An Option Agreement is best described as which type of contract?

An Option Agreement is best described as which type of contract?

• A. Unilateral agreement that sets the sale price/terms & gives the buyer the option to not buy
• B. Bilateral agreement requiring both parties to perform
• C. A lease with option to purchase
• D. A contract that transfers ownership immediately

Answer: (A)

An Option Agreement is a unilateral contract. In this setup one party promises to keep an offer open and to sell if the option holder chooses to exercise it, while the other party has the right but no obligation to buy. The option holder can decide later to purchase at the fixed price or terms within a set period, but is not required to do so. The seller’s obligation to sell (and the price/terms) only comes into play if the option is exercised, often supported by some consideration paid for the option. This makes it a one‑sided promise at the outset, not a mutual commitment from both sides. It isn’t describing a bilateral contract, where both sides are bound to perform from the start. It isn’t simply a lease with an option to purchase, which combines a lease with a separate right to buy rather than the pure option grant itself. And it doesn’t imply immediate transfer of ownership; ownership only occurs if the option is exercised and a separate purchase closes.

An Option Agreement is a unilateral contract. In this setup one party promises to keep an offer open and to sell if the option holder chooses to exercise it, while the other party has the right but no obligation to buy. The option holder can decide later to purchase at the fixed price or terms within a set period, but is not required to do so. The seller’s obligation to sell (and the price/terms) only comes into play if the option is exercised, often supported by some consideration paid for the option. This makes it a one‑sided promise at the outset, not a mutual commitment from both sides.

It isn’t describing a bilateral contract, where both sides are bound to perform from the start. It isn’t simply a lease with an option to purchase, which combines a lease with a separate right to buy rather than the pure option grant itself. And it doesn’t imply immediate transfer of ownership; ownership only occurs if the option is exercised and a separate purchase closes.