Date Certain

What Is Date Certain?

A date certain is the specific date by which a predetermined action must happen, as per a particular contract. The date certain is an important snippet of data since it is legally binding on the parties in question.

Contracts with date certain highlights carry guarantees that are important to investors thus might carry a premium over contracts that lack such elements. Date certainty additionally considers more exact hedging, as expectations for delivery of goods or commodities can be known in advance.

Understanding Date Certain

Frequently, the parties to a contract need to know the specific date on or by which the terms of the contract will be completed. This date, known as the date certain, is an important part of any contract since it permits the parties to unbiasedly check whether the terms of the contract have been maintained.

A common illustration of a date certain contract is a lease agreement between a tenant and a landlord. Lease agreements will have a starting date and a termination date, typically incorporating a year term, some of the time with an option to broaden or restore the lease for an extra date certain term. On the off chance that a tenant neglects to move out by the termination date of the lease, they can be removed and subject to lawsuits.

Date certain elements are embedded in normalized derivatives contracts like options and futures, which terminate at a given date and time. Since these provisos are viewed as legally binding, inability to perform by the date certain will qualifies the harmed party for damages or different forms of legal recourse. On account of trading that happens on an exchange, these disappointments would almost certainly be cured by the exchange or clearing house being used. On account of transactions happening rigorously between private parties, the dispute might be settled in intercession or through the courts.

Real World Example of a Date Certain

In American options markets, the third Friday of every month is in many cases utilized as the date certain at which the options terminate. In any case, various options markets will have various customs in such manner. In European-style options, the expiration date is the possibly time when an option can be exercised. In this sense, the date certain for an European-style option is extremely clear.

American-style options, then again, are a bit more obscure. In their case, the option holder can choose for exercise their contract whenever between when the option is purchased and when its expiration date happens. By and by, the expiration date is a date certain that lays out the last conceivable opportunity for the option holder to exercise the option.

In a few rare cases, a date certain may not exist. For instance, Russian-style options, which are rarely traded in practice, have no expiration date by any means. All things considered, the option holder can stand by endlessly before choosing for exercise the option.

Features

• Date certain provisos are common contractual highlights in financial products or economic transactions, for example, the expiration date of an options contract or starting date of a lease.
• Inability to keep the date certain qualifies the harmed party for damages and other legal cures.
• A date certain is a legally binding date determined in a contract.