Culbertson v. Brodsky
“A contract in which there is no consideration moving from one party, or no obligation upon him, lacks mutuality, is unilateral, and unenforceable.” Texas Farm Bureau Cotton Ass’n v. Stovall, 113 Tex. 273, 253 S.W. 1101 (1923).
Culbertson v. Brodsky case is an example of the illusory promise situation. An illusory promise is not a real promise, it lacks consideration. Since there is no consideration – there is no contract. Therefore, the law will not enforce either party to the deal. Mr. Brodsky signed the option contract with Mr. Culbertson, and deposited a check of $5000, representing “earnest money”, to be held by the bank for the period of 60 days. By entering this deal, Brodsky intended to purchase the real estate property from Culbertson if he is satisfied with the results of the engineering research and the inspection of that property. The contract required the title company to hold the “earnest money” check in the escrow until the expiration of the 60 days feasibility period. After performing the tests during that period of time, Brodsky, if he decided the property was unacceptable to him, could terminate the agreement, at his sole election, and demand the return of the earnest money with no further obligation of either party. There is a false premise in that argument. There is no obligation for Mr. Brodsky to complete the contract in the way the deal was structured. The earnest money deposit in the option contract between Brodsky and Culbertson is an illusory promise. In order to bind Mr. Culbertson with the promise to sell, Mr. Brodsky should have paid a non-refundable fee, even small. In that situation, it would have been an option contract between two parties. An option contract is a “right, which operates as a continuing offer, given in exchange for consideration—something of value—to purchase or lease property at an agreed price and terms within a specified time”. If Mr. Brodsky had provided a non-refundable fee or...
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