Question
nnnnWhich of the following statements is true with respect to an option?
nnnnSelections
nnnnA. Valid without consideration
nnnnB. Valid if the consideration is exactly $10 but is not delivered
nnnnC. Valid if consideration is delivered even if it is less than $10
nnnnD. Not valid if the delivered consideration is less than $10
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Answer: C
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5 Keys Summary
nnnn• An option is a form of contract and must include sufficient consideration to be legally binding and enforceable.
nnnn• The law has a very low requirement for the amount of consideration needed to make an option valid; an option can be given for a nominal sum, such as 5 cents or one dollar.
nnnn• Because adequacy of consideration is not generally required to make a contract enforceable, an option is valid if consideration is delivered, even if the amount is minimal, such as less than $10.
nnnn• For the option to be binding, some consideration must, in fact, pass from the optionee (buyer) to the optionor (seller); a mere recital of consideration is insufficient.
nnnn• If valid consideration is delivered, the option contract grants the optionee the right, but not the obligation, to purchase the property upon specified terms within a specified time.
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