Court Opinion

ID: 9690478
Source: CourtListenerOpinion
Date Created: 2023-08-24 19:14:34.676244+00
Date Added: 2024-06-11T18:18:57.413860
License: Public Domain

SHIRLEY S. ABRAHAMSON, C.J.
¶ 49. (concurring in part) . I agree with the majority opinion that this matter must be remanded to the circuit court. I would, however, remand, in addition to the other issues, the factual question whether the parties mutually agreed to eliminate the illusory financing clause and proceed with the contract without a financing clause.
¶ 50. The circuit court properly concluded, I believe, that the financing clause rendered the contract illusory and void. The circuit court then concluded as a matter of law that the parties' communications were not sufficient to eliminate the financing clause or to constitute an agreement for a new contract with the same terms as the original "contract," except for the financing clause. Here's where I part with the circuit court. I think the intent of the parties is a matter of fact for the fact-finder, not for the circuit court on summary judgment.
¶ 51. The court of appeals concluded that the financing provision did not render the contract illusory and that there is a material issue of fact regarding whether the financing contingency was waived. Accordingly, it remanded the instant case to the circuit court for a determination of whether the buyer waived the financing clause.1
*421¶ 52. In contrast, the majority opinion seems to conclude that the written agreement was indefinite and was made definite by the parties' subsequent conduct. The majority opinion concludes that "both parties came to the conclusion that Metropolitan had obtained sufficient financing."2
¶ 53. I conclude that the financing provision made the agreement illusory and that the record is insufficient to determine as a matter of law on summary judgment whether the parties formed a new contract (with the same terms as the original contract) by agreeing to eliminate the financing clause.
¶ 54. The majority opinion errs, I think, by conflating the question whether the contract is illusory with the question whether the contract is indefinite. Although the concepts of illusoriness and indefiniteness may overlap and Wisconsin case law sometimes uses the words confusedly, they should be analyzed separately.3
¶ 55. A promise is illusory if "[w]ords of [the] promise [] by their terms make performance entirely optional with the 'promisor.' "4 The Wisconsin case lawis in accord.5
*422¶ 56. The court of appeals in Nodolf v. Nelson, 103 Wis. 2d 656, 660, 309 N.W.2d 397 (Ct. App. 1981) (quoting 1 Corbin on Contracts § 149, at 656-59 (2d ed. 1963), observed that a contract is illusory when the contract is conditioned on a fact or event wholly under the control of one party: "[P]romissory words are illusory if they are in form a promise that is conditional on some fact or event that is wholly under the promisor's control and his bringing it about is left wholly to his own will and discretion."6 A putative contract that is illusory is no contract at all, that is, such a contract is void.7
¶ 57. As the court of appeals further explained in Nodolf, a financing contingency renders the contract incurably illusory and unenforceable if the contingency grants to one party the exclusive right to determine whether suitable financing has been obtained: "The buyer cannot have the exclusive right to determine whether financing has been obtained without rendering illusory his promise to purchase. The fact that he chose to fulfill the financing condition therefore does not cure the unenforceability of the agreement."8
¶ 58. The financing condition at issue in the present case states as follows:
*4235.7 Financing Contingency. Buyer shall have obtained unconditional financing in an amount equal to 85% of the purchase price from a reputable Lender on terms satisfactory to Buyer and an appraisal which is satisfactory to Buyer in Buyer's sole discretion. Unless Buyer waives this contingency by written notice to Seller within 30 days following full execution of this Agreement, this Agreement shall terminate without further force or effect and Buyer's earnest money shall be promptly returned.
(Emphasis added.)
¶ 59. I agree with the circuit court that the financing provision in the instant case is illusory. Absent construing the contract to require good faith relating to financing (and the circuit court explicitly concluded that the financing provision did not include a good faith requirement),9 the contract is plainly illusory because the buyer retains sole discretion about the sufficiency of financing.10 Thus, the putative contract in the instant case was void at the time of formation. Only a new contract will save a void agreement between the buyer and seller.
*424¶ 60. The majority opinion dismisses the claim that the contract is illusory, concluding that "the subsequent actions of both parties rendered the financing clause definite. Neither Metropolitan nor GEA had complete control over determining whether the financing contingency had been met: both parties came to the conclusion that Metropolitan had obtained sufficient financing."11
¶ 61. I agree with the majority opinion that an indefinite contract may be made definite. A contract provision is indefinite (or uncertain) if the provisions in the contract do not "provide a basis for determining the existence of breach and for giving an appropriate remedy."12 This court has held that if a contract cannot be given sufficient definiteness, the contract will not he enforced.13
¶ 62. A contract that appears indefinite on its face may be made definite by trade usage of the terms in the contract or the course of dealing between the parties.14 The majority opinion concludes the subsequent actions of both parties rendered this contract definite. But if the contract was illusory when made, it cannot be cured by the subsequent conduct.
¶ 63. Because I conclude that the financing clause renders the contract illusory and void, I would remand the matter to the circuit court for further proceedings *425to determine whether the parties formed a new contract without a financing term.
¶ 64. I am authorized to state that Justice PATIENCE DRAKE ROGGENSACK joins this opinion.

