Illusory Promise

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Illusory Promise | You be the Judge

Case Study

An illusory promise sounds like a promise or commitment, but is not really a promise or commitment to do anything. Because it does not bind the maker to do anything, it may not be treated as consideration to establish a contract.

Culbertson v. Brodsky
Culbertson had listed real estate for sale.
Brodsky & Culbertson signed an option contract.
Option document:
- Brodsky delivers $5,000 check to bank;
- Bank holds check for sixty (60) days without cashing it; - During the 60 days Brodsky could inspect the property; - After inspection Brodsky could decide whether to purchase or not; - Brodsky decided to buy, Culbertson refused claiming there was no contract because no consideration was given; - Trial for Brodsky, Culberttson appeals.

In order to be establish a contract, consideration must be of legal value and bargained for or exchanged, or a promise (Beatty). Brodsky did not give valid consideration that makes Culbertson’s offer to sell enforceable.

Brodsky’s claim that Culbertson received earnest money is false. Culbertson (or his bank on his behalf) received a piece of paper that might or might not become a cashable check if Brodsky decided.

To argue that the check, which could not be cashed for 60 days, was valuable consideration it must be shown that it has some other value besides the potential cash value during the 60 days. If on day 61, Culbertson had cashed the check, it could have been valuable consideration that may have established a contract if the contract had not otherwise expired.

To establish “value” (Gifis)

- promisee does or commits to doing something he had no prior legal duty to do - or refrains from doing something he was legally entitled to do - or must be a legal benefit to promisee, or a legal detriment to the promisor

The check (at least for 60...
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