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?
A) The contract is unenforceable because the option to cancel clause makes the contract an illusory promise.
B) The contract is unenforceable because the $2,000 is past consideration.
C) The contract is unenforceable because only one party has the option to cancel.
D) The contract is enforceable because the option to cancel clause is supported by consideration.

Question

Quizplus · Accepted Answer

The contract is enforceable because the option to cancel clause is supported by consideration, which is the payment of $2,000 to EZ Lawn upon termination. This clause gives Plaza Hotel the option to terminate the contract early, but at a cost. The fact that only one party has the option to cancel does not make the contract unenforceable, as long as that party provides consideration for that option. Similarly, the $2,000 payment is not past consideration because it is contingent upon the exercise of the cancellation option. Finally, the contract is not an illusory promise because both parties have agreed to the terms, including the cancellation clause.

The Plaza Hotel Contracts with EZ Lawn to Have EZ