Legal Memorandum: Settlement Agreement and Illusory Contract

Issue: Under California law, may a settlement agreement be viewed as an illusory contract?

Area of Law: Business Organizations & Contracts, Litigation & Procedure
Keywords: Illusory contract; Settlement agreement
Jurisdiction: California
Cited Cases: 188 Cal. App. 4
Cited Statutes: None
Date: 05/01/2015

A settlement agreement may also be an illusory contract.  See Chicago Title Ins. Co. v. AMZ Ins. Services, Inc., 188 Cal. App. 4th 401, 421-22 (2010) (quoting Scottsdale Ins. Co. v. Essex Ins. Co., 98 Cal. App. 4th 86, 94-95 (2002)) (holding parties must exchange promises that represent legal obligations to create valid contract and contract is illusory when one party assumes no obligations). 


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