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An unexercised option lapses of itself at the end of its period

A worked RES examination question on option to purchase, from our Paper 1 bank — with the rule it turns on, and why each of the four options is right or wrong.

Paper 1Lesson 6Option to purchaseFree — no sign-up

The question

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?

  1. A. The option lapses of itself and the seller need do nothing further about it at all.
  2. B. The option continues until the seller serves written notice on the buyer ending it.
  3. C. The option continues indefinitely until one or other of the parties brings it to an end.
  4. D. The option converts automatically into a binding contract once the period has expired.

The answer, and why

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.

More on Option to purchase

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