OPTION MONEY EARNEST MONEY

Consideration for the grant of the option Indicative of a contract of sale

Determine whether the grantor can
unilaterally withdraw the option within
the option of period
Considered down payment, an initial
payment of the price.




BIBLE BAPTIST SERRA
SAME SITUATION: a contract of lease with an embedded option
to buy
ADVANCE PAYMENT
of a certain amount
FORFEITURE OF RIGHT
There was a special provision, that
In case of failure to exercise the
option there would be forfeiture of
the improvements introduced by
the lessee
HELD
There was NO CONSIDERATION
DISTINCT FROM THE PRICE
THERE IS CONSIDERATION
SEPARATE FROM THE PRICE
The ADVANCE PAYMENT COULD
NOT BE CONSIDERED A
CONSIDERATION DISTINCT FROM
THE PRICE
SJP RATIO: this is somehow
faulty because If you are the
lessee, why will you pay in
advance if you are not being
given a bonus in the form of
the option to buy.
IF YOU HAVE A CASE OF LEASE
WITH AN EMBEDDED OPTION
THERE SHOULD ALWAYS BE A
CONSIDERATION.
RATIO:
We assume that lessee agree
to the terms and conditions of
the lease because of the
option, maybe it was factor in the
rental, maybe on penalties.
Although in Serra case, It was
very explicit on the forfeiture.










RIGHT OF FIRST REFUSAL OPTION
Does not provide the price or
cause

A COMPLETE OFFER
done only when there is a
decision on the part of the
grantor to dispose the
property. Prior to that nothing
can be done by the grantee.

You have the object to buy the
specific property at a specific price
at a specific period
That is in fact an offer
If its made into a contract then it
is an option contract
subject to enforcement when
an action speaks of specific
performance.