By backdating

Posted by / 02-Dec-2020 19:02

It’s not unusual for parties to a contract to want the written agreement to cover a period before it’s actually signed.

There are any number of contexts where this comes up — some legitimate and others not exactly aboveboard — but the logistics of negotiating and signing contracts are such that the issue is unavoidable.

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.FH Partners was unable to cite to any authority “for the proposition that a retroactive effective date in one contract can be construed to have an automatic retroactive effect on a separate contract,” which would probably have been fatal to its case.But the language of the FDIC/FH Partners agreements further undermined FH Partners’ arguments because the documents (1) stated that they couldn’t be amended or waived except in a writing signed by the parties, (2) didn’t anticipate that the FDIC could modify what it was conveying to FH Partners after closing, (3) conveyed the FDIC’s interest “as of the Loan Sale Closing Date,” (4) transferred the FDIC’s interest in the loan “as is,” (5) provided that the FDIC would “have no obligation to secure or obtain any missing intervening assignment or any assignment to [the FDIC] that is not contained in the Loan File,” (6) provided a process by which FH Partners could require the FDIC to repurchase a loan if it was determined that the FDIC didn’t own it as of the closing, and (7) transferred the FDIC’s rights “at the time of closing.” The appellate court stated, “We necessarily conclude that the FDIC/FH Loan Sale Documents unambiguously anticipated that the FDIC might very well be conveying to FH Partners less than perfect, and even non-existent, title to Loan A and Loan B.As to the first issue, the transaction between the FDIC and Weatherford couldn’t have retroactive effect unless the parties showed a clear intent for the transaction to be retroactive.The court stated the general rule that “a written contract becomes binding when it is finally executed or delivered, unless a different intent appears.” Although the face of the main agreement in the FDIC/Weatherford transaction expressed an intended effective date of November 7, 2008, ancillary documents signed in connection with the transaction weren’t backdated, and the main agreement didn’t explain why it was backdated.

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Thus, the FDIC and Weatherford could have made their transaction retroactive, but they didn’t document the deal clearly enough to do so.