Why does an option contract typically require separate consideration from the optionee?
Correct Answer
B) To make the owner's promise to keep the offer open binding and irrevocable during the option period
Separate consideration makes the optionor's promise irrevocable for the option period. Without it, the owner could revoke the offer at any time.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
Consideration is something of value exchanged between parties to a contract, making the agreement legally binding. It can be money, a promise to act, a promise to refrain from acting, or anything else of value.
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