ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Monday, March 19, 2018

A termination provision that goes both ways isn't illusory

A recent case out of the Southern District of Texas, Henderson v. A & D Interests, Inc., Civil Action No. 3:17-CV-096, deals with arguments regarding illusory promises and unconscionability. 

The plaintiffs were exotic dancers at the defendant's adult entertainment club. They sued and the defendant moved to compel arbitration pursuant to the agreement between the parties. The plaintiffs argued that the agreement was unenforceable because it was illusory. The relevant termination provision allowed either party to terminate "at any time with or without notice." Because the termination provision provided such rights to both parties, the court found it wasn't illusory and the agreement was enforceable. 

The plaintiffs also argued that the arbitration provision in the agreement was unconscionable because it required the parties to split the cost of the arbitration, which the plaintiffs argued would be prohibitive. However, the court found unpersuasive the plaintiffs' evidence on the estimate of the cost of the arbitration, and there was no evidence of the plaintiffs' ability to pay for an arbitration at the time they agreed to the provision, which to the court was the relevant moment. 

https://lawprofessors.typepad.com/contractsprof_blog/2018/03/a-termination-provision-that-goes-both-ways-isnt-illusory.html

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