Illusory Promise

Contracts Law.  An illusory promise is one that only creates the illusion of a contract and is not enforceable. For example, Person A promising to give Person B hundred dollars if Person A feels like is an illusory promise. It is not binding and cannot be enforced as a contractual obligation.

“An illusory promise is one that appears to be a promise, but it does not actually bind or obligate the promisor to anything. Illusory promises cannot provide consideration for an agreement.”  Rose v. New Day Financial, LLC, 816 F.Supp.2d 245 (D. Md. 2011).

“An illusory promise is a promise in form only: one that its maker can keep without subjecting him- or herself to any detriment or restriction. An archetypal example of an illusory promise is the statement that ‘I promise to do as you ask if I please to do so when the time arrives.’ A promisor can keep that promise by either doing as the promisee asks or not, and so the promisor maintains total freedom to do as he or she wants. Since the maker of an illusory promise assumes no detriment or obligation, an illusory promise is not regarded as consideration. If a party to a purported contract has, in fact, made only illusory promises and therefore not constrained him- or herself in any way, he or she has given no consideration and therefore no contract exists. Because no contract exists, neither party has a cause of action for breach.”  Devine v. Notter, 2008 WI 87 (2008).

“To be binding and enforceable, contracts ordinarily require consideration. A promise becomes consideration for another promise only when it constitutes a binding obligation. Without a binding obligation, sufficient consideration does not exist to support a legally enforceable agreement. An ‘illusory promise’ appears to be a promise, but it does not actually bind or obligate the promisor to anything. An illusory promise is composed of words in a promissory form that promise nothing. They do not purport to put any limitation on the freedom of the alleged promisor. If A makes an illusory promise, A’s words leave A’s future action subject to A’s own future whim, just as it would have been had A said nothing at all. Similarly, the Restatement of Contracts explains that ‘[w]ords of promise which by their terms make performance entirely optional with the promisor whatever may happen, or whatever course of conduct in other respects he may pursue, do not constitute a promise.’ Likewise, the promise is too indefinite for legal enforcement is the promise where the promisor retains an unlimited right to decide later the nature or extent of his performance. The unlimited choice in effect destroys the promise and makes it merely illusory.”  Cheek v. Healthcare, 378 Md. 139, 147-48 (2003).

“An illusory promise is one that is so indefinite that it cannot be enforced, or by its terms makes performance optional or entirely discretionary on the part of the promisor. Generally an agreement that reserves the right for one party to cancel at his or her pleasure cannot create a contract. Further, the illusory promise is insufficient consideration to support enforcement of a return promise.”  Lane v. Wahl, 101 Wash. App. 878 (2000).

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