Backdating contracts verbal contracts and contract splitting are considered to
For example, if a seller had sold his house in December then the seller could have taken advantage of certain tax benefits.However, he only realizes this in January and so wishes to backdate the document to December.The best way to achieve this is to state openly in the document that it is recording an earlier oral agreement made on, and so is with effect from, a particular date and then date it the actual date it was signed.The position is then clear to all who subsequently look at the document.
Does he need to check to see whether that was actually the case or can he take an ostrich-like position and put his head in the sand and not ask any questions?There are any number of contexts where this comes up — some legitimate and others not exactly aboveboard — but the logistics of negotiating and signing contracts are such that the issue is unavoidable.(Jason Mark Anderman illustrates the logistics problem well in this comment to a backdating post on Ken Adams’s blog.) There’s nothing inherently illegal or unethical about backdating contracts, although backdating can certainly be both unethical and illegal, depending on the situation.For obvious reasons, any request to backdate a document for these reasons should be flatly turned down.However, an explanation often given by the person wanting to backdate the document is that the document is merely meant to reflect an oral agreement that has already been made and that this is just a way of documenting it.