There are many official contracts today, and one of the lesser-known ones is an option contract. An option contract is where an individual agrees to keep an offer open for a specific period. In turn, the individual must gain something from the options offer. An option contract is when an individual keeps the option open for a person.
Options contracts are often used in the financial services industry. For example, this type of contract allows a seller to provide an option for the buyer to buy a stock at a specific price for a set time.
Options contracts are also common in real estate. An option contract becomes useful when a potential buyer takes a while to inspect the property thoroughly and secure the funds to pay for it. Should this be the case, the seller and the buyer may agree on a specific amount in which the buyer must need to meet with the bank before fully committing. The option will expire at a particular period of time whether or not the buyer gets the option.
Examples of Option Contracts
There are various types of option contracts such as:
- Lease option contract – It is a type of lease agreement that lets a person rent a residential property and purchase it once the rent period is up. It works by granting the option to the tenant to buy or renew the lease.
- Contract renewal – Most contracts will have an option to renew a contract, which is common for services that are done periodically, such as annual subscriptions.
- Keep Offers Open – It is common in the sale of goods in which the selling party will accept money to keep the offer open.
Exercising an Option
An individual can exercise the option once it reaches the specific amount of time indicated in the contract. For example, in a lease option contract, a tenant can also exercise the option to purchase the property when the lease period is up.
Options contracts will include a deadline, and if the option isn’t exercised past the deadline, that forfeits the right of an individual the agreed option.
If you’re planning to have an option contract, it’s best to have a lawyer draft and review it for you. An option may be agreed upon orally, but having it on written paper is essential. That’s why you need to find a good contract lawyer.
In Brisbane, there are a lot of contract lawyers that you can consult with for an option contract. There are plenty of law firms that you can find, which can be a bit overwhelming, especially if it’s your first time to have an option contract drafted.
One of the best ways to find a lawyer amid the many contract lawyers out there is to do your research. It also helps to have basic knowledge of what an options contract is to guide you in the process.
An option contract is basically a contract that provides an option to an individual to be fulfiled within a given time. It is commonly used in the financial and real estate industries.
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