ContractsIntermediateDelaware Exam

In Delaware, what is 'consideration' for an option contract to be binding?

ANo consideration is ever needed at all; option contracts are always fully binding the instant they are signed, as a general rule
BSome amount of consideration (money, services, or other value) must be given to the seller by the buyer to keep the option openCorrect
COnly nominal consideration ($1) is required by law
DConsideration must equal 1% of the property value

Why Some amount of consideration (money, services, or other value) must be given to the seller by the buyer to keep the option open Is Correct

Answer B: Some amount of consideration (money, services, or other value) must be given to the seller by the buyer to keep the option open

An option contract requires consideration (payment) from the buyer (optionee) to the seller (optionor) to keep the option open. Without consideration, the option is merely an offer that can be revoked at any time.

Exam Tip: Contracts

Contract questions frequently test the essential elements required for a valid contract. Remember: competent parties, mutual consent, lawful object, and sufficient consideration. Watch for void vs. voidable distinctions.

Key Contracts Terms in This Question

Option Contract

A contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.

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