Jigsaw piece puzzle

Commencement: Definition, Example and Related Terms

What is Commencement ?

Commencement refers to the beginning or start of a process, event, or condition. In the context of contracts, 'commencement' typically signifies the date on which a contract or legal obligation becomes effective. This date is critical as it marks the point from which the terms and conditions of the contract are enforceable and the parties are bound by their contractual obligations. Understanding when a contract commences is essential for both parties to ensure compliance with the agreed-upon terms.

For example, a lease contract might specify a commencement date on which the tenant is allowed to take possession of the property and starts paying rent. Similarly, a construction contract would detail a commencement date marking when the building activities are to begin.

The commencement of a contract might not always be immediate upon signing. Some contracts have conditions that must be fulfilled before the commencement is triggered. This can include obtaining regulatory approvals or fulfilling certain preconditions detailed in the contract.

It's crucial for all parties involved to pay attention to the commencement details to avoid any potential disputes or breaches. This includes understanding whether there are specific actions that need to be undertaken before the contract begins, and if any timelines are attached to these actions.

Example(s)

  • Scenario Description
    A software development company enters into a contract with a client to deliver a new software system. The contract specifies that the commencement date is 30 days post-signature to allow for the recruitment of necessary project personnel. This means that all contractual obligations, including timelines for deliverables, begin 30 days after the contract is signed.
    A business partnership agreement is signed between two companies planning a joint venture. The agreement states that the commencement date is conditioned upon obtaining regulatory approval from the authorities. Therefore, the joint venture activities will only start once the approval is secured and acknowledged by both parties.

Related terms