Contracts I
Option Contract
Five ways to get an option contract:
Restatement Second of Contracts § 25
Restatement Second of Contracts § 25Option Contracts
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.
Copyright, The American Law InstituteRestatement Second of Contracts § 45
Restatement Second of Contracts § 45Option Contract Created by Part Performance or Tender
- 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.
- 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.
Copyright, The American Law Institute- Only applies when inviting a unilateral contract.
Restatement Second of Contracts § 87(1)
Restatement Second of Contracts § 87(1)- An offer is binding as an option contract if it
- 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
- is made irrevocable by statute.
Copyright, The American Law Institute- An exception for signed writing purporting consideration
- An offer is binding as an option contract if it
Restatement Second of Contracts § 87(2)
Restatement Second of Contracts § 87(2)- 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.
Copyright, The American Law InstituteUCC § 2-205
Firm Offers.
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.
Copyright, The American Law InstituteCopyright, The American Law Institute- Sort of like R2C § 87(1), but this UCC section only applies to merchant offerors. (Most of the UCC applies to any contract for the sale of goods.)