BY JOHN GOUDY
The Option Agreement Trap
iStock/ FedotovAnatoly; mevans
Signing could mean you’re all out of options
I
f you’re familiar with professional team sports, you may have heard the terms “team option,” “player option” and “mutual option.” When a player’s contract includes a team option, the team gets to choose whether to exercise the option to keep the player for another season beyond the guaranteed years of the contract. With a player option, it’s the player who decides whether to exercise the
option and stay for another year or whether to become a free agent (in which case the player can choose to resign with the same team or sign with another team). With a mutual option, both the team and the player must exercise the option in order to extend the stay of the player under the existing contract.
Option agreements are common in pro sports. They’re also common when it comes to land deals and they work in much the same way. Think of the land as a team and the landowner as the team ownership. The player in this scenario is the person or company looking to use the land, whether by way of leasing or purchasing it.
“By signing the option, you have effectively signed the agreement and accepted the project.”
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