Question

Option Contracts
In this section, you learned about option contracts, which are not empty bags but enforceable contracts.
What makes an option contract legally enforceable? That is, what are the characteristics of an option contract that differentiate it from an unenforceable promise?
Write a small paragraph identifying a few key characteristics of option contracts.
When you comment on your peers’ responses, make sure to point out any characteristics that you think they have omitted.

Answer 1

In a normal option contract, the merchant consents to hold an offer open for a specific period of time. A potential purchaser needs to give the dealer some installment in return. At the end of the day, in an option contract, the merchant is consenting to keep the "option" open for the buyer.
Options contracts are mostly connected with the financial markets, where a party may want the option to buy a stock at a specific cost for a set timeframe.
By taking a specific sum of cash in return for this option, the seller has bartered away their entitlement to deny the offer. It's critical to call attention to the fact that , nonetheless, the party purchasing the option is under no commitment to really exercise this option and buy the stock, since the individual in question just bought the option to do as such.

These sorts of agreements are additionally very common in real estate sector as well, where it might take some time for an expected purchaser to direct a full examination of the property and secure financing, among different advances. For this situation, the vendor and the imminent purchaser may concede to a specific sum, for instance, yet the purchaser needs to meet with her bank before completely submitting. On the off chance that the purchaser consents to the terms within the assigned time span, at that point a contract is entered into for the arrangement.

The option lapses toward the finish of the period expressed in the agreement, whether or not the purchaser invokes the option.

An options contract is legally enforceable because the buyer of the contract is paying a sum of money to the seller of the contract to have that right and it has all elements involved in a valid contract like offer, acceptance, consideration , mutuality etc.