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What Are Options Contracts?

As a Florida business owner, you will enter into countless contracts as necessary to successfully run your company. Both as a seller and buyer of goods and services, you will confront both written and oral agreements covering a wide range of transaction. One type of contract that may be unfamiliar to you, but which offers multiple advantages depending on your business objectives, is the “options” contract. A Florida contract law attorney can tell you more about whether an options contract is right for your situation, but you may find some general information useful.

Overview of Options Contracts

The general operation of an options contract is that the seller of an item or interest makes an offer to a buyer, and agrees to keep the offer open under certain circumstances. For example, the seller leaves the transaction as an option for the buyer:

  • Until a certain date;
  • Until the price of the asset reaches an agreed upon price; or,
  • Until some other trigger event occurs.

As a result of receiving the benefit of the option offered by the seller, the buyer must give the seller something of value as consideration.

Why Consider an Options Contract

There are multiple benefits for any organization to transact business through an options contract, but these agreements are most often used for deals involving stocks, other types of securities, and real estate purchases. Whether you are the buyer or seller, you may consider using an options contract for a transaction in such scenarios as:

  • Financial Services Industry: Options contracts can be used by those in the securities industry to leverage their stock positions, as a means of testing the waters. Traders can mitigate risk of a full purchase until certain variables become more solid.
  • Employers Who Offer Benefits to Employees: As an employer, you may want to provide perks to your employees as part of a comprehensive benefits package. Through an options contract, you can offer your company stock for purchase by employees at a reduced price. Both parties gain the advantage if the price goes up.
  • Real Estate Transactions: When purchasing real estate, the buyer will usually want to conduct a full inspection and secure funding in advance. You can use an options contract to secure your interests in the transaction, while completing these important tasks. An options contract can also serve as a foundation for purchases of multiple parcels, where the buyer wants to improve a single tract initially before taking on the entire piece of real estate.

Consult with a Florida Contract Law Attorney About Options Contracts

Like any agreement, options contracts can be complex, especially when you are focusing on running your business. It is wise to retain an experienced business litigation lawyer to assist with negotiating the terms and conditions, drafting the necessary documents, and protecting the interests of your company. If you are considering an options contract and want to know more about the legal implications, please contact Clearwater Business Law in Florida at (727) 785-5100. We can schedule a consultation to review your circumstances and tell you more about how to reach your goals.