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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. It is a general principle of contract law that courts should err on the side of enforcing contracts. [1]
For example, A receives Rs.50/- in return for which he promises to deliver certain goods to B. The money A receives is the present consideration. When consideration to one party to other is to pass subsequently to the maker of the contract, is said to be future consideration. For example. A promises to deliver certain goods to B after a week.
2. A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise. 3. The performance may consist of an act other than a promise, or a forbearance, or the creation, modification, or destruction of a legal relation. [1]
Put simply, "[t]he buyer under a requirements contract does not promise to buy as much as she desires to buy but, rather, to buy as much as she needs". [2] However, such a contract would likely be deemed illusory if the buyer reserved the right to buy from other parties.
A promise cannot be based upon consideration that was said, given or done before the promise was performed. Something said afterwards, will not count as consideration. For example, if X promises to reward Y for an act that Y had already performed then while the performance of that act is good consideration, for the promise to be rewarded for it ...
The leading case is Stilk v Myrick (1809), [3] where a captain promised 8 crew the wages of two deserters provided the remainders completed the voyage. The shipowner refused to honour the agreement; the court deemed the eight crew were unable to enforce the deal as they had an existing obligation to sail the ship and meet "ordinary foreseeable emergencies".
The promisor impliedly promises not to revoke the offer and the promisee impliedly promises to furnish complete performance, but as the name suggests, the promisee still retains the "option" of not completing performance. The consideration for this option contract is discussed in comment d of the above cited section.
A particular promise may be illusory because the contract effectively gives the promisor an unfettered discretion as to whether to perform the promise. [ 51 ] [ 52 ] [ 74 ] [ 75 ] The case law reflect the tension between, on the one hand, the desire to hold parties to their bargains in accordance with the principle pacta sunt servanda and, on ...