Drafting contracts

(i) Words of agreement:

A familiar funny phrase illustrative for the difference between common law governed contracts and European continental contracts are the so-called ‘words of agreement’. The words of agreement signal the start of the binding part of the agreement. A somewhat exaggerated and wordy example:

NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows.
In contracts governed by a European continental legal system (or a law historically based on the Napoleonic-Roman or Germanic legal tradition), it would be sufficient to write:
NOW THEREFORE, the Parties agree as follows:

or any other convenient header distinguishing the parties and the background description. The words now therefore should only be included if the contract has a preamble.

Simplify. Contract drafters increasingly place a simple heading AGREEMENT after the recitals and before the body of the contract. In this pragmatic approach, consistency prescribes that the preamble should also be preceded by something like BACKGROUND and the party clauses by PARTIES.


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