Backdating is the practice of marking a document, whether a check, contract or another legally binding document, with a date that is prior to what it should be. Backdating is usually disallowed and can even be illegal or fraudulent based on the situation. Sometimes though, backdating can be acceptable; however, the parties involved must agree to it. Consider the following examples of common backdating scenarios that are not allowed:. Here are a few examples of situations where backdating may be acceptable:.
FH Partners involves the ownership of a promissory note that was made to a bank in connection with a loan. FH Partners made a demand on the debtor for payment of the loan and eventually sued the debtor and guarantors. The law does not support the blanket conclusion that a retroactive effective date in a contract is only enforceable when the evidence demonstrates that the parties had agreed to the material terms of their contract as of the retroactive date.
However, where a contract is ambiguous with respect to its effective date, the absence of an explanation for a retroactive effective date, and evidence that the parties had not agreed to the material terms of their contract as of the purported retroactive effective date, are relevant considerations in resolving the ambiguity. In light of that fact, there is no evidence that the FDIC was authorized to unilaterally cure title defects months after closing.
This is especially true in the context of a complex deal that includes multiple documents and when the retroactive date is several months in the past.
Right! think, retro dating contracts apologise, but
Merely stating a retroactive effective date in the main agreement may not do the trick. I take a uniformly hard line on backdating contracts.
The dating parties sign contracts that state the relationship is consensual, explain what the parties should do if the relationship ever ceases to be consensual, and affirm that the employees are. Typically, your policy's retroactive date is the date on which your professional liability contract is written and will not change as long as you continually renew your policy. Jun 14, So much of the social contracts that we build with people in our lives are covert - that is to say they are never explicitly talked about. Co-creating your relationship contract with your partner will give you both the opportunity to be transparent and honest about what is important to you in your relationship.
As Ken Adams has pointed out, if you want a contract to cover activity prior to its signature, you can just say so: This agreement applies to transactions between the parties on or after xxxx. The one area in which I relax this rule somewhat is in drafting corporate resolutions that are, as Kwall and Duhl characterize the situation, merely memorializing events that occurred at times in the past for example, the continuation of named persons as directors and officers, the establishment of a banking relationship, etc.
Still variants? retro dating contracts simply
When third parties might be prejudiced, what I do even here is to have a contemporary resolution ratify the actions taken by the directors at a prior time. This keeps everything clean with no chance to mislead.
This is a great comment, Vance. Its good to have the voice of experience in the discussion. The date of a contract can have revenue-recognition implications, as well as tax implications.
And misleading regulatory bodies is the main issue that got folks in trouble in the stock options backdating scandal, as I recall.
So is it ever OK to backdate a document? There are rare occasions when it may be permissible or even justified to do so.
A commonly used example is where the parties had originally signed a document, but the original had been lost or destroyed before it could be stamped or filed. In such cases it would be perfectly proper for the parties to re-execute an identical document to replace the missing one.
Useful phrase retro dating contracts the
Slightly more tenuously, where the parties reached a binding agreement on a certain date, but only reduced it to writing on a later date, they might be justified in putting the date of agreement rather than the date of execution if the terms were in fact identical a more likely scenario given the length and detail of many modern written contracts would be where the terms of contracts are agreed by e-mail on a certain date, but the parties were only available to sign the actual physical documents upon a later date.
For execution as a deed the requirement of signing is a crucial part of the process of creating rights by way of deed, and so it is never permissible to backdate a deed.
Oct 15, Though FH Partners cites to several cases for the general proposition that the parties to a contract can agree to give a contract retroactive effect, none of those cases address or support the proposition that a retroactive effective date in one contract will be applied to retroactively modify or reform a separate contract involving at least one unrelated fatgirlnmotion.comg: retro dating. Nov 21, It is important to remember that back-dating the defined effective date is not the same as back-dating the contract itself. Back-dating a contract can be a criminal offence and will be a breach of professional conduct rules for solicitors. The Needle Blog Needle November 21, Backdating is the practice of marking a check, contract, or other legally binding agreement, with a date that is prior to the current date. Backdating is usually not allowed and even can be illegal.
Probably the most difficult of the grey areas occurs where parties have a recurring commercial relationship which starts informally, but they later decide to document it and agree terms. Legally speaking of course what they should do is put a provision in the contract which states that the terms of this contract shall also govern prior transactions which the parties shall henceforth treat as being regulated by those terms.
However, where lay persons write contracts themselves or download a pro forma from the internet, often these legal niceties are lost upon them.
Jan 19, However, where a contract is ambiguous with respect to its effective date, the absence of an explanation for a retroactive effective date, and evidence that the parties had not agreed to the material terms of their contract as of the purported retroactive effective date, are relevant considerations in resolving the ambiguity. Apr 06, When we say "backdating" what we usually mean is executing a document and then dating it with an earlier date than the actual date of execution, with the intention that it should be treated as giving rise to legal rights before the actual date. Jan 30, A Google search on backdating or retroactive date in legal contracts in the U.S., however, will offer a horde of results proving that business owners and courts, alike, have considered the topic in detail and rulings on the matter continue to shape their use and handling.
In practice the courts are more sympathetic than one might anticipate. Where the parties have obviously and without malice tried to wrap antecedent matters into a contractual framework, the courts will often imply a necessary term into the contract in relation to the regulation of earlier matters, particularly where this does not have an adverse impact on a third party or result in some evasion of taxation or filing fees.
Another common example is where one person purports to sign a document on behalf of another person, and then afterwards the parties execute a backdated power of attorney to clothe the signatory with the necessary authority. You can never be absolutely sure whether it is alive or dead or perhaps alive from a different date than you had anticipated until a judge opens the box for you.
Either the clause can require the Recipient Party to attest that no disclosures have been made of confidential information already shared.
Or, if certain confidential details have already been disclosed by the Recipient Party, those can be specifically listed in this clause, with a warranty that no other disclosures have been made, other than those specifically listed.
Retro dating contracts
Prior to drafting or signing a retroactive agreement, do your research, choose your words wisely, and approach with caution. Done correctly, they can be quite useful.
Executed poorly, however, and you could find yourself in a world of hurt.
Jan 30, Non-disclosure Agreements. This article is not a substitute for professional legal advice. This article does not create an attorney-client relationship, nor is it a solicitation to offer legal advice.
Dating: Do's And Dont's (1949)
Separate agreement or just a clause. How to protect ideas during patent pending.
Feb 09, However in practice, for both good reasons and bad, back dating of documents does occur. The risks of back dating (or misdating) documents accidentally is multiplied in modern commercial.
Confidential Information vs. Trade Secrets.
Share business plan by using NDA agreement. Typical duration of a non-disclosure.
Is it allowed: NDA with retroactive date.