Tennessee Supreme Court Holds Promise to Provide as Many Continuing Education Programs as “Feasible” Is Not Illusory

Nashville, Tenn- The Tennessee Supreme Court today issued an opinion in Pharma Conference Education, Inc. v. State, rejecting the argument of the State of Tennessee that its contract with Pharma Conference Education, Inc. was not enforceable because Pharma’s promise to perform was illusory.  The Court held that Pharma’s promise to provide as many continuing education programs “as is feasible” was a real obligation and not illusory and therefore amounted to adequate consideration for the contract.

The dispute concerned a written agreement in which Pharma, a provider of pharmaceutical continuing education programs, promised to provide the University of Tennessee Health Science Center as many continuing education programs “as is feasible.” Before any programs were held, the State terminated the agreement. Pharma sued the State for breach of contract. 

The State argued Pharma could not enforce the contract against the State because Pharma did not give consideration for it. Consideration exists when a party promises to do something or refrain from doing something. For a contract to be enforceable, both parties must give consideration. 

The Supreme Court granted review to determine whether a promise to provide as many continuing education programs “as is feasible” was adequate consideration. The Court held that it was. The Court noted that under section 47-50-102 of the Tennessee Code, a written contract signed by the party to be bound creates a presumption of consideration. The State offered two arguments to overcome that presumption, but the Court rejected both.

First, the State argued that the term “feasible” gave Pharma complete discretion to decide whether to put on a program and rendered its promise illusory. The Court disagreed. It concluded that whether a program is “feasible” turns on objective criteria such as venue availability, speaker availability, and resource constraints, not on Pharma’s subjective determination.

Second, the State pointed to deposition testimony of Pharma’s president indicating that he believed Pharma had complete discretion to decide whether to create programs. The Court held that extrinsic evidence of a party’s subjective understanding of a contract’s terms is irrelevant to the proper interpretation of the contract and should not be considered. Moreover, the parole evidence doctrine also barred the use of the testimony to supplement or contradict the contract’s terms. 

Consequently, the Court rejected the State’s argument that the contract was unenforceable because it lacked consideration. 
Chief Justice Kirby concurred but wrote separately to explain that the deposition testimony may have been initially admissible, but it could not be used to contradict the terms of the contract.  

To read the majority opinion, click here.

To read the separate opinion, click here.