Also known as: option agreements · option contract
Written by attorneys · grounded in primary & secondary sources — see below
A promise that limits an offeror's power to revoke an offer for a stated period. The promise becomes binding when supported by consideration recited in a signed writing or when the offeree begins the invited performance.
Olive Okafor paid a recited fee to Oasis Resorts for an offer to sell resort property. Oasis later tried to revoke before Olive accepted. The revocation failed because the signed writing reciting consideration created an option that kept the power of acceptance open.
Octavia Okonkwo received an offer from Oceanview Properties inviting acceptance only by completing site improvements. She ordered materials and began grading the land. Oceanview could not revoke because the start of performance formed an option contract.
Select any source to read its text and confirm it supports the definition.
Oakley Osei mailed acceptance of an option to buy equipment from Orbit Communications. The acceptance reached Orbit after the option period ended. No contract formed because acceptance under an option contract is effective only upon receipt.
Oliver Okeke signed a letter offering Odyssey Logistics an exclusive distribution deal and recited a fee as consideration. Odyssey paid the fee. The signed writing bound the offer as an option contract even though actual payment arrived later.
Odessa Okada contracted to buy a factory from Orion Orlov. A recorded option held by a prior tenant gave the tenant repurchase rights over part of the land. The buyer refused to close because the option created reasonable doubt about marketable title.
Oasis Resorts shareholders signed a general option agreement giving family members a right of first refusal on any sale to outsiders. One shareholder tried to sell shares directly to a third party. The agreement prevented the transfer without first offering the shares to the designated holders.
No. The power of acceptance under an option contract remains open despite rejection, counteroffer, revocation, or the offeror's death or incapacity unless a contractual duty is discharged.
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Part performance creates an option when the offer invites acceptance solely by rendering performance and the offeree tenders or begins that performance. The offeror's duty then becomes conditional on completion of the invited performance.
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No. Acceptance under an option contract is effective only when received by the offeror, unlike ordinary offers where the mailbox rule may apply.
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An offer becomes binding as an option if it is in a signed writing that recites consideration and proposes a fair exchange within a reasonable time, or if a statute makes it irrevocable.
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Yes. A recorded option creates an outstanding adverse claim that gives a prudent purchaser reasonable doubt about clear title, allowing the buyer to refuse to close.
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…| | | | | April 16 (app. 10:20 A.M.) | Coates (for family trusts) | 2000 | 31 -31 5/8 | | | [^maj-4]: A "call" is a negotiable option contract by which the bearer has the right to buy from the writer of the contract a certain number of shares of a particular stock at a fixed price on or before a certain agreed-upon…