Business law 2026-2027 Option Contracts
Option Contracts
Unilateral Contract
Offer can’t be accepted by promising to perform; rather, the offeree must
accept by performance, then the contract becomes executed.
When you perform you can’t revoke the offer to sell (prevent injustice)
Where an offer invites an offeree to accept by rendering a performance and
does not invite a promissory acceptance, an option contract is created when
the offeree tenders or begins the invited performance or tenders a beginning
of it.” (Ragosta v. Wilder)
A performance or return promise is bargained for if it is sought by the
promisor in exchange for his promise and is given by the promise in
exchange for that promise. (Restatements S 71) (Ragosta v. Wilder)
Promissory Estoppel
A promise which the promisor should reasonably expect to induce action or
forbearance of a definite and substantial character on the part of the promise
and which does induce such action or forbearance is binding if injustice can
be avoided only by enforcement of the promise. (Restatement S 90)
Firm Offers
Unilateral
The parties may contract to the effect that full or partial performance by the
holder of the option is required to exercise the option. If they do so, the
contract 315 remains a unilateral one after the option is exercised, that is,
the holder having performed, only the owner remains bound to perform.
Bilateral
If they do not so contract, the holder may exercise by promising to perform,
in which case the contract becomes bilateral—both parties are bound by
their promises to perform the contract.
Acceptance ch.7
RULES:
Choice of promise or performance: Where the contract specifies the required
manner of acceptance, the holder must conform. Where the manner of
acceptance is not specified, the holder may exercise by promising to
perform what the option requires of him. (Gleeson)
A prize is not considered a gift if the prize was not motivated out of affection,
respect, admiration, charity or like impulses. (Simmons)
To determine whether a payment is a gift, the trier of fact must infer from
the facts the motivations of the donor.
Option Contracts
Unilateral Contract
Offer can’t be accepted by promising to perform; rather, the offeree must
accept by performance, then the contract becomes executed.
When you perform you can’t revoke the offer to sell (prevent injustice)
Where an offer invites an offeree to accept by rendering a performance and
does not invite a promissory acceptance, an option contract is created when
the offeree tenders or begins the invited performance or tenders a beginning
of it.” (Ragosta v. Wilder)
A performance or return promise is bargained for if it is sought by the
promisor in exchange for his promise and is given by the promise in
exchange for that promise. (Restatements S 71) (Ragosta v. Wilder)
Promissory Estoppel
A promise which the promisor should reasonably expect to induce action or
forbearance of a definite and substantial character on the part of the promise
and which does induce such action or forbearance is binding if injustice can
be avoided only by enforcement of the promise. (Restatement S 90)
Firm Offers
Unilateral
The parties may contract to the effect that full or partial performance by the
holder of the option is required to exercise the option. If they do so, the
contract 315 remains a unilateral one after the option is exercised, that is,
the holder having performed, only the owner remains bound to perform.
Bilateral
If they do not so contract, the holder may exercise by promising to perform,
in which case the contract becomes bilateral—both parties are bound by
their promises to perform the contract.
Acceptance ch.7
RULES:
Choice of promise or performance: Where the contract specifies the required
manner of acceptance, the holder must conform. Where the manner of
acceptance is not specified, the holder may exercise by promising to
perform what the option requires of him. (Gleeson)
A prize is not considered a gift if the prize was not motivated out of affection,
respect, admiration, charity or like impulses. (Simmons)
To determine whether a payment is a gift, the trier of fact must infer from
the facts the motivations of the donor.
