Center for Contract and Economic Organization
The Charles Evans Gerber Transactional Studies Center
Most contractual arrangements are either structured as options or include options as important elements. As a result, many of the major doctrines of contract law effectively operate to create or to set the terms of such options. For instance, it has long been recognized that a contract that is enforceable only through monetary liability operates in practice as an option, because as a legal matter the promisor retains the power either to perform or to breach and pay damages. Similarly, the doctrine of promissory estoppel, which attaches liability to precontractual statements in cases where they are reasonably relied upon, effectively grants an option to the relying party to enforce the promise or not as she finds convenient. Similar options arise where contracts are voidable- but not void-for reasons of mistake, lack of capacity, or fraud.
Avery W. Katz,
The Option Element in Contracting,
Va. L. Rev.
Available at: https://scholarship.law.columbia.edu/faculty_scholarship/606