Corporate & Securities Law

?Thereby? in Language of Performance?

By Ken Adams

Another day, another unexpected contract usage.

Today, I saw the following:

Upon issuance of an oral or written work, service, or purchase order, Company thereby hires Contractor to promptly provide the products, materials, and supplies and perform the services set forth in the Order.

What caught my eye was the use of thereby. It raises the issue of the limits of language of performance, which is one of the categories of contract language discussed in MSCD chapter 2.

Here’s what MSCD 2.12 says:

In general English usage, one can accomplish an action by means of a speech act, such as I quit! Such speech acts occur in contracts. One example is Doe hereby purchases the Assets … . This manual refers to such speech acts as “language of performance.” They use the present tense, and they serve to indicate actions accomplished by means of the signing of the contract.

And MSCD 2.13 says:

One helpful element of language of performance is hereby, which signals that the act described is being accomplished by virtue of the speech act itself.

The provision quoted at the top of this post resembles language of performance, but using thereby rather than hereby. But I don’t think it works. Using thereby pushes the act in question into the future, and it’s accomplished by issuance of an order. Because it’s not accomplished by the speech act itself, in other words the signing of the contract, you can’t call it a performative, which is the linguistics term for what I call language of performance. That’s why the provision sounds a little odd.

I suggest that it would make more sense to have the company retain the contractor using standard language of performance (hereby retains), with obligations only kicking in once an order is issued.

Full post as published by AdamsDrafting on October 02, 2008 (boomark / email).