Spooner v. Reserve Life Insurance Co. case brief summary
287 P.2d 735 (1955)
Defendant, an insurance company,
appealed a judgment from the Superior Court for King County
(Washington) in favor of plaintiffs, agents employed by defendant, in
an action for breach of contract involving performance bonuses.
CASE FACTS Defendant distributed a bulletin
outlining a bonus program subject to certain conditions and a
provision that defendant could withhold any bonuses with or without
The court reversed the judgment in favor of plaintiffs in an
action for breach of contract involving performance bonuses.
court held that the bulletin did not create an enforceable contract
for the payment of bonuses because the limitation in the bulletin
created an illusory promise, which created no binding obligation on
defendant to pay bonuses.
The promise to pay bonuses was illusory
because the limitation regarding withholding bonuses made performance
of the promise optional or discretionary on the part of defendant.
The court therefore reversed with instructions to enter a judgment
dismissing the case.
The court reversed because a promise by defendant to pay its
agents performance bonuses was subject to a limitation that reserved
the right to withhold the bonuses, making the promise illusory and
creating no enforceable contract or obligation for the payment of
bonuses. Recommended Supplements and Study Aids for Contract Law
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