Contract Glossary
Effective Date
Definition
The effective date is when a contract's terms actually kick in. It's not always the same day you sign. You might sign on March 15, but the contract could take effect on April 1, or even retroactively on January 1.
In Practice
You negotiate an employment agreement throughout February and sign it on February 28. But the effective date is January 1 because you've been working since the start of the year and the contract needs to cover that period. The effective date means the contract's terms, including salary, benefits, and non-compete obligations, apply from January 1, even though you didn't sign until two months later.
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