Effect of backdating a contract
So, many contracts and agreements are considered and negotiated after trade has begun or eager discussions have already taken place – sometimes months past. Thankfully, most jurisdictions allow for contracts, including NDA’s, to be signed with a retroactive date.And when you find yourself in this situation, it may occur to you after-the-fact that you should have signed an agreement in the beginning. This is commonly referred to as “backdating.” But backdating (or adding a retroactive date) any contract can be tricky business, perhaps even more so with NDA agreements because of their nature and content.Even if they intended to be cautious and fair with your information, they may not have handled it like truly “” information because they weren’t yet under a contractual obligation to do so.When drafting the agreement, be sure to have candid conversations with the other party about what may have already been disclosed prior to the agreement being signed.Hindsight is always 20/20 and so it goes in the professional world, as well.Sometimes our mouths move faster than our brains and business moves faster than our keyboards.For example, if the agreement calls for monthly reports, but the agreement is being signed several months after the effective (retroactive) date, then the agreement will be in breach the moment it’s signed because several months would have passed without any report being issued.
Before signing a retroactive agreement, consider all of the surrounding circumstances and draft your language accordingly.Make it clear as to why the backdating was necessary and steer clear of anything that may later be construed as fraudulent.While there are a number of other issues that can arise from an agreement with a retroactive date, these are some of the most common because they’re often overlooked during drafting.One of the most straightforward ways to backdate the agreement is to not backdate it at all. If you’ve already disclosed proprietary or confidential information but you’re ready to confidently move forward with the other party and all necessary conversations have taken place, one option is to draft the non-disclosure agreement with an identical effective and execution date, as is usual, but include a clause that covers past disclosures.An example of this kind of clause from Docracy: This may not always be your best option, but if you’re fairly certain that your past disclosures have been in good hands and there’s no other reason to backdate the entire agreement, then this clause may cover all your bases.
Remember: the purpose of a Non-Disclosure Agreement (NDA) is to protect against the disclosure of your private and proprietary information.