Option Contracts

Question 1

Second Restatement: Contracts without Consideration

Answer 1

An offer is binding as an Option K if:

(1) It’s in writing an signed by OR
(2) Recites a purported consideration for the making of the offer, and
(3) Proposes an exchange on fair terms within reasonable time;
OR
(4) Is made irrevocable by statute

Question 2

Option Contract Created by Part Performance or Tender

Answer 2

Where an offer invites an OE to accept by rendering performance
i) Not by promissory acceptance

Option K created when:
i) OE tenders or begins the performance

OR’s duty of performance under Option K
i) Conditional upon completion or tender of OE’s performance

Question 3

Option (Promise not to revoke)

Answer 3

A promise to keep offer open for a specified period of time

Limits the ORs power to revoke the offer until after the period has expired

An option contract only if OR suffers detriment; this makes the offer irrevocable