799:
generally imply in law that the promisor must act in good faith and reject the deal only if he is genuinely dissatisfied. As another example, if a contract promises a promisee a certain percentage of the proceeds of a promisor's business activities, this is illusory, since the promisor doesn't have to do anything: any percentage of zero is zero. However, courts may find that the promisor made an implied promise to use reasonable efforts to try to make money, and cite him for breach of contract if he does absolutely nothing. The U.C.C. in contracts exclusive to both sides requires "best efforts" in such contracts. This may be read to be the same as a good faith effort, but is seen by some courts as a higher duty.
28:
808:
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.)
817:
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.
798:
Many contracts include "satisfaction clauses", in which a promisor can refuse to pay if he isn't subjectively satisfied with the promisee's performance. Strictly speaking, this is an illusory promise, since the promisor has no actual legal burden to pay if he chooses not to. However, courts will
816:
Many judges 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
807:
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
775:
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."
771:
It is a general principle of contract law that courts should err on the side of enforcing contracts. Parties entering into the arrangement presumably had the intention of forming an enforceable contract, and so courts generally attempt to follow this intention.
825:
The "terms and conditions" of some websites and
Software applications 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.
835:, the court found a telephone service provider could not change the terms of its service contract by merely posting a revised contract on its website because "an offeree cannot assent to an offer unless he knows of its existence."
767:
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.
289:
294:
921:
562:
667:
3 Historically restricted in common law jurisdictions but generally accepted elsewhere; availability varies between contemporary common law jurisdictions
831:
508:
557:
682:
249:
496:
727:
700:
313:
277:
761:
892:
306:
572:
162:
57:
906:
752:, which is a promise that courts will enforce. A promise may be illusory for a number of reasons. In
720:
592:
318:
671:
567:
526:
438:
374:
87:
696:
547:
356:
206:
272:
232:
157:
133:
115:
945:
713:
689:
552:
120:
580:
417:
267:
146:
52:
47:
505:(also implied covenant of good faith and fair dealing or duty to negotiate in good faith)
8:
866:
Portland
Gasoline Co. v. Superior Marketing Co., 150 Tex. 533, 243 S.W.2d 823, 824, (1951
336:
227:
92:
72:
699:, and Canadian jurisprudence in both Québec and the common law provinces pertaining to
622:
585:
427:
399:
365:
258:
243:
237:
211:
479:
468:
189:
138:
129:
110:
67:
502:
389:
384:
346:
341:
167:
394:
124:
101:
640:
531:
462:
447:
195:
42:
939:
757:
431:
179:
152:
82:
174:
741:
635:
630:
617:
408:
62:
922:"How Zappos' User Agreement Failed In Court and Left Zappos Legally Naked"
820:
473:
379:
284:
201:
779:
Methods of finding potentially illusory contracts enforceable include:
753:
675:
658:
77:
870:
Northern
Natural Gas Co. v. Conoco, Inc., 986 S.W.2d. 603 (Tex. 1998)
626:
301:
27:
749:
456:
351:
19:
748:
is one that courts will not enforce. This is in contrast with a
422:
793:
612:
602:
692:
both in Québec and in the country's common law provinces
756:
countries this usually results from failure or lack of
695:
7 Specific to civil law jurisdictions, the
American
832:Douglas v. U.S. District Court ex rel Talk America
509:Contract A and Contract B in Canadian contract law
937:
664:2 Specific to civil and mixed law jurisdictions
721:
821:Changes to a "contract" without notification
701:contractual and pre-contractual negotiation
910:, No. 09-cv-217 (N.D. Tex. April 15, 2009)
811:
728:
714:
802:
919:
938:
853:Biotechnology Australia Pty Ltd v Pace
497:Duty of honest contractual performance
881:1 Corbin on Contracts, s 149, at 659.
685:of International Commercial Contracts
896:, 222 N.Y. 88, 118 N.E. 214 (1917).
674:and other civil codes based on the
13:
920:Goldman, Eric (October 10, 2012).
