California First-Year Law Students' Exam (Baby Bar) — MCContractsMedium
A small business owner enters into a contract with a marketing firm for a six-month advertising campaign. The contract states, 'The marketing firm will provide advertising services as it deems appropriate, and the business owner will pay a reasonable fee for satisfactory results.' The business owner later decides to cancel the campaign, claiming there was no enforceable contract. Is the owner correct?
- AYes, because the term 'satisfactory results' makes the contract unenforceable due to indefiniteness.
- BNo, because the business owner's promise to pay a 'reasonable fee' implies an obligation.
- CYes, because the marketing firm's promise is illusory, lacking a definite commitment.
- DNo, because the marketing firm's promise to provide advertising services constitutes valid consideration.
Show answer & explanationAnswer & explanation
Correct answer: C. Yes, because the marketing firm's promise is illusory, lacking a definite commitment.
An illusory promise is one where the promisor has not committed to any definite course of action, effectively reserving total discretion. Here, the marketing firm's promise to provide services 'as it deems appropriate' means it can choose to do nothing, rendering its promise illusory and thus lacking consideration.
Why the other options are wrong
- A. While 'satisfactory results' can be a subjective condition, the core issue preventing contract formation is the illusory nature of the marketing firm's promise, not just the indefiniteness of 'satisfactory results'.
- B. While 'reasonable fee' can sometimes be made definite by a court, the primary issue here is the marketing firm's lack of commitment.
- D. The marketing firm's promise is not valid consideration because it lacks a definite commitment; they can choose to do nothing.
Illusory Promise
A statement that appears to be a promise but does not actually bind the promisor to any performance, rendering it insufficient as consideration for a contract.
- Lacks a true commitment or obligation.
- Often includes escape clauses or unlimited discretion for the promisor.
- Results in a lack of mutual obligation, preventing contract formation.
Memory trick: For a deal to be real, both sides must feel the legal steel.