An illusory promise is one that is so indefinite that it cannot be enforced, or by its terms makes performance optional or entirely discretionary on the part of the promisor. Generally an agreement that reserves the right for one party to cancel at his or her pleasure cannot create a contract. Further, the illusory promise is insufficient consideration to support enforcement of a return promise. The Wahls contend the lease provision that allows the Lanes to terminate the lease at any time with written notice creates an illusory promise. What they fail to acknowledge is that a lease is not a typical contract.
Leases are conveyances whose covenants are interpreted under contract law.
In Peoples Park , the lessor argued that the lease was invalid because only the lessee could terminate the lease at any time, and that consequently there was a failure of consideration for the lease. Further, the court noted, the lessee promised to do something and to pay certain money in exchange for the lessor's promise to lease the premises. This promise for a promise was sufficient to obligate both parties under the lease. The fact that the Lanes may terminate the lease before the expiration of the term does not render the lease invalid. Although the original agreement was between the Lanes and the Grogans, the McCarthys immediately took the land by deed, reduced the lease agreement to writing and properly recorded it.