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I'm new to contract law and have a scenario where I need to draft a digital contract to collect payment as soon as contract is signed but remaining terms of the contract will become effective some time in future.

From what I have read so far, it looks like a contract can have different contract execution date (signature date) and I can introduce an effective date clause which can mention the date on which terms will go into effect. Is there a commonly used clause that I can use to enforce collection of payments before the effective date? What would be a correct way to draft such a contract? Any examples would be appreciated.

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Payment Date

When drafting a contract just use simple English terms (assuming the contract is in English) that both parties understand. Don’t introduce using-legal language that you think you understand but may not know all the nuances of - don’t say date of execution when you mean the date the contract was signed; they aren’t the same thing.

Incidentally, a payment made before goods and services are provided is called a deposit.

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  • Speaking of using terms the parties might not fully understand - It might a deposit, implying refundablility under some circumstances or it might be a non-refundable fee to induce the other party into entering into the agreement. I would not call it a depot unless that is your common intention. – George White Oct 30 '20 at 21:13
  • @GeorgeWhite Deposits can be refundable or non- refundable or refundable in some circumstances or not others. The word “deposit” on its own doesn’t tell you which type it is. – Dale M♦ Oct 30 '20 at 21:48
  • I did state it implied refundablity so I agree with you that it might or might not mean refundable. I do not agree that an initial payment before other terms are effective is per se a deposit. And since I believe many people view "deposit" as default refundable I suggested not using that term without fully understanding what the agreement actually said. – George White Oct 30 '20 at 23:09
  • The term "advance payment" is also used for a payment made before goods or cervices are delivered. it is the usual term for a payment to an author made before the book or other writing is delivered, for example. – David Siegel Nov 30 '20 at 2:06
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You might want the agreement to be in effect when signed or when the first payment is made, but some terms not be in effect until some future date. I think if someone is paying money there is an agreement (meeting of the minds) in effect at that moment.

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