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This document summarizes the key differences between an option contract and a right of first refusal.
(1) An option contract requires consideration to be enforceable, while a right of first refusal can be part of another contract. (2) If breached, an option contract allows damages or specific performance lawsuits, while a right of first refusal only allows damages lawsuits unless it was part of another contract. (3) A right of first refusal can be cancelled if the third party buyer acted in good faith, while an option contract cannot be cancelled without the consent of both parties.
This document summarizes the key differences between an option contract and a right of first refusal.
(1) An option contract requires consideration to be enforceable, while a right of first refusal can be part of another contract. (2) If breached, an option contract allows damages or specific performance lawsuits, while a right of first refusal only allows damages lawsuits unless it was part of another contract. (3) A right of first refusal can be cancelled if the third party buyer acted in good faith, while an option contract cannot be cancelled without the consent of both parties.
This document summarizes the key differences between an option contract and a right of first refusal.
(1) An option contract requires consideration to be enforceable, while a right of first refusal can be part of another contract. (2) If breached, an option contract allows damages or specific performance lawsuits, while a right of first refusal only allows damages lawsuits unless it was part of another contract. (3) A right of first refusal can be cancelled if the third party buyer acted in good faith, while an option contract cannot be cancelled without the consent of both parties.
• Ang Yu vs. CA (en banc) • Equatorial Realty vs. Mayfair • PNOC vs. Keppel • Ang Yu vs. CA • Sanchez vs. Rigos • Rosencor vs. Inquing • Vasquez vs. CA • Carceller vs. CA
Must have all three (3) requisites for Subject Matter
and four (4) requisites for Price
In an option contract, the first thing to look at is In a right of first refusal, the first thing to look at is whether or not there is a separate whether or not it is a part of a contract. consideration.
(1) No separate consideration (1) Part of a contract
• Withdraw before acceptance or if an • Remedies in case of breach: acceptance has been made, before the o Rescission of the sale between offeror knows of such fact by the grantor and the third-party communicating withdrawal to offeree buyer (results to restitution) • Liability only attaches when withdrawn o Specific performance against the arbitrarily owner (to sell it to you under the o Damages – Art. 19 CC same terms), only if it is an obligation to give Exericse of option can result to either a contract o (Technically, there would be to sell or contract of sale DEPENDING on the damages in either case – Art. wording of the contract 1191) • PNOC vs. Keppel: An option unsupported by a separate consideration stands as an Exception: No rescission when the third-party was unaccepted offer to buy (or to sell) which, in good faith (Rosencor vs. Inquing) when properly accepted, ripens into a • Only damages against the grantor of the contract to sell. right of first refusal (2) With separate consideration (2) Not part of a contract • Withdrawal during option period -> breach • If there is a separate consideration of contract o Treat it as if it is part of a contract; • Remedies in case of breach see (1) (Note: Atty. Gulapa said o Damages, because of a breach of this is only an 8/10 answer) contract (Ang Yu vs. CA) o “I give that you may do” o Specific Performance – if an • If there is no separate consideration obligation to give (Carceller vs. o Remedy in case of breach: CA) § Damages – Art. 19 CC § Inspect the wording of (Ang Yu vs. CA) the contract. If it is an obligation to do, there can be no specific performance.