Question

Baird (optionor)gave Dole (optionee) an option to buy a piece of property for 6 months for $300,000. Dole gave Baird $150 for the option. Was this a valid option?

Answer 1

Answer:

Yes, it is a valid option.

Explanation:

In order for a purchase option to be valid, it must include valuable consideration, the price must be set and there must be a specific time period during which the option is valid.

In this case, this option met the 3 requirements:

1. the $150 is a valuable consideration, even though the amount is very low, it was agreed between the two parties
2. the price was set at $300,000
3. the time period is 6 months