The agreement sets out a timetable for the meaning of communications and assumptions. If the buyer does not accept a notification of offer during the period defined in the contract, the seller is free to sell the land to another buyer at the same price (or at a higher price). A buyer could therefore conclude an option contract while applying, for example, for a building permit for the land. If the buyer obtains a satisfactory building permit during the option period, he can decide whether or not to exercise the option and acquire the land. Unlike a conditional contract, she does not need to buy the land simply because she has obtained the building permit. This would be preferable if the buyer does not yet have financing or if he has alternative land for which he has also applied for a building permit. In order to minimise this risk, where flexibility is necessary and no significant time limit can be set at the time of conclusion of the contract, the parties should provide for provisions that operate late in the agreement between the parties. An option agreement can also be an agreement signed between an investor who wishes to open an option account and their brokerage firm. The agreement is the verification of an investor`s level of experience and knowledge on the various risks associated with the negotiation of option contracts. It confirms that the investor understands the rules of the Options Clearing Company (OCC) and that they do not present an inappropriate risk for the brokerage firm. An investor should understand the option opening document that highlights different option terminologies, strategies, tax implications, and unique risks before the broker allows the investor to trade options.
An option agreement differs from a conditional contract in that neither party is required to complete the sale unless the option is exercised. Under the terms of an option agreement, it is up to the buyer to decide whether they actually wish to conclude the purchase at some point in the future (but during the period indicated in the option agreement). As a result, the Commercial Court decided that, although the parties wanted the option agreement to be binding, it was not applicable due to uncertainty, given that the delivery dates were not agreed and left for the future agreement between the parties. The Court also found that, if it had not reached that conclusion, it would have found that the defendant`s conduct assimilated to a waiver of the contract and that it was liable to the applicant. The Commercial Court examined the principles applicable to the agreements to be concluded in the main judicial appel appelle authorities of Mamidoil-Jetoil Greek Petroleum and B J Aviation. One of the fundamental principles that flows from these decisions is that if the parties have agreed on an essential matter in the context of an effective construction of the contract (for example. B the price in a contract for the sale of goods or the provision of services) in the future, the contract is probably unenforceable due to uncertainty. The decisions are also decisive for the argument that, when it is satisfied that the parties intend to implement their agreement, it should endeavour to achieve that intention by the construction or implication of a provision. However, the implied provision must not be contrary to the Tribunal`s conception of explicit contractual conditions.
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