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Simple English definitions for legal terms
illusory contract
Read a random definition: N.P.
A quick definition of illusory contract:
An illusory contract is an agreement between two or more parties that seems like a real contract, but one party doesn't actually have to do anything. This means that the contract isn't really enforceable or legally recognized. It's like making a promise that you don't have to keep. Sometimes people use the word "contract" to refer to the written document that shows the agreement, but that's not really what makes a contract real or not.
A more thorough explanation:
An illusory contract is a type of contract that appears to be binding, but in reality, it is not. It is a contract that lacks consideration, which means that one party is not obligated to do anything. Therefore, the contract is not enforceable by law.
For example, if a company offers a job to an employee but reserves the right to terminate the employment at any time without cause, the contract is illusory. The employee is obligated to work for the company, but the company is not obligated to keep the employee employed. Therefore, the contract is not enforceable.
Another example of an illusory contract is a contract that gives one party the option to cancel the contract at any time. For instance, if a person signs a contract to buy a car but has the option to cancel the contract within 24 hours, the contract is illusory. The buyer is not obligated to buy the car, and the seller is not guaranteed a sale.
In both examples, the contracts lack consideration, which is a necessary element of a binding contract. Therefore, they are illusory contracts and not enforceable by law.