Backdating agreement

Commercially it is useful to have matters set out in writing so that there is certainty as to the existence of an arrangement and as to what the terms are.

Setting out in writing what is agreed prevents disputes as to what the terms of the agreement were – although there may be disputes on how those terms are to be interpreted!

Contrast that with an agreement dated “effective as of December 31, 2012” when the parties did not reach agreement until January 2013, but used the 2012 date to get last year’s substantially lower long term capital gain rates. For a very good article on this topic from an excellent resource for the M & A lawyer, see Backdating (63 Bus.

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Parties may be tempted to ‘back date’ the documents to when their plans were devised or agreed.

However doing so is at very least misleading and deceptive conduct (because the date of a document means the date that it is signed), and at worst may constitute criminal fraud.

Stating that the contract or agreement will be effective from an earlier "effective date" will, however, only be effective as between or among the parties to the contract or agreement.

It will not affect those parties' obligations under the terms of the contract or agreement with regard to third parties who are not parties to the agreement.

Including a prior date on the document can come back to haunt notaries later down the road.

Last modified 23-Jan-2020 01:07