“As Consideration”

The word consideration features prominently in the traditional recital of consideration. You know: “NOW THEREFORE, in consideration of the premises, …” blah blah blah. The traditional recital of consideration is of course pointless (I revisited it in this 2011 post), but that’s not what this post is about.

Instead, reader Chris Lemens brought to my attention the phrase as consideration. It features in the body of the contract; I’ve seen it most often in language of release. Here are some examples from EDGAR of release language featuring the word consideration:

In consideration of the payments made and benefits provided under the terms of this Agreement, and except for claims Executive may have under this Agreement, Executive (on behalf of himself and his personal representatives) promises not to sue, and releases and forever discharges the Company …

As additional consideration for the assignment made hereunder, Assignee hereby forever releases and discharges Assignor  …

As further consideration for the amendments, consents and/or waivers set forth herein, each Borrower hereby waives and releases and forever discharges Agent and each Lender …

In exchange for the above-referenced consideration, the Employee hereby irrevocably releases and forever discharges …

Such body-of-the-contract references to consideration raise two issues:

First, something either is consideration, or it isn’t—saying that it constitutes consideration doesn’t make it so. If that’s the case, why bother referring to consideration at all? Omitting references to consideration would have the benefit of eliminating a pointless legalism.

Second, the bargained-for exchange that constitutes consideration usually consists of more than single tit-for-tat promises. Instead, one party exchanges a parcel of promises in exchange for the other party’s parcel of promises. Why single out one promise in particular as being supported by consideration?

So generally, body-of-the-contract references to consideration are pointless.

But there might be some point to sparing such references in release language. I suspect that drafters allude to consideration in release language because releases usually aren’t integral to deal mechanics but instead are an add-on. Because releases can seem free-standing, drafters are inclined to reiterate the notion of consideration.

But if you want to refer to consideration, use the phrase in consideration. It’s a phrase that’s used colloquially; it expresses the notion of exchange. By contrast, as consideration and its variants is could only refer to the doctrine of consideration. You don’t need to invoke the doctrine of consideration to accomplish your rhetorical goal.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.