Can an offeree reject, then accept, an offer contained in an option contract? Forum

[Cavalier-336]

Offeror and Offeree enter into an option contract whereby Offeree pays $1,000 to Offeror to keep offer open for a period of two weeks (the offer is a car for $50,000)

On day 5, Offeree telephones Offeror and rejects the offer.

After that rejection, does Offeree still contain the power of acceptance? It appears that Offeree would since Offeree paid $1,000 to keep the offer open for two weeks.

[cnk1220]

I think yes b/c he paid consideration $$$ to keep it open so it's an option K so even if he says I don't want it he still has to the end of the offer period to accept.

Although I don't understand the reasoning/why or why these people can decline and then be like no jk I want it but at this point idc to know why either I just want to pick the right answer. Also don't know why the people in MBE land are still relying on snail mail to accept a K like this is 1976 and nobody has email but that's a different story...

[jumbocolumbo]

Yes, he retains the power of acceptance

[Cavalier-336]

Thank you everyone.

I agree to accept that as the law, but you must admit it is logically inconsistent with contract principles.

The option contract is viewed as one party promising to hold open his offer for a fixed period of time. This SHOULD NOT mean that that the other party receives super powers to where he cannot reject and thus terminate his power of acceptance.

http://scholarship.law.edu/cgi/viewcont ... =lawreview

As the above critic puts it, an option contract is "irrevocable, NOT irrejectable."

[TenaciousJ]

Don't get tripped up by a question that combines the mailbox rule and an option contract. Mailbox rule does not apply to option contracts, so acceptance must be received by the offeror before the option expires or he loses power of acceptance regardless of when it was mailed. I've seen that trick a couple of times.

[kellyfrost]

Has anyone seen a similar situation or issue come up in real life?

[TheJuryMustDie]

Offeror and Offeree enter into an option contract whereby Offeree pays $1,000 to Offeror to keep offer open for a period of two weeks (the offer is a car for $50,000)

On day 5, Offeree telephones Offeror and rejects the offer.

After that rejection, does Offeree still contain the power of acceptance? It appears that Offeree would since Offeree paid $1,000 to keep the offer open for two weeks.

The Offereee retains the ability to accept within the option period to the extent that that the offeror hasn't acted/relied on the offeree's rejection.If the offeree has affirmatively rejected the offer and the offeror relies on such rejection to his detriment, rejection will be deemed effective regardless of the option nature of the contract. (Think promissory estoppel).

[zhenders]

I agree to accept that as the law

Good idea.