The date of a document is normally the date from which the parties have agreed to be bound.
As such, it should reflect accurately the date on which the parties signed it, or if signing on different dates, the date the last signature was added.
FH Partners argued on appeal that, although the FDIC didn’t own the loan on December 16, 2008, the FDIC’s backdated transaction with Weatherford remedied the problem retroactively.
The appellate court determined two separate issues: (1) whether the FDIC’s June 10, 2009 transaction with Weatherford was effective to retroactively transfer the loan to the FDIC as between the FDIC and Weatherford and (2) whether a retroactive effect applied to the FDIC’s earlier transaction with FH Partners.
For a shorter piece with a few practical tips see Backdating – it’s illegal isn’t it?
Setting aside such issues, avoiding unwanted side effects of backdating contracts can be tricky, especially when the purported effective date of an agreement is several months before the date it was actually signed, as can be seen in involves the ownership of a promissory note that was made to a bank in connection with a loan.
For one reason or another, professional appointments do not always get signed straightaway and time can lapse from when the work commenced to when the appointment was signed.
Consultants will often ask - can we backdate the appointment?
When it comes to dating documents the distinction is a fairly important one and raised an issue that often crops up.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.The trial court granted the defendants summary judgment, holding that FH Partners didn’t own the loan and so it couldn’t enforce it.
On appeal, the Missouri Court of Appeals, Western District agreed.The backdating scheme involved moving an effective date for the exercise of stock options from when the options were 'out of the money' to a date that made the options 'in the money' to allow certain executives to exercise their options profitably.