warranted only if the circumstances indicate that such was the intention of the parties.

Another legal provision that could apply if the market price rises is § 934 of the Civil Code. This provision gives a party the right to avoid a contract if the price paid (or received) is more (or less) than half the value of the goods bought, provided the party did not know their real value. The application of § 934 of the Civil Code, however, would be problematic as the disparity between the price and the value of the goods must exist at the moment that the contract granting the option is concluded.36

germany

In all three cases, the promise is not binding without compliance with the formalities for assuming an obligation to transfer real estate of § 313 of the Civil Code.37 The formalities are required to provide proof of the obligation and to caution the parties themselves because real property is regarded as an extremely important asset.

Because Realty can choose freely whether to buy or not, the contract in Case 13(a) is an option. An option is not deemed to be a gift. It is valid even if nothing is paid for it. Therefore the promise is binding. It does not matter if the market price has risen (Case 8(a)).

The question of what Realty wants to do with the land merely concerns Realty’s motives. They are not part of the contract as long as it does not prohibit an immediate resale.

The only difference between Cases 13(a) and 13(b) is the duration of the option. In general, contracts that are binding for a very long time can offend common decency and therefore be void according to § 138(1) of the Civil Code.38 Here again, common decency is defined as the beliefs of those whose thinking is proper and just.39 For common decency to be violated, there must be an extreme limitation of a person’s economic liberty.

Section 138(1) of the Civil Code would only apply to an option if no reasonable remuneration were paid in return for it. Because remuneration was inadequate, the highest German court (Bundesgerichtshof) held an option to be void that gave an editor the right to publish all further works

36Ibid., § 934 no. 13; OGH JBl 1987, 718.

37A contract which obliges one party to transfer or acquire real property has to be recorded by a notary. The absence of this formality is immaterial if the real property has actually been transferred.

38A promise (Rechtsgeschäft) which offends common decency is void.

39Mot. vol. II, 727; BGHZ 52 (1970), 20.

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of a certain author without any time limit.40 Therefore, the permissible duration of an option always depends on what was paid for it. It is not possible to say exactly how long the time limit can be. In our case, however, the option for two years should be valid even with little compensation or even without any if Simon had some interest of his own in the deal, and this interest was the reason he granted the option.

In Case 13(c), Realty can refuse to buy if, in its ‘sole and absolute judgment’, it thinks the economic prospects of the property are unsatisfactory. If a contract provides that the buyer has the right to examine goods or real estate, the contract is deemed to be concluded already but subject to the condition that the buyer approves the goods. In the absence of an explicit contractual provision to the contrary, the buyer is absolutely free in his decision to approve the goods according to § 495 of the Civil Code. Again, the motives of Realty and the rise in the market price are immaterial as long as they are not explicitly included in the contract. It would not be a violation of good faith even if Realty did not tell the truth about its motives since under § 495 of the Civil Code the buyer is not even obliged to disclose his motives.

Because the law provides that the buyer has this right, his exercise of it would be held to violate good faith (§ 242 of the Civil Code) only under very exceptional circumstances. They would have to be much more compelling than they are here.

greece

An agreement to transfer the ownership of immovable property must take the form of a notarial document (art. 369 of the Civil Code) and it must also be entered in the public land register (art. 1192 of the Civil Code).41 The agreement undertaking to transfer the ownership of immovable property must take the form of a notarial document because it leads to a transfer of such property (art. 369 of the Civil Code). If this form is not

used, then the agreement is invalid.42

Moreover, the terms and conditions that the parties agree upon must also appear in a notarial document in order to be valid, and they must be entered in the public land register so that the buyer can be protected as long as a condition of the transfer is not yet fulfilled.43 If there is a change

in the circumstances before the fulfilment of the condition, art. 388 of the Civil Code does not apply.44

