The option to conclude a contract is a special construction, fixed in the legislation relatively recently (in 2015). Business entities often have some difficulties in its application. Let us further consider in detail what constitutes an option to conclude a contract. Examples of using the design will also be given in the article.
General information
The option is used to formalize the purchase and sale of the right to conclude a transaction (transactions) on the terms established in it. In other words, one participant provides another opportunity in the future to conclude one or more contracts. As a rule, the transaction is onerous.
For example, several contracts for the supply of products on terms agreed by the parties will be signed at the time of acceptance of the offer. But for the right to conclude such transactions, the potential buyer paid the seller this right.
It is worth saying that for the business sector, the option to conclude a contract is not a new design. This model has been quite actively used before. However, due to the lack of official regulation, the model was often considered by the courts as a contract under a condition or as a preliminary agreement. Accordingly, the application of such approaches entailed certain consequences for the parties.
Offer
This concept is disclosed in article 435 of the Civil Code. The offer is a proposal addressed to one or several entities, expressing quite clearly the intention of the sender to consider himself a party to a contract with the addressee, if the latter accepts this proposal.
The offer must contain the essential terms of the transaction.
The offer binds the sender with an obligation from the moment it is received by the addressee. If the person decides to withdraw the offer, he must send a corresponding notice to the recipient.
If the notice of withdrawal is received earlier or together with the offer, the offer will be considered as not received.
Acceptance
Under it is understood the response of the subject to whom the offer is addressed, on the acceptance of the proposal. Consent must be unconditional and complete.
As indicated in Article 438 of the Civil Code, silence is not regarded as acceptance unless otherwise provided by law, the relationship between the sender and the addressee, or custom.
The fulfillment by the subject who received the offer, within the time period specified in the offer, of actions to fulfill the conditions specified therein will be considered an acceptance, unless otherwise provided by law, other regulatory acts or is not enshrined in the offer itself. For example, it may be the shipment of products, the performance of work, the provision of services, the transfer of the corresponding amount, etc.
Option Action Scheme
In general, the model looks like this:
- The parties sign an option to conclude an agreement containing an offer.
- The option holder pays the provider remuneration (unless otherwise specified in the agreement). It is worth noting that the price, according to general rules, is not included in the list of essential conditions of the option . However, it is advisable to indicate the value of the transaction or the gratuitousness of the transfer. The fact is that the retribution of the contract is supposed to Art. 429.2 of the Civil Code of the Russian Federation . When considering a dispute, the court will calculate the cost according to the rules of article 424 of the Code.
- Acceptance (acceptance) of the proposal by the holder.
- Registration of the main contract.
Of course, there is a risk of rejection of the offer. In such cases, payment of the option is provided.
Model advantage
According to the courts, the dignity of the option to conclude a contract is that the acquirer receives the power, but not the obligation to complete a specific transaction in the future. In this case, the second party must sign an agreement at the request of the acquirer of the option. For this, the first is the reward.
Contract Option: Sample
According to the requirements established by law, and also taking into account the practice in the business sector, the following conditions can be formulated to be included in the option:
- Names of parties and other information that allows them to be uniquely identified. Such information, for example, includes TIN, PSRN for organizations or passport data for citizens.
- Subject of the contract. It is the right to conclude a contract in the future. Along with this, the conditions are obligatory provided on the basis of which it is subsequently possible to unambiguously determine the subject of the upcoming transaction.
- Validity. If the parties do not determine the period during which the option will be valid, then by default it is considered equal to the year.
- Terms and conditions of payment of premiums (remuneration) or an indication of the gratuitous transfer of rights.
- Conditions under which the right to accept an offer can be exercised. Taking into account the existing classification of contracts and the inconsistency of judicial practice in qualifying conditional transactions, the parties can associate the right to accept the proposal with the onset of certain circumstances, including those depending on their will. Indication of these conditions in the agreement is at the discretion of the participants.
- The condition on the admissibility of including payment for the option in the amount of the premium under the main contract. For example, if the participants do not agree on another, the option holder will not be rewarded if he does not accept the offer.
- Admissibility of cession.
- Additional terms.
- Details of the parties and their signatures.
Decor
In accordance with the requirements of the law, the form of an option to conclude a contract is similar to the form for processing a future transaction.
If it must be concluded in writing, then the option is issued in the same way. If the main contract must be certified by a notary, then the agreement in question is also certified.
For example, when buying and selling a share in a LLC, an option to conclude a contract is notarized. In this case, the contract for the acquisition of several shares is drawn up as a single document. If we consider a sale transaction, then the legislation directly indicates the possibility of certification of the offer first (including the option contract ), and then the acceptance. The relevant provisions are enshrined in paragraph 11 of Article 21 of the Federal Law "On LLC".
Legislation does not require state registration of an option. The fact is that formally the procedure does not belong to the category of transactions. It is regarded as a legal act recognizing the conclusion of a contract.
Option and prior agreement
The main differences between these documents include:
- Subject. The fact of concluding a preliminary contract implies the obligation of the parties to draw up a basic agreement in the future. The option, in turn, provides one of the participants with the possibility of accepting (unilateral expression of will) to give effect to the main contract.
- The moment the obligation arose. During the execution of the preliminary agreement, the obligation to conclude the main contract appears upon direct signing. With an option, it arises only after accepting the offer.
