00:14
Adam Stofsky
What does it mean to execute a contract or for a contract to be executed? That feels like a very technical term to me. What does that mean?
00:22
David Tollen
It is. It's kind of a better term than sign because it covers more, but basically means to sign it. So it's the moment of agreeing and stating that agreement. So you could execute the contract by shaking hands on it. But mostly we execute by signing a contract. Nowadays you can call it signature, but a lot of contracts are a click wrap. So the contract is posted by a merchant online and. And it's executed by them by posting it and offering it. And it's executed by the customer by clicking I agree. And the courts, after a little confusion, late 20th century, concluded that works. That's a signature that works just fine. So whatever that mechanism of finally indicating a cent is, that's the execution. Whether it's signature or handshake or click or what, you know, what have you.
01:21
David Tollen
You just want to make sure you do it in a way that is recorded and clear. That's the problem with the handshake. You want to. You want to know that execution happened.
01:31
Adam Stofsky
So if a contract involves a kind of exchange of value or both parties are given something or not both, actually all parties. It's the moment in which that has essentially been accepted and by everyone in some legally recognizable way, whether it's clicking, signing, shaking hands. Did I get that right?
01:51
David Tollen
That's right. A lot of times parties working on a written contract will exchange drafts back and forth for a while. And you don't want to get into a confusing situation where you're sort of wondering which draft is the terms. So you have a blank at the bottom where you sign and the signature helps you avoid that problem. And of course, that problem can come up if we're just, you and I are talking about what our deal is going to be and we don't record it. And there's a question, at what point have we finished that conversation and what we just said is the terms, and maybe we shake hands or do something hopefully, to clarify that. And the problem with unwritten contracts is you don't have as clear a clarification. At what point did we shake hands?
02:35
David Tollen
Whereas we, you know, you sign and it's pretty clear.
02:39
Adam Stofsky
It's funny, it seems obvious in a way when you think about it. It's kind of profound. Right. Like the moment both people sign this thing and we're assuming most contracts are signed. That's the moment at which, like this is the deal. When we both sign.
02:52
David Tollen
Yeah, it's a nice kind of safety valve. It creates an artificial mechanism to give you freedom to talk and to disagree and to try things out. Knowing you haven't made a binding agreement that signature moment helps you do.
