Recently, I was reviewing a contract for a client of mine when I came across the following sentence:
NOW, THEREFORE, in consideration of the mutual promises and covenants, herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows
Now, with all those “herebys”, “hereins” and “therefores”, you should immediately start thinking to yourself: “Self, do you think a lawyer perhaps constructed that prose?” And, in answer to yourself, you should say: “Abso-stinking-luteley!” This is just the sort of thing that some really smart guy wrote a very long time ago to buy himself a horse.
But, have you ever thought about what all those various terms mean? Let’s break it down a bit:
- Mutual promises Is an important part of a contract that shows the parties had a “meeting of the minds” in agreeing to the contract. Of course, just saying that there are mutual promises doesn’t make it so.
- Consideration Now, most of us, myself included normally think of that word to mean “something to think about”. In the first part of the sentence, that is precisely how it is used. But what about the second time it’s used as “good and valuable consideration”. Is that smart thinking vs. dumb thinking? No. In legal contracts, consideration is something that you “pay” in a contract to demonstrate that you have actively participated in the contract. Without it, there is no contract. Now, when I say “pay”, it doesn’t have to be money. It could be services, promises, or all sorts of things.
- Receipt and sufficiency Refers back to “consideration” in the legal sense. The statement is basically saying that the consideration is “big enough” here that no court could find that it wasn’t sufficient to be a valid contract. Again, just saying so doesn’t make it so.
So, when you break it down, the statement basically says that the parties are entering into a contract willingly, they are creating a valid contract, and they agree to certain terms (that will follow). To rewrite this entire sentence into plain English (the preference of 99.9% of everyone), it would become:
The parties agree as follows
That’s a bit easier, no?