signed by the parties. Hopefully, the parties can review the definition of “Binding Agreement Date” and quickly reach an agreement on the Binding Agreement Date. However, language was also added that “The absence of an agreement on the Binding Agreement Date shall not render this Agreement unenforceable.” So, if the parties cannot agree, then the parties would have to litigate the issue of the correct Binding Agreement Date. (Not a great use of time or resources.)
The 1-day period for objection should also cure the issue of a binding date that is after the expiration of the time limit of an offer. Despite a technically late acceptance, if the parties operate under the contract as though it were binding, a party would be deemed to have waived any objection to the validity of the contract. (Technically, a contract accepted after the expiration of a Time Limit of the offer is a counteroffer, which the other party can accept or reject.)
The specific language in the Purchase and Sale Agreement is found at C.4.(k) on page 6 of the PSA.
C.4 Other Provisions
(k) Objection to Binding Agreement Date: If the Buyer or Seller objects to the date entered as the Binding Agreement Date, then within one (1) day from receiving notice of Binding Agreement Date, the party objecting shall send notice of the objection to the other party. The objection shall be resolved by the written amendment between the Buyer and Seller by executing a binding agreement date confirmation (F733). The absence of an agreement on the Binding Agreement Date shall not render this Agreement unenforceable. The failure of a party to timely object will result in the parties accepting the Binding Agreement Date as entered.
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