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2014 Year in Review – Contract Law

JPL Livery Services v. R.I. Dep’t of Admin., 88 A.3d 1134 (R.I. 2014): As the Rhode Island Supreme Court recognized this term, “it is a fundamental principle of contract law that a bilateral contract requires mutuality of obligation.” JPL Livery Services v. R.I. Dep’t of Admin., 88 A.3d 1134, 1143-44 (R.I. 2014) (citing Centerville Builders, Inc. v. Wynne, 683 A.2d 1340, 1341 (R.I. 1996)). A mutuality of obligation exists when “both parties are ‘legally bound through the making of reciprocal promises.’” Id. (quoting Centerville Builders, Inc., 683 A.2d at 1341). Conversely, “[t]he words of a promise ‘are illusory if they are conditional on some fact or event that is wholly under the promisor’s control and bringing it about is left wholly to the promisor’s own will and discretion,’ such that ‘the words used do not in fact purport to limit future action in any way.’” Id. (quoting 2 Corbin on Contracts, § 5.32 at 175, 176 (1995)). If a termination clause allows a party to terminate at any time at will without more, the promise is illusory. Id. (citing Holliston Mills, Inc. v. Citizens Trust Co., 604 A.2d 331, 335 (R.I. 1992)).

About The Author

Nicole J. Benjamin

I am a shareholder and business litigator at AP&S. I help businesses and their legal departments achieve their objectives by reducing their liabilities, advising them on complex legal matters and defending unavoidable litigation in federal and state court.

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