Isabella Carter
In contract law, consideration refers to the value exchanged between the parties to the contract. For a contract to be enforceable, there must be a valid consideration offered by each party. An illusory promise is a statement that appears to be a promise but does not impose any obligation on the person making the statement and, therefore, lacks legal sufficiency. An illusory promise is not valid consideration and neither party to a contract containing an illusory promise is bound by the contract. This is because the promisor has not made any kind of commitment and has not given up anything of value.
| Characteristics | Values |
|---|---|
| Definition | An illusory promise is a statement that appears to be a promise, but in reality, it does not impose any obligation on the person making the statement and, therefore, lacks legal sufficiency. |
| Binding | An illusory promise is not binding because the promisor has not made any kind of commitment (nothing he has promised actually limits his future options). |
| Enforceability | An illusory promise is not valid consideration and neither party to a contract containing an illusory promise is bound by the contract. |
| Examples | "I will paint your house in June if I feel like it", "I promise to sell you my car if I feel like it", "I will give you an umbrella if I remember to bring it on Tuesday". |
| Types | There are two kinds of illusory promises: the first is where the promisor promises to do something only if they want to; the second is contained in contracts that allow a party to terminate the contract at will and without any notice to the other party. |
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What You'll Learn
Illusory promises are not binding
An illusory promise is a promise that is unenforceable due to indefiniteness or lack of mutuality, where only one side is bound to perform. The promise is normally a statement that seems to be an offer or agreement, but is so vague, ambiguous or conditional that it does not actually obligate the promisor to do anything at all. For example, a promise of the form, "I will give you ten dollars if I feel like it," is purely illusory and will not be enforced as a contract.
There are two kinds of illusory promises. The first is where the promisor promises to do something only if they want to. The other kind of illusory promise is contained in contracts that allow a party to terminate the contract at will and without any notice to the other party.
Courts will not enforce illusory promises because they are not considered valid considerations. This is because there is no mutual exchange of value, and the promise is illusory, being too vague to obligate the party to anything specific.
It is important to note that not every promise is a pledge to do something. Sometimes it is an illusory promise, where the promisor actually gives up no consideration. For example, Juliette promises to mow Lydia's lawn if she feels like it. May Juliette enforce the contract? No, because Juliette has incurred no legal detriment; her promise is illusory, since by doing nothing she still falls within the literal wording of her promise.
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Promises to do what one is legally obligated to do
A contract is a crucial part of a valid consideration. For a contract to be valid, it must meet specific requirements. A bargain is an exchange of promises, acts, or both, in which each party views their promise or performance as the price of the other party's promise or performance.
A bargain in which one party promises to do what they are already legally obligated to do is not enforceable because the obligated party is not required to do anything new under the contract. This is because the bargain does not constitute "proper" consideration. An example of this is a promise by an uncle to pay his nephew $5000 if the nephew refrains from drinking, using tobacco, swearing, or gambling until the age of 21. The nephew fulfilled his side of the bargain, but the uncle refused to pay, arguing that the promise was merely a gift and not a binding contract. The court held that there was no consideration as the nephew had promised to give up nothing to which he had a legal right.
In another example, a sixteen-year-old David is promised $50 by his uncle if he refrains from smoking. The promise is not enforceable because David already has to refrain from smoking, so he has promised to give up nothing to which he had a legal right.
In the case of Lydia offering Juliette $10 for mowing her lawn, Juliette's promise to mow the lawn if she felt like it was illusory. By doing nothing, she still fell within the literal wording of her promise.
In the case of Glisson starting his own security business, Global sued Glisson to enforce the second non-competition agreement. The court found that the newly signed non-competition agreement lacked valid consideration because Global was already obligated to employ Glisson through the initial two-year employment contract period.
In summary, a promise to do what one is already legally obligated to do constitutes illusory consideration because it lacks proper consideration. The obligated party is not required to do anything new under the contract, and the promise is not enforceable as it does not constitute a binding contract.