- The number of parties required. The preliminary agreement is bilaterally binding. With an option, the obligation to draw up a contract rests solely with the provider. The holder may not accept the offer. The corresponding consequences follow from this. In case of preliminary agreement, in case the participant evades fulfillment of the obligation, the second one may send a lawsuit to the court forcing him to sign the contract. With an option after acceptance, the contract will be executed automatically.
- The possibility of cession. In the preliminary contract it is not provided. Cession for an option is fixed at the legislative level.
- Payment for the possibility of concluding a contract. As a rule, preliminary agreements are free of charge. Options provide a certain fee for granting rights.
Agreement option
It is another model in which the parties make the fulfillment of an obligation dependent on the availability of a claim sent by one of the participants. Normally, such a design is regulated by Art. 429.3 Civil Code.
An option contract may stipulate that a claim will be considered automatically made upon the occurrence of certain circumstances. In the agreement, the parties must establish the term for its direction. If the period expires and the claim is not presented, the contract will be considered terminated.
It must be said that the option agreement is not included in the classification of contracts as a separate type. On its basis, absolutely any transaction can be executed: leases, sales, supplies, and so on.
An example is the agreement on the sale of an apartment, within which the deadline for sending a request for state registration of transfer of rights is one year from the date of signing. If the period is skipped by one participant, the second returns the value of the property, and retains the option fee.
Special cases
These include agreements in which, in the case of a request, obligations are provided for:
- Payment of cash in accordance with a change in the value of the underlying assets or the occurrence of a circumstance defined as a basic asset.
- The acquisition or sale of securities, products, currencies, acting as an asset.
- The execution of the contract, which is a derivative instrument and forms the underlying asset.
Problem of choice
An option agreement and an option are distinguished by the fact that the former does not require signing the main contract. Of course, the obligation has already been established, and the contract entered into force from the moment of signing. However, its execution is postponed until certain circumstances or until the request is sent by the relevant participant.
At the same time, option and option agreement have a number of common features:
- Both agreements provide for the payment of a bonus for the right granted. Moreover, the law does not prohibit the parties from agreeing on a free transfer.
- When the contract is executed, the payment is not refunded, unless the parties have agreed otherwise.
- The fate of the main transaction is decided by one side.
It can be assumed that the agreement should be drawn up when the participants are confident in the possibility and necessity of the transaction, but it just needs to be postponed a little. An option can be considered rational if the counterparties admit that the transaction may not take place, although they do not want to miss the opportunity to conclude it on certain conditions.
For example, an agreement would be drawn up by the parties to the relationship if from the very beginning they agreed only on the probable conclusion of a transaction (for example, the purchase and sale of real estate), including under a suspensive condition (when the acquirer has the funds or he changes his place of residence etc.).
Option Termination
Its order of the parties to the relationship should be established in the text of the agreement. In addition, it is advisable to discuss the issue of returning the prize. If it is not regulated by the participants, the courts, as a rule, impose on the provider the obligation to return the fee, if the termination of the contract is due to his unfair performance of the accepted obligation.
If the provider refuses to perform (for example, in connection with the loss of interest in the main transaction), the courts are guided by the general rules for terminating the relevant type of contract. From the moment of acceptance of the irrevocable offer, which is present in the option, the main contract is recognized as concluded.
Cession
Legislation provides for the option of assigning rights to an option. However, its implementation is allowed even if the participants did not agree on the assignment. In the agreement, the parties may fix the inadmissibility of the assignment.
In practice, situations are possible when the option was concluded with one person, and the acceptance is sent to another entity.
The legislation does not establish any special rules for regulating the circulation of rights. Accordingly, the assignment must be guided by the general provisions on cession. According to Art. 385 of the Civil Code, the debtor (provider) must be notified of the change in lender.
If the event is notified by the original creditor, the debtor can immediately begin to fulfill the obligation. If the notice is received from a new person, then the provider must be provided with evidence of the assignment of rights. An agreement may be an agreement on the sale or alienation of the right to sign an option agreement.
Irrevocable offer
It is referred to in article 436 of the Civil Code. In accordance with the norm, an offer received by the addressee during the period provided for acceptance cannot be withdrawn unless otherwise specified in the proposal itself or if it follows from its substance or the conditions in which it was made.
The option to sign the contract provides for the issuance by one participant of the relationship of an irrevocable offer to another. Meanwhile, these legal acts have a number of differences. Among them, the following should be noted:
- In the usual issuance of an irrevocable offer, the provider does not expect to receive a fee. For an option agreement, retaliation is presumed (assumed).
- The appearance of the right to accept an offer under an option may be conditional on a suspensive condition. When issuing an offer, such an opportunity is very doubtful.
- Under the option agreement, organizational issues can be resolved, for example, the issuance of an offer and its adoption, timing, rules for the exchange of information, confidentiality, etc.
conclusions
The option to sign the contract is thus intended to consolidate the terms agreed upon by the parties on the possible conclusion of a certain transaction subsequently on the terms established in this option.
At the time of signing, one of the parties (the provider) is obligated to conclude an agreement. However, he will execute it only after acceptance by the second participant of the acceptance. The latter, in turn, can, but is not required to express his consent.
The option should contain conditions on the basis of which it would be possible to unambiguously determine the subject of the transaction, the completion of which is expected to be subsequently. The conclusion of the option is carried out in the form in which the main contract is signed.
In general, it must be said that this contractual design is very common in the business sphere. During the entire time of use by business entities, despite some difficulties, it has shown its effectiveness. After the structure was fixed at the legislative level, judicial practice in disputes related to options became more streamlined.