Case 13 - options given without charge

Summary

Case

Realty, a company dealing in land, was looking for a site for a new building. It told Simon it might be interested in purchasing a lot that he owned, but that it would need time to conduct a study. Without charging anything, Simon promised that he would sell his land to Realty for a fixed price (a) if Realty chose to buy it at any time within the next month, (b) if Realty chose to buy it at any time within the next two years, or (c) when Realty completed its study of the land, unless, in its sole and absolute judgment, Realty thought the economic prospects were unsatisfactory, in which case Realty had the option to withdraw. Realty accepted. Is the promise binding? Does it matter if therewas an abrupt rise in the market price, and Realty wants to buy the land, not for a building, but for immediate resale?

Discussions

FRANCE

We note at the outset that it does not matter if, because of an abrupt rise in the market price, Realty wants to buy the land, not for building, but for resale unless the purpose for which the land is bought was an essential element of the contract. We will not examine that possibility in any detail. Suffice it to say that, had the purpose of the sale been one of the determining factors which induced Simon to contract, he would need to prove that such a condition belonged to the parties' agreement (dans le champ contractuel).