Can You Backdate Agreement
The reversal of contract documents can be one of the most complex issues facing lawyers. While this problem only appears from time to time when it does, it is important to have a good understanding of what to do. In the case of a private contract, a retrodaation is not normally illegal. Legality issues come into play when the parties to a contract or their lawyer use backdated documents. There are some restrictions on the effect of the backdated clauses, as it is not possible to rewrite history, but in general, if the parties have agreed to an earlier “effective date,” they are entitled to assert all the rights in the agreement against the other party from the date on which they actually sign it, including with respect to the time already elapsed. Despite the general conviction, the return of documents is not necessarily illegal. In fact, it is allowed for so long that there is a Latin expression, nunc pro tunc, which describes the backdated documents. This article explains when legal documents can be retrodated and, if appropriate, it is legally possible to do so. The difficult question a lawyer must answer is to what extent he must inquire about the accuracy of his client`s statement that the document “only records a previous agreement”? Should he check whether this was indeed the case, or can he adopt an ostrich position and do the ostrich and not ask questions? Does the lawyer have an obligation to at least make reasonable efforts to confirm that he or she is being told the truth? Unfortunately, there is no simple or linear answer, and this depends on the ease with which the lawyer will defend his position by agreeing to forward the document if his judgment was wrong and if the authorities challenge the document, possibly in a criminal complaint against the client.
What confirmation of the agreement preceding the client or company for which the client (and lawyer) works? Is the client a long-time customer who has always acted correctly in the past? Does the lawyer know the client well? These are questions that the judge or regulator will probably ask him if things go wrong and he will need convincing answers. In addition to the deception of a third party, a retrodedation may be prohibited even if it is contrary to current legislation or legislation. In Research in Motion Ltd.4, for example, the Ontario Securities Commission found that RIM practiced poor backdating practices when some high-level individuals had options at a price that was “in the money.” This practice was contrary to both the TSX rules and RIM`s stock options plan, which provided that options were to be granted “at an exercise price at least below the closing price of RIM`s common shares on the TSX on the last trading day before the day the licensing options were approved”5 Although a re-posted is generally permitted by common law. A court will not take effect of retrodation if the parties have dated the contract to mislead a third party. At Re Rovet3, for example, employees of a company were interested in forming unions. The company attempted to prevent the formation of unions by hiring additional employees who opposed the union. However, to the company`s disappointment, these employees were only recruited after the company`s current employees submitted their application for union training, so that new employees were not able to participate. To address this deficiency, the company and its lawyer rescheduled the contracts of new employees at a date prior to the application for union training. The Ontario Court of Justice found that the demotion of employment contracts was intended to mislead a third party and suspended the lawyer for a period of twelve months.