This lesson deals with option contracts and firm offers, both of which result in irrevocable offers. The existence of an offer is often an essential element of the bargaining process. Although most offers are revocable, sometimes the offeree's power of acceptance is irrevocable through the formation of an option contract. This lesson will look at formation of an option contract through part performance or tender, a signed writing supported by consideration, statutory firm offers and detrimental reliance.
On completion of the lesson, the student will be able to:
1. Define an "option contract."
2. Describe how an option contract is formed.
3. Give an example of a "firm offer" under UCC § 2-205.