Can a contract be backdated to cover a previous gap?

Question

I run a concession which trades on private property in the United Kingdom.

My contract expired on 31 March 2021 and there was no correspondence to renew it. I have been allowed to continue trading, but the business has been badly affected by Covid-19.

The previous three-year contract was due to end on 31 December 2020 but in July 2020 was extended to 31 March 2021, with 3 months free of charge to me due to Covid-19.

Now I have been offered a new one-year contract, backdated to 1 April 2021. The fee to be paid by me is the full rate previously paid, with no consideration for the diminished trade caused by the pandemic.

There is no opportunity to negotiate the terms or the fee between April 1 and to date, during which I have been allowed to trade. I have been given 2 weeks to sign.

Moreover, the contract (as before) requires me to supply my product occasionally on demand to the landowner for a price determined by them, when they need it. This price has not been updated for 10 years, despite the submission of 'fair price' requests.

Is this move by the landowner fair and legal? Their stance is to "take it or leave it" but this is my livelihood, and the location is important.

I would rather not be specific about the landowner or the nature of the business.

Answer 1

It depends on what you mean by backdated.

If you mean that the terms of the contract provide that they apply to a period which pre-dates the date on which the contract was entered into then this is fine. The parties are free to negotiate terms which govern their past behaviour.

If instead you mean that the contract purports to have been entered into in the past then no, that is not legitimate. Depending on the circumstances this can amount to fraud or forgery.

In practice it is common for people to misunderstand the difference and so you will often find contracts backdated by inserting the past date as the date of the contract (the 2nd type) when the correct approach is to have a clause which specifies that the terms apply from an earlier date (the 1st type).

There is also an implied question here about what those terms should be for the backdated period. The parties are free to agree what they like in order to "rewrite history" but failing that, what are the terms governing the period after the fixed term contract came to an end? The contract itself may contain an automatic renewal clause. Failing that there are a number of possibilities. From Practical Law (pay-walled):

In the circumstances you describe (the parties have continued to deal) one of the following legal outcomes is likely:

• A new agreement has been entered into. A contract may be created by actions as well as words. For more information about contract formation, see Practice note, Contracts: formation
• The old agreement has been continued, on the same or varied terms. Just as a contract may be created by actions, it can be varied by them too. Contract clauses seeking to limit the parties' freedom to vary the contract, for example by imposing formal requirements for a variation, may themselves be varied. For more information on variation generally, see Practice note, Contracts: variation.
• There is no contract, but only a duty to pay a reasonable sum for services requested. For more information on restitution generally, see Practice note, Remedies: restitution

In determining which of the above applies, a court will look at:

• What the parties have said and done about extending the contract or continuing to deal.
• The extent to which their behaviour is consistent with the terms of the old agreement.

If the parties continue to do business in a way which is consistent with the terms of the expired agreement, this will support an argument that their relationship is governed by its terms. Whether a court will hold that the expired agreement has been extended in its entirety or that just some of the old terms apply will depend on the facts. However, the following cases suggest that where there have been no disputes over specific terms in the post-expiry period, the entire original agreement may apply: [rest omitted for brevity]

Disclaimers: my answer is based on general contract law. Landlord and tenant law is complex and specific rules may well exist in your case. The terms of your lease may also affect the situation. We don't give specific legal advice here and you should speak to a solicitor about you situation if in any doubt.

Answer 2

Can a contract be backdated to cover a previous gap?

Yes, provided that the parties agree to do so.

Is this move by the landowner fair and legal?

It is lawful. It might or might not be fair, but it is short of unconscionable. Therefore, it will be binding and enforceable if you agree to the terms of the new contract.

Although the UK and other countries have enacted protections apropos of the so-called "pandemic", the extent to which they encompass your contract is uncertain. For instance, you mention landowner, but the rest of your post is in terms of "concession" and "trades" rather than a landlord-tenant relation.

Recent legislative provisions encourage the parties to negotiate debts, although strictly speaking your matter is not about debt or unpaid fees. The counterparty simply failed to timely address the renewal.

If the counterparty alleges that you have benefitted "for free" from the concession since April 2021, you might want to develop the argument of how also landowner's entitlements were in place notwithstanding that he did not exercise them.

Answer 3

Is it fair?

Not a legal question.

Is it legal?

Yes.