Even if a transaction is given retroactive effect as between the parties, it’s unlikely that the same will be true when non-parties are involved.It’s often difficult — maybe impossible — to conceive of all the non-parties who could be affected by a transaction, so it’s non unlikely that there will be unintended consequences that won’t be cured by backdating a contract.
Thus, the FDIC and Weatherford could have made their transaction retroactive, but they didn’t document the deal clearly enough to do so.The appellate court then considered whether, assuming that the FDIC/Weatherford transaction was retroactively effective (which it wasn’t), the retroactivity of that transaction had any legal effect on the transaction between the FDIC and FH Partners.In light of that fact, there is no evidence that the FDIC was authorized to unilaterally cure title defects months after closing.” Effectively backdating written agreements so that they’ll be enforceable retroactively can be surprisingly complicated.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.
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.
It is always best to have an express written contract.
If you don’t have an express written contract, the next best thing to have is an express oral contract with someone who is truthful, and who will not deny the terms of your agreement.
The parties’ intent for the transaction to have retroactive effect must be clear.