Coal-fired Electric Company agrees to "buy all the coal it needs" from Coal Company for five years. Since Electric Company did not necessarily agree to buy any coal at all, it has made an illusory promise unsupported by any consideration and can quit its relationship with Coal Company without consequence.

Question

Quizplus · Accepted Answer

Although Electric Company did not specify a specific quantity of coal to purchase, it did make a promise to buy all the coal it needs for five years. This promise is supported by consideration (the promise to purchase coal in exchange for the promise to supply it) and is not illusory. Therefore, Electric Company cannot simply quit its relationship with Coal Company without consequence.

Coal-Fired Electric Company Agrees to "Buy All the Coal It