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Why does everyone keep mentioning holding signature in escrow? That doesn't even matter here... Whether signatures were released or not, payment was a closing condition. Party didn't pay, so deal didn't close. (Also, it's super common for signatures to be released prior to wires going out)
There’s no legal obligation to wire payment until the agreement is signed people. Let’s zoom out and use common sense. Agreement must be signed for there to be an obligation to pay.
Now, if the payment isn’t made, then, you know, a pretty critical part of the agreement has been breached and I can only assume buyer gets their money back.
I say assume* because I’ve never had this happen, of course. I HAVE been on the buy side when we’ve signed, had a wire held up at the fed ref desk, and then BARELY gotten it through before the wire deadline. So… I’ve sweated it out on the buy side before.
Read the SPA bro… buyers delivery of the purchase price is always a condition to closing.
Yes, in my experience payments are never expected to be smooth outside financial services.
There’s always something that delays things. That said, a few days delay should be concerning unless it’s also a cross border payment. You should at least be able to ask for a copy of the wire showing as sent even if it hasn’t loaded yet.
It’s been years since I’ve done deals but don’t you need to confirm wiring of funds before the signature pages are released?
AA 1 - if signatures have not been released, the words on thr purchase agreement have no authority
Lol dude, what? If they didn't make payment the deal didn't close. Have you followed up to see what the deal is?
Are you sure it wasn’t a signing rather than a closing?
This is also an important lesson:
1. Executing a contract means that you have signed, notarized (if necessary), and met all condition precedents.
2. Signing a contract means that you have literally just signed the agreement.
When I use my signature block lead in statement, I never say: “This Agreement is executed on the date of acknowledgment below, but effective for all purposes as of the Effective Date.”
Instead I say: “This Agreement is signed on the date of acknowledgment below, but effective for all purposes as of the Effective Date.”
This practice is also supported by Ken Adams in his book “A Manual of Style for Contract Drafting”
Unless it was a simultaneous sign and close, funds wouldn’t be transferred at signing.
If it was simultaneous sign and close, but funds haven’t been received, then you haven’t signed or closed. As a seller you would not close unless funds are received.
Don’t you hold the signature in escrow?
Thanks everyone for the replies, it’s a relief. This is what I always assumed but I started to overthink and question if there is anything I’m missing. Apparently not.
There's a few options and it's fine to ask a senior which one to do.
1. If the date in the documents isn't specifically important, just change it to the date the payment is actually made and recirculate the document then, saying like "Thanks all. We are now closed. Please find attached the SPA with closing updated to today's date."
2. If the date itself is important, and the parties are friendly, and the wire is initiated on or right after the closing date, then keep the date but just make sure payment does come through soon. Keep following up and then when payment is actually made, circulate the documents again and say like "Thanks all for confirming payment has been made. Please find again the SPA, with closing treated effective as of <date>. Let us know of any questions."
3. If the date IS specifically important and the parties are NOT friendly, then this is potentially a very thorny situation and you need to escalate. This may be a breach with significant consequences. But that's not too common.
Membership Assignment Agreement for a stock purchase???
Bad naming conversations. But it sounds like this was an equity deal for membership interests and their purchase agreement was technically incorrectly named as a stock purchase agreement.
How is it possible to close without payment?
Coach
Saying it's closed or "treating it as closed" is a lot different than it actually being closed. Super weird they'd say that though