If you’ve read some of my other blog posts, you know that I’m a big fan of using plain language instead of legalese. However, sometimes a little legalese can be the difference between an enforceable contract and a contract that isn’t worth more than the paper it’s written on.
When I’m drafting a contract that is subject to Pennsylvania law, there is one phrase that I nearly always make sure to add to the agreement:
“The parties to this Agreement intend to be legally bound hereby.”
What’s the importance of this phrase? Call up your lawyer friends and ask them about 33 P.S. Section 6 (when written instruments without consideration valid). Ok, I’ll save you the call:
“A written release or promise, hereafter made and signed by the person releasing or promising, shall not be invalid or unenforceable for lack of consideration, if the writing also contains an additional express statement, in any form of language, that the signer intends to be legally bound.”
33 Pa. Stat. Ann. § 6.
An essential element of a contract is that there must be consideration. Consideration is defined as something (such as an act, a forbearance, or a return promise) bargained for or received by each party in an agreement which motivates a person to do something, especially to engage in a legal act. So, if you’re trying to enforce a contract in a court, a defense that may arise is that there is insufficient or no consideration.
33 P.S. Section 6 says that if you include an indication that the signer of an agreement expressly states that they “intend to be legally bound,” it effectively serves as consideration for the agreement and invalidates a defense that the contract is invalid or unenforceable for lack of consideration.