14:
957:
868:), overruled on other grounds by
794:Implied-in-law "good faith" terms
783:Implied-in-law "good faith" terms
499:(or doctrine of abuse of rights)
314:Enforcement of foreign judgments
278:Hague Choice of Court Convention
26:
762:consideration under English law
913:
899:
893:Wood v. Lucy, Lady Duff-Gordon
884:
875:
858:
845:
307:Singapore Mediation Convention
1:
838:
681:5 Explicitly rejected by the
448:Quasi-contractual obligations
7:
10:
962:
907:Harris v. Blockbuster Inc.
319:Hague Judgments Convention
670:4 Specific to the German
375:Anticipatory repudiation
125:unequal bargaining power
812:Bargaining for a chance
789:Bargaining for a chance
697:Uniform Commercial Code
672:Bürgerliches Gesetzbuch
357:Third-party beneficiary
329:Rights of third parties
207:Accord and satisfaction
428:Liquidated, stipulated
273:Forum selection clause
158:Frustration of purpose
803:Implied-in-fact terms
786:Implied-in-fact terms
690:Canadian contract law
58:Abstraction principle
519:Related areas of law
418:Specific performance
268:Choice of law clause
233:Contract of adhesion
147:Culpa in contrahendo
53:Meeting of the minds
48:Offer and acceptance
855:(1988) 15 NSWLR 130
683:UNIDROIT Principles
457:Promissory estoppel
337:Privity of contract
290:New York Convention
250:UNIDROIT Principles
93:Collateral contract
88:Implication-in-fact
73:Invitation to treat
503:Duty of good faith
400:Fundamental breach
366:Breach of contract
295:UNCITRAL Model Law
259:Dispute resolution
244:Contra proferentem
238:Integration clause
212:Exculpatory clause
738:
737:
581:England and Wales
489:Duties of parties
480:Negotiorum gestio
469:Unjust enrichment
190:Statute of frauds
139:Unconscionability
111:Misrepresentation
68:Mirror image rule
953:
930:
929:
917:
911:
903:
897:
888:
882:
879:
873:
862:
856:
849:
746:illusory promise
730:
723:
716:
558:China (mainland)
527:Conflict of laws
390:Efficient breach
385:Exclusion clause
185:Illusory promise
168:Impracticability
30:
16:
15:
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823:
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734:
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577:United Kingdom
540:By jurisdiction
12:
11:
5:
959:
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912:
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688:6 Specific to
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657:1 Specific to
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532:Commercial law
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463:Quantum meruit
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228:Parol evidence
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220:Interpretation
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196:Non est factum
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23:
22:
9:
6:
4:
3:
2:
958:
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758:consideration
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661:jurisdictions
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624:
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593:United States
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432:penal damages
429:
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423:Money damages
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202:Unclean hands
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163:Impossibility
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153:Force majeure
151:
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137:
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134:public policy
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83:Consideration
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25:
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21:
18:
17:
946:Contract law
925:
915:
905:
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891:
886:
877:
869:
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860:
852:
847:
830:
828:
824:
815:
806:
797:
778:
774:
770:
766:
745:
742:contract law
739:
636:Criminal law
618:Property law
573:Saudi Arabia
478:
461:
242:
194:
184:
145:
63:Posting rule
20:Contract law
851:Kirby J in
474:Restitution
285:Arbitration
926:Forbes.com
839:References
760:(see also
754:common law
676:pandectist
659:common law
439:Rescission
347:Delegation
342:Assignment
130:Illegality
78:Firm offer
678:tradition
548:Australia
395:Deviation
302:Mediation
35:Formation
940:Category
750:contract
641:Evidence
613:Tort law
586:Scotland
409:Remedies
352:Novation
175:Hardship
102:Defences
43:Capacity
631:estates
563:Ireland
180:Set-off
121:Threats
116:Mistake
629:, and
627:trusts
601:Other
553:Canada
744:, an
649:Notes
623:Wills
605:areas
568:India
430:, or
380:Cover
890:See
864:See
132:and
123:and
829:In
764:).
740:In
603:law
942::
924:.
625:,
928:.
872:.
729:e
722:t
715:v
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