Business Owners often ask whether a contract that their company is entering into can in fact take effect from an earlier date compared to the date on which it is to be signed by the parties. The quick answer is yes, this is possible, but Abigail Owen, Corporate Partner at Rawlison Butler, points out that there are a number of matters you should be aware of and need attending to.
Business Owners often ask whether a contract that their
company is entering into can in fact take effect from an earlier
date compared to the date on which it is to be signed by the
parties. The quick answer is yes, this is possible, but Abigail
Owen, Corporate Partner at Rawlison Butler, points out that there
are a number of matters you should be aware of and need attending
to.
The parties to a contract can state expressly in the contract
itself that, although the contract is entered into on the date of
signing, it is to take effect from a past date. This is, however,
only effective as between the contracting parties. It will not
affect the parties' obligations with regard to third parties
(for example, to the Revenue, which will invariably be based on the
date of the contract itself, depending on the particular
circumstances).
Nevertheless, if a company is proposing to adopt this practice it
is imperative that they are alive to the fact that parties signing
a contract cannot backdate the date of signature. This could
potentially be an offence under the Theft Act where it could be
pursued as false accounting or false statements by directors, as
well as potentially amounting to offences under other legislation,
including a claim for conspiracy to defraud.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
