On November 1, a yacht owner posts a flyer offering to sell a yacht with a statement that the owner will hold the yacht for an amount if paid by November 20. A second buyer offers $60,000 on November 15 and the owner accepts. The first buyer later pays $50,000 on November 20 and finds the yacht has already been sold. Can the first buyer sue for breach?

• A. The first buyer cannot sue because the offer was revoked.
• B. The first buyer cannot sue because the offer had lapsed by November 20.
• C. The first buyer cannot sue because there was no reliance.
• D. The first buyer can sue because the owner never revoked the offer and the first buyer accepted before revocation.

Answer: (D)

The key idea is how an offer that promises to hold something open for a price works as an option contract. The flyer creates an option: if a payment is made by a certain date, the owner will hold the yacht for that price. Under an option, the offeror cannot revoke the offer during the option period, and acceptance can occur by performance.

Here, the first buyer’s payment by the deadline is acceptance and exercise of that option. The owner had not revoked the offer before that performance, so a binding contract to sell to the first buyer arose. Selling the yacht to the second buyer after that (or treating the option as defeated by another sale) would breach the option contract. The other choices miss the point that the hold-open offer is enforceable for the period, and acceptance by performance before any effective revocation means the first buyer can sue for breach.