Question 1
A buyer exercises an option and completion is set for eight weeks later. He asks his salesperson whether either side may still withdraw during that period if circumstances change, having heard that nothing is truly settled until completion.
Which statement is correct?
- A. Either party may withdraw provided the deposit changes hands in the right direction.
- B. Either party may withdraw before completion provided reasonable notice is given first.
- C. The buyer may withdraw but the seller may not, the option being for the buyer's benefit.
- D. Neither party may now withdraw voluntarily, a binding contract having come into being.
Show the answer and full explanation
Answer: D
The rule. Once the option has been exercised the parties are in a binding contract of sale. Neither may withdraw voluntarily.
Why D is correct. Neither may withdraw.
The other options.
- B permits withdrawal on notice
- C permits it to the buyer alone
- A permits it against payment. Each treats the pre-completion period as still provisional.
Exam note. Exercise is the moment the arrangement becomes mutual. Completion merely performs it.
Once the option has been exercised the parties are in a binding contract of sale →
Question 2
A salesperson is asked by a first-time seller what happens to an option to purchase if the buyer simply lets the fourteen days run out without exercising it. The seller has heard nothing from the buyer since the option was granted, the buyer's agent has stopped returning calls, and the period expires at the end of the week. She wants to know whether she must serve some form of notice, whether she needs the buyer's agreement to treat the matter as closed, and how soon she may put the property back on the market without exposing herself to a claim.
Which statement is correct?
- A. The option lapses of itself and the seller need do nothing further about it at all.
- B. The option continues until the seller serves written notice on the buyer ending it.
- C. The option continues indefinitely until one or other of the parties brings it to an end.
- D. The option converts automatically into a binding contract once the period has expired.
Show the answer and full explanation
Answer: A
The rule. An unexercised option lapses of itself at the end of its period. The seller need serve nothing and need not obtain the buyer's agreement.
Why A is correct. It lapses automatically.
The other options.
- B requires written notice
- C requires an election by one of the parties
- D converts it into a binding sale.
Exam note. An option is a right with a deadline. Missing the deadline ends it without further step.
An unexercised option lapses of itself at the end of its period →