Also known as: alternative performance
Written by attorneys · grounded in primary & secondary sources — see below
A contractual doctrine determining when a promise that reserves a choice among alternative performances supplies consideration. The promise supplies consideration if each alternative would itself be valid consideration when viewed in isolation. The promise also supplies consideration if at least one alternative would be valid consideration and the parties perceive a substantial possibility that events will eliminate the non-consideration alternatives before the promisor chooses.
Select any source to read its text and confirm it supports the definition.
Riverbend Clinic promised Dr. Ana Lopez either a $250,000 annual salary or a year of rent-free use of its facilities if she resigned her current position and relocated. Lopez accepted and performed by resigning and moving. Each alternative imposed a real detriment on the clinic and conferred a benefit on Lopez. The clinic's retained choice therefore supplied consideration and created an enforceable contract.
Metro Properties promised Apex Studios either a $1,000 monthly rent reduction or four free reserved parking spaces if Apex renewed its lease early. Apex performed the early renewal. Each alternative standing alone would have been valid consideration because each conferred a measurable economic benefit. Metro's promise therefore supplied consideration and bound the parties.
Prairie Grain promised Lopez Farm either to buy its entire wheat crop at $6 per bushel or to allow storage as space permits if export prices fell below a stated index. Both parties knew government rules would likely block private storage if prices fell that low. The purchase alternative supplied consideration on its own. The regulatory risk created a substantial possibility that the storage alternative would be eliminated before Prairie chose, satisfying the rule for enforceability.
A promise supplies consideration if each alternative would itself be valid consideration when viewed alone. It also supplies consideration if one alternative would be valid consideration and the parties perceive a substantial possibility that events will eliminate the non-consideration alternatives before the promisor chooses.
Supporting sources
A promise is illusory when the promisor can choose an alternative that requires no legal detriment or confers no benefit. In that case the promisor retains complete discretion to perform or not perform and supplies no consideration.
Supporting sources
The test is satisfied when one alternative supplies consideration and the parties perceive a substantial possibility that events occurring before choice will eliminate the non-consideration alternatives. Regulatory or market events known to both parties at formation can satisfy the test even if the events are not certain.
Supporting sources
A fixed-bonus alternative validates the promise when the other alternative also supplies consideration on its own. The fixed amount guarantees a real detriment and benefit so that the promisor cannot escape all obligation through choice.
Supporting sources