§45. OPTION CONTRACT CREATED BY PART PERFORMANCE OR TENDER
(1) Where an offer invites an offeree to accept by rendering a
performance and does not invite a promissory acceptance, an option contract is created when the
offeree tenders or begins the invited performance or tenders a beginning of it.
(2) The offeror's duty of performance under any option contract
so created is conditional on completion or tender of the invited performance in accordance
with the terms of the offer.
a. Offer limited to
acceptance by performance only. This Section is limited to cases where the offer does not invite a promissory acceptance. Such an offer
has often been referred to as an "offer for a unilateral contract." Typical illustrations are
found in offers of rewards or prizes and in non-commercial arrangements among relatives and friends....
d. Beginning to perform.
If the invited performance takes time, the invitation to perform necessarily includes an invitation to begin performance. In most
such cases the beginning of performance carries with it an express or implied promise to
complete performance. See §62. In the less common case where the offer does not contemplate or invite
a promise by the offeree, the beginning of performance nevertheless completes the
manifestation of mutual assent and furnishes consideration for an option contract.
e. Completion of
performance. Where part performance or tender by the offeree creates an option contract, the offeree is not bound to complete
performance. The offeror alone is bound, but his duty of performance is conditional on completion of the
offeree's performance. If the offeree abandons performance, the offeror's duty to perform never
f. Preparations for
performance. What is begun or tendered must be part of the actual
performance invited in order to preclude revocation under this Section.
Beginning preparations, though they may be essential to carrying out the contract or to
accepting the offer, is not enough. Preparations to perform may, however, constitute justifiable
reliance sufficient to make the offeror's promise binding under §87(2).
In many cases what is invited depends on what is a reasonable
mode of acceptance....The distinction between preparing for performance and beginning
performance in such cases may turn on many factors: the extent to which the offeree's conduct is
clearly referable to the offer, the definite and substantial character of that conduct, and the extent to
which it is of actual or prospective benefit to the offeror rather than the offeree, as well as the terms of
the communications between the parties, their prior course of dealing, and any relevant usages of trade.
§87. OPTION CONTRACT
(1) An offer is binding as an option contract if it
(a) is in writing and signed by the offeror, recites a purported
consideration for the making of the offer, and proposes an exchange on fair terms
within a reasonable time; or
(b) is made irrevocable by statute.
(2) An offer which the offeror should reasonably expect to
induce action or forbearance of a substantial character on the part of the offeree before
acceptance and which does induce such action or forbearance is binding as an option contract to the
extent necessary to avoid injustice.
Subsection (2) states the application of §90 to reliance on an unaccepted offer,
with qualifications which would not be appropriate in some other
types of cases covered by §90. It
is important chiefly in cases of reliance that is not part
performance. If the beginning of performance
is a reasonable mode of acceptance, it makes the offer fully
enforceable under §45 or §62; if not, the
offeror commonly has no reason to expect part performance before
acceptance. But circumstances
may be such that the offeree must undergo substantial expense,
or undertake substantial
commitments, or forego alternatives, in order to put himself in
a position to accept by either promise
or performance.... But the reliance must be substantial as well
Full-scale enforcement of the offered contract is not
necessarily appropriate in such cases.
Restitution of benefits conferred may be enough, or partial or
full reimbursement of losses may be
proper. Various factors may influence the remedy: the formality
of the offer, its commercial or social
context, the extent to which the offeree's reliance was
understood to be at his own risk, the relative
competence and the bargaining position of the parties, the
degree of fault on the part of the offeror,
the ease and certainty of proof of particular items of damage
and the likelihood that unprovable
RESTATEMENT (SECOND) OF CONTRACTS
damages have been suffered.