To minimize the risk of backdating, please contact Parker McCay`s Corporate Law Department to draft and review your company`s retroactive agreements. Either party may consider that the service contract should apply from 1 March, the date on which the service provider started its work, rather than on 1 April, but often for different reasons, for example: in such a situation, the parties are often tempted to date the service contract to 1 March to ensure that the service contract creates and confirms rights in this area. of services, which took place from that date. However, the parties are often unaware that this effect can be achieved by including an «effective date» or «departure clause» in the service contract, which states that although the service contract is dated April 1, its provisions apply from March 1. That start date, which is considered to be earlier, should also be recognised in the clause on the duration of the agreement in order to ensure consistency and to clearly demonstrate the intention of the parties. However, backdated documents can be illegal or even criminal. If an anti-dating document misleads a third party or gives a false impression of when an action was taken, it may be fraudulent. The intentions of the parties are also important in assessing whether backdating is legal. To a layman, backdating seems like a bad thing. But this can be right or wrong. Its legitimacy depends on its purpose and effect. In some cases, backdating is pure fabrication.
It is of course inappropriate to date a document to one date, but the event occurred on a different, later date. Typically, this type of backdating occurs when the beneficiary of the anti-dating can obtain some kind of tax or other benefit if the event occurred on the earlier date. This wording clearly indicates to anyone reading the written contract that it has been backdated. This also explains why the contract is backdated. A document backdated to avoid a legal sanction is also likely to be illegal. Suppose a health care facility needs to verify that all employees have received tuberculosis tests and flu vaccines. The facility puts an employee on duty without checking these medical items and later learns that the employee has not had a flu shot. The employer should correct this oversight. However, it would be illegal for the employer to administer the flu vaccine and date the vaccine to the employee`s first day of work. However, not all anti-dating involves manufacturing. Backdating can also include the practice of dating a document to the date the event occurred, even if it is signed later. Here, the event occurs before the document that occupies it can be executed, and the document simply remembers the previous event.
This is both a common and legitimate use of anti-dating. While the backating of a contract`s effective date may be appropriate in some situations, these issues need to be carefully considered before backdating contractual documents, among other things. For example, if a contract is signed in counterparties, the parties could potentially execute it on completely different dates. In this scenario, using an as-of formula may be appropriate. In addition, if the performance of the contract took place before the performance of the contract, there may be sufficient reason to backdate the date of entry into force of the contract. When drafting such provisions, it is important for the parties to distinguish between the «date of the contract» and the «date of entry into force». The «Contract Date» is the date on which the parties agree to be bound by the terms of the Service Agreement and the «Effective Date» is the date from which the parties agree that the terms agreed in the Service Agreement apply. As with violin labels, the backdating of legal documents can be legal and even advised. It is the responsibility of the parties to a document to ensure that their intentions are honest and that the backdating does not harm third parties or violate legal requirements.
When in doubt, significant disclosure of the back-up of the document itself may be helpful in addressing the remaining concerns. Clients also requested to backdate a document to achieve a specific economic outcome agreed between the parties. As a general rule, the parties to an agreement can make their agreement effective at any time, provided that the rights of third parties are not affected and no law is violated. In such cases, when the anti-dating is indeed harmless, the anti-dating may be used, but it is always recommended to use the previously discussed qualifiers (i) «of», (ii) «in force from» or (iii) dated «from ___», «but in force from __» to make it clear that the date of signature and the date of the agreement are not identical. Simply put, if a document is dated before an event occurs, the backating is fabricated and inappropriate. On the other hand, if the document runs after the event, but accurately reflects the date of the event, the anti-dating is an appropriate reminder. However, the line between these practices is not always clear. For example, the date on which the event itself occurs may be uncertain. Sometimes the law governing the event is ambiguous, and sometimes the facts surrounding the event are unclear.
There are no «clear line» tests for legal backdating. However, here are some questions that parties may consider when assessing whether their backdating is legal: Under paragraph 8(1)(a), an «instrument» can be defined as any document, whether or not that document is formal in nature. And under paragraph 9(1)(g), an instrument may be considered false if the document claims to have been created or amended on a date when it was not created or amended. In this context, the misnaming or backdating of a contract could be considered a serious legal offence. A crime of this type is tried or even charged by a district court. Under article 6, paragraph 2, the maximum permissible penalty in the event of an indictment is 10 years` imprisonment. In my practice, clients often ask me if they can date a document with a date earlier than the date they actually sign the document. This is called «anti-dating».
Although the term anti-dating often has a negative connotation, there are certain circumstances in which anti-dating is quite legitimate. Anti-dating is the practice of marking a document, whether it is a cheque, contract or other legally binding document, with a date earlier than what it should be. Backdating is usually not allowed and can even be illegal or fraudulent, depending on the situation. However, anti-dating can sometimes be acceptable. however, the parties concerned must consent to this. In general, the backdating of an agreement is legitimate if it accurately recalls an unwritten agreement between the parties. However, if the parties do not know when the unwritten agreement was reached, the practice should be avoided as it could lead to unforeseen risks. The risks are: While backdating may be legitimate or inappropriate, it is often misunderstood and associated with misconduct. Anti-dating includes a wide range of behaviors ranging from obvious fraud to the legitimate and common practice of executing a document after the event has already occurred. This article provides a brief overview of how to distinguish legitimate backdating from incorrect backdating. The backsating of a contract may constitute a criminal offence under section 17 (False accounting) or section 19 (False statements by business managers) of the Theft Act 1968.
It may also constitute forgery under section 1 of the Counterfeiting and Counterfeiting Act 1981, as the document becomes a «false instrument» if it is «amended on a date … it wasn`t really done. In this scenario, the effective date is March 1 and the contract date is April 1. A company (the customer) wants to procure certain IT services that its IT service provider is expected to start on March 1. Negotiations on the terms of the service contract between the parties are taking longer than expected, so the service provider will start working in the meantime. The parties agree on 1. April on the terms of the service contract they intend to sign at that time. [1] More detailed information on the meaning of contractual grounds can be found in my article entitled Recitals. Anti-dating of violin labels was not uncommon and was not illegal. However, the backdating of legal documents is another matter. Anti-dating of legal documents is often allowed. However, in other circumstances, it may be fraudulent or illegal.
This is a common myth that parties can backdate a commercial or technological contract to ensure it covers events that occur before the date of signing. However, backdating a contract in this way can be a criminal offense and is often completely avoidable, as the same effect can be achieved through careful legal drafting. In another example, imagine a landlord who doesn`t want to rent an apartment to a minority candidate. .