Pre-emption Agreement: Grantor Obligations and Trigger Events

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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 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). Signup and view all the answers

What is the key characteristic of an option?

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

In what way can an option be exercised?

By the unilateral act of exercising the option, typically by accepting the offer. Signup and view all the answers

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. Signup and view all the answers

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. Signup and view all the answers

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. Signup and view all the answers

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. Signup and view all the answers

What principle applies to preference contracts regarding compliance with formalities?

Preference contracts need not comply with the formalities required for the main agreement. Signup and view all the answers

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. Signup and view all the answers

What must be done before revoking an ordinary revocable offer?

The revocation must be communicated with the offeree. Signup and view all the answers

In terms of options, what makes an offer irrevocable?

Accepting the option renders the offer irrevocable. Signup and view all the answers

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. Signup and view all the answers

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. Signup and view all the answers

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. Signup and view all the answers

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. Signup and view all the answers

What type of obligation does the grantor have in a pre-emption agreement once it is concluded?

Negative obligation Signup and view all the answers

In a pre-emption agreement, what type of obligation does the grantor have conditional on the trigger event?

Positive obligation Signup and view all the answers

What must the offer made by the offeror in a preference contract be according to pacta de contrahendo?

Bona fide Signup and view all the answers

How long must an offer be kept open for in a preference contract according to pacta de contrahendo?

Reasonable period Signup and view all the answers

What remedy is available in a preference contract if the grantor withdraws the offer after initially making it to the grantee?

The oryx mechanism Signup and view all the answers

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) Signup and view all the answers

What power does the grantor retain in a pre-emption agreement?

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

What obligation does the grantor have if the grantee exercises the option in a pre-emption agreement?

Obliged to sell Signup and view all the answers

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. Signup and view all the answers