Commencement
The date or event marking the official start of a contract, lease, employment relationship, or legal proceeding; the anchor point from which most contract timelines flow.
While straightforward in theory, many businesses fail to actively track obligations tied to this concept - often resulting in missed deadlines, unintended renewals, penalties, or loss of contractual rights.
US Law · For business owners and foundersWhat is a Commencement?
Commencement is the date or event marking the official start of a contract, lease, employment relationship, term of service, or legal proceeding. It is the anchor point from which all other contract timelines and deadlines flow - performance periods, payment schedules, warranty terms, and indemnification periods all run from the commencement date.
The commencement date is not always the same as the execution date. A contract may be signed on January 1, 2026 but not commence until February 1, 2026, upon receipt of payment or satisfaction of a condition. Clarity about commencement is essential because ambiguity about when the contract "starts" creates disputes about when obligations are due.
Commencement can be triggered by automatic provisions (execution of the contract), conditional events (receipt of payment), or a scheduled calendar date. In multi-party contracts, commencement might occur on the date of execution by all parties or on a specified date agreed by the parties.
In practice, many teams rely on a contract expiry tracking system to stay on top of dates and obligations tied to clauses like this.
Key Elements
Trigger Event or Date
Commencement must be tied to a clear trigger - execution, a scheduled date, delivery, payment, or approval. Vague language ("as soon as possible") invites disputes.Effect on All Time-Based Obligations
Once commencement occurs, all performance periods, deadlines, indemnification periods, and warranty periods are measured from that date.Prospective or Retroactive
Commencement can occur on the execution date, a future date, or retroactively to an earlier date. The contract should specify which applies.Evidence of Commencement
For disputed trigger events, there must be proof of when commencement actually occurred - delivery receipts, payment confirmation, notice of approval, etc.Real-World Example
A landlord and tenant sign a three-year lease on November 1, 2025. The lease states "lease commencement shall be upon delivery of possession and payment of the first month's rent." The tenant does not move in until December 15, 2025, and pays the first month's rent on December 1. Disagreement arises about the commencement date - the landlord claims November 1 (execution), the tenant claims December 15 (possession), and the landlord's accountant claims December 1 (payment).
The lease states clearly that commencement requires both delivery of possession AND payment. Both events occurred by December 15, 2025 (possession) and December 1, 2025 (payment). The commencement date is December 15, 2025 (the later date). The three-year lease runs from December 15, 2025 to December 14, 2028.
This is why many businesses adopt automated deadline tracking to ensure no critical dates are missed before they pass.
Sample Clause Language
Lease CommencementWatch Out For
Commencement date disputes can lead to costly litigation
If the contract language about commencement is ambiguous, parties may litigate for months about whether commencement has occurred. Always be specific.Unilateral actions do not change the commencement date
If one party acts as if the contract has commenced before it actually has, that does not change the contractual commencement date. Both parties' understanding matters.Notice of commencement may be required
Some contracts require one party to notify the other that commencement has occurred. Failure to provide notice can be a breach, even if commencement actually occurred.Don't let commencement deadlines catch you off guard
Key dates tied to commencements - renewal windows, expiry cutoffs, notice periods - can easily slip through the cracks when tracked manually. Missing them triggers automatic extensions, penalties, or lost rights. ExpiryEdge tracks every critical deadline and sends automated reminders before they're due - so nothing slips.
Instead of relying on spreadsheets or manual follow-ups, a centralized renewal reminder system ensures every deadline is visible, tracked, and actioned automatically.
How to Use This in Your Favor
Use objective, verifiable triggers for commencement
Tie commencement to objective events like "execution by both parties," "receipt of payment," or "delivery of goods," rather than subjective events like "when the parties are ready."Document and confirm the commencement date
Once commencement occurs, confirm it in writing. Send a brief email saying "Per the contract, commencement occurred on [date]" to avoid later disputes.Frequently Asked Questions
Can we agree to a commencement date that is in the past?
Yes. Contracts can provide for retroactive commencement - e.g., "the parties agree that this Agreement commenced on January 1, 2026," even if signed later. Both parties must agree to the retroactive date.
What if the commencement condition never occurs?
If the contract requires commencement upon a condition (like receipt of payment), and the condition never occurs, the contract may never commence. The parties would need to amend the contract or agree on a new commencement date.