The present case concerns an option contract, by which one of the two parties is given the right to bring about the conclusion of a contract by his unilateral declaration to the other party. Because it concerns immovable property, it is not valid unless it takes the form of a notarial document.45

scotland

As outlined in Case 12, because this is a unilateral obligation in relation to an interest in land, it must be constituted in writing even though it is non-gratuitous or made in the course of business. Once constituted in writing, any change in the market price, or in Realty’s reasons for purchasing the land, are irrelevant in the law of Scotland which has no doctrine of consideration. Realty can hence enforce the promise if it has written proof of it. It may be possible that the promise is binding only if the land is used for building on and not for resale but this, of course, would depend on the construction of the promise.

england

It is clear in English law that promises 13(a) and 13(b) are not binding. They have the status of mere offers, and as such can be withdrawn any time before Realty agrees to buy the land on the offered terms.46 Merely agreeing to the promise to keep open the offer is not enough, because, like any other promise, a ‘firm offer’ (i.e., a promise to keep open an offer for a certain time period) is not binding unless consideration was provided in exchange for it (see Case 1). Here, nothing was given or promised in return for either promise, so the offeror is free to withdraw the offer at any time before it was accepted, so long as that withdrawal is communicated to the offeree. Thus, it was held in Dickinson v. Dodds47 that the defendant’s offer of land for sale, ‘to be left over until Friday’, could be withdrawn on Thursday and, moreover, that the withdrawal was effective where the offeree had heard from a third party that the land had been sold on Thursday.

As I have noted elsewhere, where a promisee has relied on a gratuitous offer a court may be tempted to invent consideration for the promise. In

294 the enforceabilit y of promises

this case, a court might be tempted to hold, for example, that Realty had promised to conduct a survey (which, though arguably of no benefit to Simon, is a detriment to Realty and hence meets the classical test for consideration) or to apply for a mortgage, in exchange for Simon’s promise to keep the offer open. In general, it can be predicted that English courts will try fairly hard to find ways of enforcing such a promise, especially if it is made in a commercial context.48 The rule that firm offers are unenforceable is often criticized by English lawyers,49 and the English Law Commission has recommended that firm offers made in the course of business and for a definite period should be binding.50

The status of Simon’s third promise (‘sole and absolute judgment’) is less clear. On the one hand, Realty appears to have agreed to buy the land if certain conditions prevail, thereby fulfilling the requirement of consideration. On the other hand, because the determination of whether the ‘economic prospects were unsatisfactory’ is left entirely to Realty’s discretion it is arguable that Realty has not bound itself to do anything. If performance is entirely at the discretion of Realty, the promise is unenforceable for lack of consideration.51 It would also be unenforceable on the grounds that the contractual terms are too uncertain to be enforced.52

There is no doctrine of ‘good faith’ in English law such that Realty is bound to exercise its discretion only on certain grounds. In English law, the question is one of interpretation: Does the contract, on its proper construction, bind Realty in any way, however slight? There do not appear to be any cases directly in point, but it is suggested that a court would hold that Realty was at least weakly bound in that it could exercise its discretion only on the basis of its view of the ‘economic prospects’ of building on the land and not, for example, on the basis of external economic considerations (e.g., it found cheaper land elsewhere). Earlier cases have held that sales which were subject to a ‘satisfactory mortgage’ or to a ‘satisfactory survey’ were unenforceable,53 but more recent cases have tended to construe such discretion as subject to an implied condition that it be exercised bona fide, and hence that the contract is valid.54

A further point in regard to the third promise is that because the

48See, e.g., Pitt v. P.H.H. Asset Management Ltd [1994] 1 WLR 327, where it was held that a prospective purchaser’s promise to get on by limiting himself to just two weeks was

consideration for the vendor’s promise not to consider other offers during that period.

53Montreal Gas Co. v. Vasey [1900] AC 595; Astra Trust v. Adams & Williams [1969] 1 Lloyd’s Rep. 81.

54Albion Sugar Co. Ltd v. Williams Tankers Ltd (The John S Darbyshire) [1977] 2 Lloyd’s Rep. 457.