Backdating effective date contract

Texas does not have any specific laws that prohibit it and in contracts law, this concept is called the "relation back" theory of contract effectiveness. 1990) for an explanation that back dating violates no general contract law principles and is "determined by the intent of the parties as deduced from the instrument itself." Aside from the obvious issues where someone is back-dating a contract to commit some type of fraud, back-dating raises a whole host of unforeseen consequences with regards to a party's performance under the contract as well as the rights of third parties.

Sometimes a group of companies which has reorganised itself will want to backdate some of those changes, perhaps to backdate an intra-group transfer of business so that it coincides with the previous year end.

Here are some guidelines as to what may be possible from a legal perspective.

On the other hand it also appears to be creating a false document, so, I don't know.

Generally you can back-date the effective date of a contract.

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!Does it matter if this effective date is prior to the date the parties actually entered into the agreement?And if so, is this ‘backdating’ problematic or even potentially illegal?Different considerations may apply from accounting and tax perspectives, and those aspects should be taken into account too.What you can’t do Clearly, you can’t backdate a document so that is appears to have been signed on, say, 31 December, when in fact it was signed on 15 June.In any event, it is an inferior way of dealing with the true legal state of affairs.

Tags: , ,