Many contracts contain the phrase “in consideration of the foregoing”, but what does that phrase mean?
The word “foregoing” means whatever was just mentioned or stated.
The phrase “in consideration of the foregoing” means “in return for whatever was just mentioned”. For example, a contract that says “Bob will give Amy his piano, and in consideration of the foregoing, Amy will pay Bob $50” means the same thing as “Bob will give Amy his piano, and in return, Amy will pay Bob $50.”
Let’s look at an example paragraph taken from a real contract:
“In consideration of the foregoing and during the life of this agreement, the Hospital agrees not to lock out or cause to be locked out any employee covered by this Agreement.”
– Page 10 of St. Mary’s Hospital’s union contract
The two “foregoing” paragraphs of the quoted paragraph (i.e. the two paragraphs which came directly before the quoted paragraph) were written promises that the Union would not strike or boycott the Hospital. So the meaning of the quoted paragraph can be rephrased as:
“In return for the Union promising not to strike or boycott the Hospital, the Hospital promises not to lock out any Union employees.”
Can the phrase “in consideration of the foregoing” be ignored?
Yes, the phrase “in consideration of the foregoing” can essentially be ignored when you are reading a contract because it does not add or modify any obligations for either party. Think about it by comparing two example contracts:
Contract 1:
“Bob will give Amy his piano.
Amy will pay Bob $50.”
Contract 2:
“Bob will give Amy his piano.
In consideration of the foregoing, Amy will pay Bob $50.”
The two contracts have the same meaning. It is implicit that as long as benefits are prescribed for both parties in the contract, then each party’s benefits are each “in consideration of” the some or all of the other’s.
What is the legal meaning of “subject to the foregoing” in a sentence?
“Subject to the foregoing” is another phrase which is common in contracts.
The phrase “subject to the foregoing” means that the statement which comes after it is dependent upon, superseded by, or otherwise subject to the statement(s) that came before it.
More specifically, if we have:
Statement A.
Subject to the foregoing, Statement B.
Then that means Statement B is only valid if the conditions of Statement A are met, or that the rules of Statement A should supersede any conflicting rules specified in Statement B. I know that sounds abstract, so let’s take a look at an example:
“The property will be transferred in the name of the purchaser, only after the sale deed has been executed and the full amount paid.
Subject to the foregoing, the sale can be executed.”
In that example, the statement “the sale can be executed” must be interpreted as conditional: the sale can only be executed if first the full amount is paid and then the property is transferred in the name of the purchaser.
Let’s look at another example:
“The Partnership will employ or offer employment to all employees of Exchange International (a division of AT&T’s Cable Business) that were hired pursuant to the Sale Agreement.
Subject to the foregoing, the Partnership may, but shall have no obligation to employ or offer employment to all employees of AT&T’s Cable Business.”
At first glance, the second paragraph appears to say that the Partnership may choose to not offer employment to any employee of AT&T’s Cable Business. However, since the second paragraph is “subject to the foregoing” (i.e. subject to the preceding paragraph in this case), we see that the Partnership must still at minimum offer employment to any employees of AT&T’s Cable Business who work in the Exchange International division.
NOTE: Unlike the phrase “in consideration of the foregoing”, the phrase “subject to foregoing” CANNOT be ignored when reading a contract because it materially changes the meaning of whatever statement follows it.
What is the legal meaning of “notwithstanding the foregoing” in a sentence?
The phrase “notwithstanding the foregoing” is probably the most confusing “foregoing” phrase that is commonly found in contracts.
The phrase “notwithstanding the foregoing” means that whatever immediately follows is enforceable “despite” or “in spite of” whatever came before. In essence, whatever comes after “notwithstanding the foregoing” trumps whatever came before that phrase.
Let’s take a look at an example excerpt from a real contract:
“This Trust Agreement may be amended by a written instrument executed by the Trustee and the Company. Notwithstanding the foregoing, no such amendment shall conflict with the terms of the Plans or shall make the Trust revocable after it has become irrevocable in accordance with Section 1.2 hereof.”
The meaning of the excerpt is that mutually agreed upon written amendments to the Trust Agreement are allowed ONLY IF they do not conflict with the terms of the Plans and do not make the Trust revocable after it has become irrevocable.
When should you use “the foregoing” provisions in a contract?
It’s actually not a good idea to use the phrase “the foregoing” when drafting contract provisions because it is an ambiguous reference. For instance, in our earlier example from the St. Mary’s Hospital union contract, I said that “the foregoing” referred to the two preceding paragraphs about unions being prohibited from striking or boycotting. But how do I know that “the foregoing” referred to the previous 2 paragraphs instead of the previous 1 or 3 paragraphs?
The answer is that I had to use my human judgement to determine how far back “the foregoing” referred to. Unfortunately, human judgement isn’t always the same from one human to the next, which is why people go to court.
To avoid costly litigation, simply number your paragraphs and then use phrases like “in consideration of section 6.2” or “subject to section 3.01” instead of “in consideration of the foregoing” or “subject to the foregoing”. Or if “the foregoing” refers to just the last sentence, then say “the last sentence” instead.