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Contracts/Illusory promise
Template:Contract law In contract law, an illusory promise is one that courts will not enforce. This is in contrast with a contract, which is a promise that courts will enforce. A promise may be illusory for a number of reasons. In common law countries this usually results from failure or lack of consideration (see also consideration under English law).
Illusory promises are so named because they merely hold the illusion of contract. 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.
It is a general principle of contract law that courts should err on the side of enforcing contracts.[citation needed] Parties entering into the arrangement presumably had the intention of forming an enforceable contract, and so courts generally attempt to follow this intention.[1]
A promise conditioned upon an event within the promisor's control is not illusory if the promisor also "impliedly promises to make reasonable effort to bring the event about or to use good faith and honest judgment in determining whether or not it has in fact occurred."[2]
Methods of finding potentially illusory contracts enforceable include:
- Implied-in-law "good faith" terms
- Implied-in-fact terms
- Bargaining for a chance
Implied-in-fact terms
Judges will often infer terms into the contract that the parties did not explicitly cite. For instance, in the "satisfaction clause" case, judges might infer that the parties intended a "reasonableness test" - that the clause could be satisfied if a reasonable person would be satisfied by the promisee's performance, regardless of whether the promisor himself asserts he is satisfied. (This interpretation is often used in cases in which a performance can be objectively evaluated, such as with the construction of a warehouse; the implied-in-law interpretation above is preferred where satisfaction is more subjective, as with the painting of a portrait.)
Bargaining for a chance
Many judgesTemplate:Who would consider the "bargaining for a percentage of the proceeds" example above an enforceable contract, even without an implied-in-fact or implied-in-law good faith term. They would view the opportunity to enter into a business relationship to itself be acceptable consideration. Put differently, the mere possibility that the promisor would do business is a valuable product of the bargain even if he does not do anything. Of course, if the promisor entered into the relationship purely with the intent of fraudulently harming the promisee, he could be cited for fraud or bad faith principles that apply to all contracts.
Changes to a "contract" without notification
Some websites' "terms and conditions" may be deemed an illusory contract and unenforceable if the language can be changed at any time by the company without notifying users and giving them a chance to accept the new changes.[3]
References
- ↑ See Portland Gasoline Co. v. Superior Marketing Co., 150 Tex. 533, 243 S.W.2d 823, 824, (1951), overruled on other grounds by Northern Natural Gas Co. v. Conoco, Inc., 986 S.W.2d. 603 (Tex. 1998).
- ↑ 1 Corbin on Contracts, s 149, at 659.
- ↑ Harris v. Blockbuster Inc., No. 09-cv-217 (N.D. Tex. April 15, 2009)
