Also known as: purported considerations · sham consideration
Written by attorneys · grounded in primary & secondary sources — see below
A nominal sum recited in a signed writing as consideration for keeping an offer open. The recital satisfies formal requirements for an option contract even when the sum is not actually paid or bargained for.
Rebecca mailed a signed letter to Pioneer Land offering a five-year warehouse lease at fifteen thousand dollars per month. The letter recited one hundred dollars as consideration for holding the offer open sixty days. Pioneer Land began sale negotiations on its current facility without paying the sum. The recital rendered the offer irrevocable for the stated period.
A developer signed a written proposal granting a buyer an option to purchase land. The document recited twenty-five dollars as consideration for irrevocability over ninety days. The buyer incurred planning expenses but never paid the sum. The recital alone made the offer binding as an option contract.
Select any source to read its text and confirm it supports the definition.
No. The signed writing reciting purported consideration satisfies the rule even when the nominal sum is never paid or tendered. Courts treat the recital itself as sufficient to create the option contract.
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No. The rule focuses on the formal elements present at formation rather than later market shifts. The offer remains irrevocable for the stated period once the signed writing recites purported consideration and proposes fair terms.
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Yes. The same formal requirements govern option contracts in commercial contexts such as film distribution rights and construction bids. The signed writing reciting purported consideration creates the option regardless of subject matter.
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