March 27, 2015
Maybe you have read, or even signed, a document which included the magic words “In consideration of…” and wondered why that phrase appears.
You should never sign a legal document if you do not understand the terms, so the first tip in this article: never be afraid to ask questions before signing contracts, whether at a law office; a realtor’s; a bank; or with a contractor at your kitchen table. Contracts have legal power, so should never be treated casually. Only in extreme cases will courts intervene to protect people who sign unwisely, and failure to read the document is not an excuse.
The second thing to know is that the phrase “In consideration of…” is a signal that the document Is a LEGAL document- another hint to take care and make sure you understand the document, and what is expected to happen as a result of the promises that follow the phrase.
The third thing the phrase tells you is that the document is a contract. Not all contracts include the phrase, but almost all contracts require that there be some consideration.
- What is consideration and why is it important?
- “Consideration” in a contract context is the exchange of value between the parties to the contract.
It is important because not all promises are legally enforceable – if they were, casual social interaction would quickly grind to a halt. Imagine if you could be sued for forgetting a dinner invitation, or arriving five minutes late to a meeting? If all promises are enforceable, no one would ever make a promise. It is the exchange of promises that signals a more serious intention- the foundation of the contract.
Promises may not be enforceable, but bargains are.
The phrase “In consideration of…” is used by lawyers in drafting contracts to warn the parties, and to signal to other lawyers and judges, that the intention of the document is to make a bargain, and that the parties intend to be bound by their exchange of promises.
“In consideration of…” is a serious and powerful phrase, and should be treated as a warning- not a stop sign, but, to torture the road sign analogy, perhaps the equivalent of “watch for falling rocks”, because treating any document containing the phrase casually is as foolish as driving without looking for danger ahead.
Whether prepared by a lawyer, homemade, or written by a business, contracts are serious business. “Consideration” of course has its every day meaning of careful thought, deliberation, an opinion based upon reflection.
When you see the phrase “In consideration of…” show yourself some consideration- take a moment; pause; think carefully; proceed deliberately only after reflection. And if you are not sure about the legal effect of what you are being asked to sign, please consult a lawyer.