Contract Law: Pacta de Contrahendo

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What is a pacta de contrahendo?

A contract aimed at the conclusion of another contract.

Define an option in the context of contracts.

An agreement restricting an offeror's right to revoke an offer.

What is the main characteristic of an option?

An option renders the offer irrevocable for a certain period of time.

Can an option be granted gratuitously?

Yes, an option can be granted gratuitously or for some consideration. Signup and view all the answers

What are the two parts of an option?

Part 1 - main offer to enter into the main agreement, Part 2 - ancillary offer to keep the main offer open for a certain time. Signup and view all the answers

How can an option be described in terms of revocation?

An option is an offer coupled with a stipulated time during which the offeror cannot revoke it. Signup and view all the answers

How can an ordinary revocable offer be terminated?

By revocation before it has been accepted. Signup and view all the answers

What makes an offer irrevocable under Pacta de contrahendo?

Having an option attached to it. Signup and view all the answers

What happens if an option does not specify a time period for exercising it?

The offer must be kept open for a reasonable time. Signup and view all the answers

When does the death of either party NOT terminate an option?

Unless the contract stipulates otherwise. Signup and view all the answers

What is the general rule for the transferability of options through cession?

Options are transferrable through cession. Signup and view all the answers

What are the two conditions to be observed in an option?

Time and not having made the same offer to another third party. Signup and view all the answers

What is a preference contract?

An agreement where one person binds himself to give preference to another should he/she decide to conclude some other specified type of agreement. Signup and view all the answers

What is the key difference between an option and a pre-emptive right?

In an option, the grantor has already made an offer to the grantee, while in a pre-emptive right, there is no firm offer at the time the right is created. Signup and view all the answers

What are the remedies for breach of an option?

If breach is material, the innocent party has the choice to cancel or uphold the contract. Signup and view all the answers

Is compliance with formalities required for preference contracts?

No, preference contracts need not comply with the formalities required for the main agreement. Signup and view all the answers

What is the principle of pacta de contrahendo in relation to options?

An offeror attempting to revoke the option constitutes a breach, and the innocent party has the choice to cancel or uphold the contract. Signup and view all the answers

What does the grantee acquire in a pre-emptive right?

The grantee acquires the preferential right to buy the property if and when the grantor decides to sell. Signup and view all the answers

What power does the grantor retain in a preference contract?

Power to decide whether or not to sell. Signup and view all the answers

In a preference contract, when is the grantor obliged to sell?

When the grantee exercises the option. Signup and view all the answers

Who holds the power in a preference contract to decide on the sale?

Power in hands of the grantor. Signup and view all the answers

What is the correlative right of the grantee against the grantor in a preference contract?

That the grantor should not sell. Signup and view all the answers

What is the trigger event in a pre-emption agreement?

The grantor deciding to sell. Signup and view all the answers

What must the offer be in a preference contract?

Bona fide. Signup and view all the answers

What type of obligation arises for the Grantor in a pre-emption agreement as soon as the agreement is concluded?

Negative obligation Signup and view all the answers

What type of obligation is conditional on the happening of a trigger event for the Grantor in a pre-emption agreement?

Positive obligation Signup and view all the answers

What is required for an offer to be considered valid in a preference contract?

Offer must be bona fide Signup and view all the answers

Can the Grantor avoid a pre-emption agreement by making an unreasonable offer?

No Signup and view all the answers

What must be the duration of an offer in a preference contract?

Offer must be kept open for a reasonable period Signup and view all the answers

What is the remedy available in a preference contract in addition to the usual civil remedies?

The oryx mechanism Signup and view all the answers