The parties’ intent for the transaction to have retroactive effect must be clear.
Merely stating a retroactive effective date in the main agreement may not do the trick.
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.
When you buy life insurance, there may come a time near the end of the process where your broker or agent will talk to you about backdating the policy.
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 example, if you turn 35 around the time you apply for a new policy, you could end up being charged a slightly higher premium for being 35 instead of 34. Your insurance company may use something called your "insurance age" or "insurance birthday" when processing your application.(Not every insurer does this.) The insurer will look at the midway point between your birthdays and round your age up or down depending on which birthday is closer. In the example above, you might be able to get a cheaper premium if you backdate the start date of the policy to June 4th, because then your "insurance age" will be 34. You'll have to pay the premium for those weeks or months that are now part of your newly backdated policy.Take auto insurance, for example: if you backdate your car insurance policy so that it says you were covered for an accident you had the month you actually bought the policy, you'll be committing fraud.You do not want to backdate your auto insurance policy. Life insurance is different because by making your policy retroactive by a short period, the insurer isn't taking on any more risk.It’s not unusual for parties to a contract to want the written agreement to cover a period before it’s actually signed.