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Promises that are too vague
An illusory promise is a promise that is unenforceable due to indefiniteness or lack of mutuality, where only one side is bound to perform. The promise is usually a statement that appears to be an offer or agreement, but is so vague, ambiguous or conditional that it does not actually obligate the promisor to do anything at all. For example, a promise of the form, "I will give you ten dollars if I feel like it," is purely illusory and will not be enforced as a contract.
To avoid making an illusory promise in a contract, use clear, definite language that outlines specific obligations and mutual consideration. Vague terms that allow one party sole discretion should be avoided. For example, a clause stating, "Party A agrees to purchase goods if and when they desire," would likely be considered illusory because it provides no clear obligation to purchase.
Courts may enforce an illusory promise as a valid contract by invoking the doctrine of promissory estoppel, which comes into play when a promise is made to a promisee who relies on the promise to their detriment. Courts may also view partial performance as evidence of mutual intent.
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Promises with an option to cancel
To be considered valid, a contract must include valid consideration. This means that there must be a mutual exchange of value, where each party gives up something or promises to do something in exchange for the other party's promise. In the case of illusory promises, there is no valid consideration because one party has not made a binding commitment.
Courts will generally not review the adequacy of consideration unless the contract is deemed "unconscionable". However, they will review the adequacy of consideration when the plaintiff is seeking an equitable remedy to a breach of contract. In this case, damages can be paid as monetary damages or equitable remedies.
It is important to note that not all contracts with an option to cancel are necessarily illusory. If the option to cancel is in writing and is for a fixed amount of time, it may be considered valid consideration. For example, an option is a promise to hold an offer open for a fixed amount of time, and most courts will consider this valid consideration.
In summary, promises with an option to cancel can be illusory if one party has the ability to terminate the contract at will without consequence. This means that there is no valid consideration because there is no mutual exchange of value, and the contract may be unenforceable. However, if the option to cancel is for a fixed amount of time and in writing, it may be considered valid consideration.
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Promises with no legal detriment
A contract is a valid consideration when both parties have limited their future options. If one party has not limited their future actions, their promise is illusory, and the contract is not legally enforceable.
Consideration is a crucial part of a valid contract. It refers to the value exchanged between the parties involved. This value can be anything, as long as it is seen to have value by most people. It does not have to be monetary.
A promise with no legal detriment is an illusory promise. This is when a contract is formed in which only one party is required to perform. An illusory promise is not a valid consideration, and neither party to a contract containing an illusory promise is bound by the contract. The promisor is not bound because they have not made any kind of commitment, and the promisee is not bound because they have received an illusory promise in exchange for their real promise.
An example of an illusory promise with no legal detriment is: "I will paint your house in June if I feel like it." In this example, the terms of the contract do not bind the promisor to give up anything, and they suffer no detriment. The promise is illusory, and the contract is unenforceable.
Another example is: "I promise to pay you $5000 if you promise that during the month of April, you either (a) travel to New York City or (b) refrain from travelling to New York City." In this example, no matter what the promisee does, they would have done one of the two options without the contract. Therefore, there is no consideration, and the contract is illusory.
Courts may enforce an illusory promise as a valid contract by invoking the doctrine of promissory estoppel. This occurs when a promise is made to a promisee who relies on the promise to their detriment.
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Frequently asked questions
An illusory promise is a statement that appears to be a promise but does not actually impose any obligation on the person making the statement. It is not considered valuable consideration as it does not involve the promisor giving up anything of value.
An illusory promise is not valid consideration, and neither party to a contract containing an illusory promise is bound by the contract. The illusory promisor is not bound as they have not made any commitment, and the real promisor is not bound as they have received an illusory promise in exchange for their real promise.
An illusory promise could be something like "I will paint your house in June if I feel like it", where the terms of the contract do not bind the promisor to any specific action. Another example is a contract where one party has the unconditional right to cancel at any time, making their promise illusory and the contract unenforceable.
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