 Metro. Ventures, LLC v. GEA Assocs., 2004 WI App 189, ¶¶ 23-29, 276 Wis. 2d 625, 688 N.W.2d 722.

 Majority op., ¶ 33.

 Professor Farnsworth analyzes Gerruth Realty Co. v. Pire, 17 Wis. 2d 89, 95, 115 N.W.2d 557 (1962), to say that the buyer's promise to obtain financing was so indefinite that it was illusory. See 1 E. Allan Farnsworth, Farnsworth on Contracts § 2.13 n.13 (3d ed. 2004).

 Restatement (Second) of Contracts § 77 cmt. a. (1981). See also 1 Farnsworth, supra note 3, § 2.13; 2 Joseph M. Perillo, Corbin on Contracts § 5.28 (1995).

 Krause v. Holand, 33 Wis. 2d 211, 217, 147 N.W.2d 333 (1967) (agreement "subject to securing a loan by 8/31/64" was illusory) (citing Gerruth Realty, 17 Wis. 2d at 95).

 Illusory contracts are not contracts because the illusory language "makes performance optional with the promisor no matter what may happen, or no matter what course of conduct in other respects the promisor may pursue[;] it does not justify the promisee in understanding that a commitment has been made." 1 Richard A. Lord, Williston on Contracts § 1.2, at 11 (4th ed. 1990).

 First Wis. Nat'l Bank of Milwaukee v. Oby, 52 Wis. 2d 1, 7-8, 188 N.W.2d 454 (1971).

 See also Gerruth Realty, 17 Wis. 2d at 92 (contract provision that "allows one party to a contract to determine *423without limitation and in a subjective manner the meaning of an ambiguous term, comes dangerously close to an illusory or aleatory contract").

 Professor Farnsworth writes that "[cjourts have responded to facially insubstantial promises in two diametrically opposite ways." One way is to declare the contract void as illusory. A second and more recent way is to read the apparently illusory promise so that it is not illusory; courts read the promise as a promise to act in good faith in exercising judgment. 1 Farnsworth, supra note 3, § 2.13 at 133-38. See also 2 Perillo, supra note 4, § 5.28 at 148 (same).

 Nodolf v. Nelson, 103 Wis. 2d 656, 660, 309 N.W.2d 397 (Ct. App. 1981).

 Majority op., ¶ 33 (emphasis removed).

 Restatement (Second) of Contracts § 33(2) (1981) (restatement provision regarding "certainty"); 1 Farnsworth, supra note 3, §§ 3.1, 3.29; 1 Perillo, supra note 4, § 4.1. For further discussion of indefiniteness in Wisconsin case law, see Mgmt. Computer Servs. v. Hawkins, Ash, Baptie & Co., 206 Wis. 2d 158, 178-80, 557 N.W.2d 67 (1996).

 Mgmt. Computer Servs., 206 Wis. 2d at 178-80.

 Restatement (Second) of Contracts § 33 cmt. a (1981).