Humble Oil & Refining Co. v. Westside Investment Corp

Brief Fact Summary. The Plaintiff, Humble Oil & Refining (Plaintiff), after paying valid consideration, entered into an option contract with the Defendant, Westside Investment Corp. (Defendant), for the purchase of land. Per the terms of the contract, Plaintiff had the option to purchase by giving notice at any time prior to 9:00 a.m., on June 4, 1963. Plaintiff gave timely notice of its intent to purchase the property and asked that some terms in the contract of sale be amended. Defendant contended that this request for amendment was tantamount to a conditional acceptance, which is also considered to be a rejection of an offer on its face.

Synopsis of Rule of Law. When valid consideration is given for an option to purchase (i.e. option contract), the contract is irrevocable for as long as the option is available.

Facts. On May 2, 1963, within the terms of its option contract, the Plaintiff sent a letter to the Defendant, along with payment manifesting its intent to exercise its option to purchase an agreed-upon parcel of land. In its letter, Plaintiff additionally attempted to amend the Contract of Sale to provide that Defendant would extend utility lines to the property, prior to the date of closing. On May 14, 1963, Plaintiff sent another communication emphasizing that their exercise of the option was not qualified by the amendments proposed in their letter of May 2, 1963, and that they still wished to exercise the option. Defendant later refused to honor the option, stating that by making a qualified acceptance, Plaintiff had rejected their offer. The trial court granted Summary Judgment; Plaintiff appealed.

Issue. The prominent issue in this case is whether an option is terminated by a qualified acceptance.

Held. Reversed.
The Court held that Plaintiff was entitled to specific performance based on their exercise of the option contract. While a change in terms in response to an offer to sell would be a conditional acceptance, tantamount to a rejection, a change in terms to the same offer does not vitiate the option to purchase. Because Plaintiff gave adequate consideration for the option contract, it was his to exercise until the end of its term. The change in terms included in his letter of May 2, 1963, was a condition to the contract to sell, not a condition to the option for which he had already given consideration.

Discussion. When adequate consideration is given, an option contract is not revocable until its term has expired.