An option contract is described as 'unilateral' in nature. What does this mean?
Correct Answer
D) The optionor is bound to sell if the optionee exercises, but the optionee has no obligation to buy
An option contract is unilateral because only the optionor is bound (to sell at the stated terms if the optionee exercises). The optionee has the right but no obligation to buy.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
Earnest money is a deposit made by the buyer at the time of the offer or shortly after to demonstrate good faith and serious intent to purchase the property. It is also called a good faith deposit.
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
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