Question

The Plaza Hotel contracts with EZ Lawn to have EZ mow the grass on the Plaza grounds for the next 10 years. However, there is a clause in the contract that states if the hotel chooses, the contract may be terminated provided Plaza pays EZ 2,000 on termination. Which of the following is correct?

1) The contract is unenforceable because the option to cancel clause makes the contract an illusory promise.
2) The contract is unenforceable because the 2,000 is past consideration.
3) The contract is unenforceable because only one party has the option to cancel.
4) d. The contract is enforceable because the option to cancel clause is supported by consideration.

Answer 1

The contract is enforceable because the option to cancel includes a termination payment of $2,000, serving as valid consideration.

Step-by-step explanation:

The contract between The Plaza Hotel and EZ Lawn includes a clause that allows The Plaza to terminate the contract with a termination payment of $2,000. This clause does not make the contract an illusory promise because the promise of EZ Lawn to mow the grounds is a real commitment, and the option to cancel provided to The Plaza is accompanied by the requirement to pay $2,000, which constitutes valid consideration. Thus, the correct answer is that the contract is enforceable because the option to cancel clause is supported by consideration.