30 Questions
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 purpose of an option in a contract?
To render the offer irrevocable for a certain period of time.
Explain the two parts of an option.
Part 1 - main offer (e.g., sale or lease), Part 2 - ancillary offer (agreement to keep main offer open for a certain time).
What is the key characteristic of an option?
It is an offer coupled with a stipulated period during which the offeror cannot revoke it.
In what way can an option be exercised?
By the unilateral act of exercising the option, typically by accepting the offer.
What are the remedies for breach of an option?
Cancellation or uphold contract, entitled to restitution for any performance made, entitled to specific performance, entitled to claim for damages.
Define a preference contract.
A preference contract is an agreement where one person binds himself to give preference to another should he/she decide to conclude some other specified type of agreement.
What is a pre-emptive right?
A pre-emptive right is where the grantee acquires the preferential right to buy property if/when the grantor decides to sell, without the grantor being under any obligation to sell.
In a preference contract, what is the difference between an OPTION and a PRE-EMPTIVE RIGHT?
An option involves an offer already made by the grantor to the grantee, while a pre-emptive right does not involve a firm offer at the time the right is created.
What principle applies to preference contracts regarding compliance with formalities?
Preference contracts need not comply with the formalities required for the main agreement.
What financial position does seeking damages aim to achieve in case of breach?
Seeking damages aims to place the innocent party in the financial position that he/she would have occupied had the breach not occurred.
What must be done before revoking an ordinary revocable offer?
The revocation must be communicated with the offeree.
In terms of options, what makes an offer irrevocable?
Accepting the option renders the offer irrevocable.
What is the effect of attempting to revoke an offer that is subject to an option?
Attempting to revoke an offer subject to an option constitutes a breach and has no force or effect.
What happens if an option does not specify a time period for its exercise?
If the option does not specify a time period, the offer must be kept open for a reasonable time.
Under what circumstances will the death of either party not terminate an option?
Death of either party will not terminate the option unless the contract stipulates otherwise.
When will an offer terminate if the option is personal to the grantee?
The offer will terminate on the death of either party if the option is personal to the grantee.
What type of obligation does the grantor have in a pre-emption agreement once it is concluded?
Negative obligation
In a pre-emption agreement, what type of obligation does the grantor have conditional on the trigger event?
Positive obligation
What must the offer made by the offeror in a preference contract be according to pacta de contrahendo?
Bona fide
How long must an offer be kept open for in a preference contract according to pacta de contrahendo?
Reasonable period
What remedy is available in a preference contract if the grantor withdraws the offer after initially making it to the grantee?
The oryx mechanism
In the context of preference contracts, what criteria should generally be used when making an offer to the holder of a preemptive right?
Objective criteria (e.g., market value)
What power does the grantor retain in a pre-emption agreement?
Power to decide whether or not to sell
What obligation does the grantor have if the grantee exercises the option in a pre-emption agreement?
Obliged to sell
Explain the power dynamics in a pre-emption agreement between the grantor and grantee.
Power in hands of the grantor to decide whether to sell, and grantee has a correlative right that the grantor should not sell.
What does the grantor's correlative right in a pre-emption agreement entail?
That the grantor should not sell
What is the trigger event in a pre-emption agreement?
Grantee exercising the option
What must the offer be in a pre-emption agreement according to the content?
Bona fide
This quiz covers the grantor's obligations in pre-emption agreements, including negative obligations that arise upon agreement and positive obligations triggered by specific events. It also explores the concept of Pacta de Contrahendo and the requirement for a bona fide offer in preference contracts.
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