WHEN IS CONTRACT RATIFIED?

WHEN IS CONTRACT RATIFIED?

The GCAAR Sales Contract was modified last year to remove the “Date of Ratification” line at the end of the body of the Contract from a substantive part of the Contract.  It now states that the Date of Ratification is “For informational purposes only”.  When is a Contract considered fully “Ratified” and how do you document that date which is so critical to the performance of all other time frames in the Contract?

Under the Common Law as interpreted in the Maryland Courts, a contract is generally deemed ratified when all material terms have been agreed upon such as price, closing date, allocation of other costs, and similar issues.  If a relatively insignificant term is omitted or an initial was omitted on a non-material term, the contract could still be considered ratified.

However, the concept of ratification is defined differently in paragraph 29 (F) of the GCAAR Sales Contract.  In the very significant departure from the Common Law, GCAAR defines “Date of Ratification” as occurring only when “…all addenda and any modifications thereto have been signed and initialed….and Delivered to the other party…”  For example, the GCAAR Contract is 7 pages long.  Three of the pages require initials but include only non-modifiable boilerplate terms.  If initials are not affixed to those pages, the Contract is not ratified and time frames do not begin to run.

It is not uncommon for the Seller to be lax about providing the completed Disclosures or Inclusions/Exclusions Disclosures, planning on following up after the contract has been signed.  Or for that matter, failing to acknowledge or even provide the Utility information.  Or one of the parties simply fails to initial one of the spaces on the forms.  According to the language in the GCAAR Contract, it is not a “Ratified” deal until those omissions are corrected.

To protect one’s clients and one’s self, extraordinary care must be taken to obtain all requirements for a ratified contract so that all other dates for performance can be strictly followed and so that no dispute arises as to when the contract was ratified.  And since the date of ratification in the contract form is no longer a term of substance, agents should document by e-mail or other written confirmation the date and time that the final Ratification has been completed.  Electronic signatures are helpful in establishing dates and times but are not dispositive. And be sure to deliver a copy of the Ratified Contract if not signed electronically. 

Thank you, 

By: Jim Savitz, Esq.

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