Contracts I

Option Contract

Five ways to get an option contract:

  1. Restatement Second of Contracts § 25

    Option Contracts

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    An option contract is a promise which meets the requirements for the formation of a contract and limits the promisor's power to revoke an offer.

  2. Restatement Second of Contracts § 45

    Option Contract Created by Part Performance or Tender

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    1. 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.
    2. The offeror's duty of performance under any option contract so created is conditional on completion or tender of the invited performance in accordance with the terms of the offer.
    • Only applies when inviting a unilateral contract.
  3. Restatement Second of Contracts § 87(1)

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    1. An offer is binding as an option contract if it
      1. is in writing and signed by the offeror, recites a purported consideration for the making of the offer, and proposes an exchange on fair terms within a reasonable time; or
      2. is made irrevocable by statute.
  4. Restatement Second of Contracts § 87(2)

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    1. An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice.
  5. UCC § 2-205

    Firm Offers.

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    An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.