Wednesday, February 22, 2012

MBE Fast Fact: Option Contracts

A few points to remember regarding the offer: Under the common law, the offer can be revoked at any time provided that the offeree has not provided some kind of consideration to keep the offer open. If consideration has been provided, then an irrevocable option contract has been formed. But don't stop there. Even under the common law, the offeror may not be able to revoke the offer, if the offeree has detrimentally relied on the offer. Always consider promisorry estopple as a substitute for consideration. Also keep in mind that if an offeree rejects the offer in an option contract, he will still be able to later accept that offer, provided he does so in the time specified in the option contract. This will not apply if the offeror detrimentally relies on the offeree's rejection.

Under the UCC, the rules change. Even if the offeree has not provided any consideration to keep the offer open, the offer will still be irrevocable if it was made by a merchant, and that merchant provided a signed offer giving assurances that the offer would be held open. The offer will be irrevocable for a reasonable time, or the stated time period, not to exceed 3 months.


  1. THANK YOU for these! your explanations are clear and the issues relevant. awesome.

  2. Excellent. Here's hoping the exam went well!

  3. First, thanks for free blogs. If a merchant expressly states in signed writing that the offer is open for 6-months, is the offer (1) irrevocable for the first 3 months but subsequent revocable between 3-6 month period OR (2) irrevocable for the full 6-month period?