offer and acceptance Tag

Before explaining what a put and call option agreement is, we should firstly examine what a "contract" is.  In law a contract is formed when certain things happen. Two of the most important things that must happen is that there must be an offer by one party and an acceptance by the other.  Without this there is no contract.  There are other ingredients in a contract also such as:
  • intention to create a legal relationship
  • certainty of terms
  • consideration
For the purposes of this discussion the important two ingredients are:
  • offer and
  • acceptance
A put and call option agreement uses this basic contract law to ensure that a contract does not come into existence until some future time. This is a good example of how very old law can be used in innovative ways even today.