What is meant by the term illusory consideration, in terms of Contract law?

Question

Yeah

Answer 1

As stated above for a contract to be legally binding, basically there needs to be offer, acceptance, an intention to enter a legally binding relationship and consideration.

Consideration is something given by the promisee and often moves to the promisor (ie; I offer that if you fix my car I'll pay you $1000). Consideration must be sufficient (legally recognisable) but not always adequate ie; I could rent you my mansion for a peppercorn.

Now, consideration must not be 1. A promise to perform a duty imposed by law (ie; a subpoena), 2. A promise to perform a contractual duty already owed to the other contracting party (ie; You've already promised me you will fix my car for $1000, you cannot now demand that you fix my car for $100000) or 3. Promise to perform a duty owed to a third party. These are all examples of insufficient consideration NOT illusionary consideration as stated above.

Now where illusionary consideration comes in, is it seems like consideration but it's not really. For instance, using the car analogy, I could say "I'll give you $1000 if you fix my car, but if I don't you can't take action", or "I'll give you $1,000 to fix my car but only if I feel like it" and so on...Basically it is a promise that the promisor is not obliged to keep.

However, in practice, a court will often interpret a contract in the favor of a disadvantaged party, as such it could be claimed that illusionary consideration is legally binding. The way this is done is through the following:

Implied-in-law "good faith" terms
Implied-in-fact terms
Bargaining for a chance

Hope this helps!

Answer 2

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RE:
What is meant by the term illusory consideration, in terms of Contract law?
Yeah

Answer 3

Illusory Promise

Answer 4

There's nothing vague about consideration - it's a basic first year contract issue in law school. What it means is that in order to form a contract you need an offer ("For five dollars, I'll paint the fence."), an acceptance, ("OK"), and consideration - which has to flow both ways. In the example above, the offeror's consideration is the work, and the offeree's consideration is the $5 - although a purist might say the offeror's consideration is the promise to do the work.

Consideration can be anything - "even a piece of paper" in the words of a famous case. But it has to be something real... even a promise is sufficient, but there must be an actual detriment to the party from whom the consideration flows.

Illusory consideration is something that looks like consideration, but isn't really. The classic example is the promise to do something that you're already obligated to do.

Answer 5

Here's the simple example of an illusory contract.

I promise that I may walk across the Brooklyn Bridge.

You promise that you may pay me $5.

The promise that I may walk across the bridge and the promise that you may pay me $5 are not actually related.

In reality, neither of us are obligated to cross bridges or pay $5.

Essentially the contract is not definite. Therefore, its illusory.

Illusory contracts fail, if at all, at their formation.

If you were to look at a contract, there is formation (offer and acceptance between parties, meeting of the minds, and consideration). The next step is defense to formation. Statute of Frauds, lack of consideration, and lack of definiteness.

Simply put, its the subject of the contract that has to stand on promises or not.

Answer 6

meant term illusory consideration terms contract law

Answer 7

General speaking, for a contract to be valid, there must be an offer, acceptance and consideration. Consideration is somewhat of a vague concept. The idea is that both parties to a contract must bring something to the bargain. This can be either conferring an advantage on the other party, or incurring some kind of detriment or inconvenience. Illusory consideration relates to circumstances in which it is claimed that there is consideration by the promise of performance of someact, but where there is also a discretion as to whether to perform that act.