Contract for the Grant of a Compliant Option to Purchase

• Main Author: SEE, Alvin W. L.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2015
• Subjects: Property law; contract law; Singapore; Contracts
• Online Access: https://ink.library.smu.edu.sg/sol_research/1734
• Institution: Singapore Management University

An agreement for the sale and purchase of real property often begins with an option to purchase ("OTP"). Usually, upon agreeing on the purchase price, the vendor will grant the purchaser an OTP in return for an option fee. During the specified option period, the vendor is bound to keep the property for the purchaser. This affords the purchaser an opportunity to reconsider his or her decision to purchase the property and time to source for financing for the purchase. If the purchaser decides to proceed with the purchase, he or she will exercise the OTP by the prescribed method and within the option period, upon which the vendor is obliged to complete the transaction. In Woo Kah Wai v Chew Ai Hua Sandra [2014] 4 SLR 166, the issue before the Court of Appeal was whether the vendors were contractually obliged to grant an OTP containing terms demanded by the purchaser in the first place. To determine whether a contract to this effect has arisen, it is necessary to examine the method by which the OTP was sought to be procured. This case provides the opportunity to consider how basic principles of contract formation apply in the process of procuring an OTP, and also how subtle legal distinctions between the different methods of procuring an OTP have bearing on practical matters.