In a contract, an option is a privilege, a right of election to exercise a privilege. Venture Stores, Inc. v. Pacific Beach Co., Inc., 980 S.W.2d 176 (Mo. Ct. App. 1998). A common example for an option would be in a lease situation in which the tenant has the legal option to extend the term of the lease for another year provided he or she complies with certain terms and conditions. Another common example exists in sporting contracts in which a team has the option to extend a player’s contractual obligation with the team after a certain amount of years. Like with all contracts, an option contract must be supported with adequate consideration.
How long does one have to exercise an option if the contract is silent on this point? Missouri courts find an implied condition that the option must be exercised within a reasonable time under the circumstances. Kershner v. Hurlburt, 277 S.W.2d 619, 624 (Mo. 1955). Therefore, it must be taken on a case by case basis.
And as with all contracts, a breach of an option contract can give rise to either legal damages — money awards — or equitable relief such as specific performance.
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