Typically this is where parties have reached an agreement and must wait while their solicitors properly document that agreement. However doing so is at very least misleading and deceptive conduct because the date of a document means the date that it is signed , and at worst may constitute criminal fraud. In any event, it is an inferior way of dealing with the true legal state of affairs. The need to document transactions is partly based on commercial necessity, and partly on legal necessity.
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! The legal necessity for documentation applies only to certain types of transactions.
The types of transactions that must be in writing are based on legislation that traces back to the Statute of Frauds UK. The most common transaction that must be in writing is contracts and declarations of trust that convey an interest in land.
Other legislation may require that at least some part of a transaction is in writing, or that there is some written notification to a government authority. An oral sale of a business may also necessitate registration of the change of ownership of the business name, bank finance documentation and re-registration of any motor vehicles sold — to name but a few examples.
These partial documentation formalities do not change the ability of parties to enter into the agreement verbally. A Vendor and Purchaser of a business met on the 30th June and agreed all of the terms for the sale of a business. They met on this day because they both desired for tax and financial reasons to have the transaction agreed to in that financial year.
On the 1st of July they instruct solicitors to document the transaction. The solicitors require only minor discussions regarding the terms of the agreement. On the 1st August the parties sign the documents and on the 1st September the business sale is completed.
But back-dating should be avoided. Such a misrepresentation would be uncovered and undone by an examination of when the parties instructed their solicitors and other means, such as computer records of when the documents were created. And — as is always the case — the parties are ultimately better served by honesty. The parties reached an agreement on the 30th of June. This is the truth of the matter.
Business sales are not required to be in writing to be effective. So the date that the business sale was agreed was the 30th of June. The Acknowledgement Agreement is merely putting into writing and acknowledging the verbal terms agreed to. The documentation will be dated the 1st August the date it is signed. The documentation will provide evidence for commercial reasons of the verbal agreement reached on the 30th June. Of course parties cannot document a verbal agreement where there was none.
So the parties could not acknowledge a verbal agreement as occurring on the 1st of June — before they met. Nor could the parties acknowledge an agreement if there was not one fully formed. Therefore if the Vendor and the Purchaser continued to negotiate the significant terms of the business sale then there could be no agreement until that negotiation is finished.