Humble Oil & Refining Co. v. Westside Investment Corp.
428 S.W.2d 92 (Tex. 1968)
An option holder who asked for utilities and then exercised the option anyway
- In one lineEn una línea
- An option contract supported by consideration is not terminated by the holder's counteroffer; the holder may still exercise the option within the period.Una opción con consideration no se extingue por una contraoferta del titular; este aún puede ejercerla dentro del plazo.
- RuleRegla
- A counteroffer terminates the power of acceptance under an ordinary offer (R.2d § 39), but not under an option contract (R.2d § 37); the optionee who proposes different terms may still accept the original terms before the option expires.
- Why this case is herePor qué está aquí este caso
- Assigned Sept. 15 (casebook p. 261): the one Texas case in the formation unit. An option supported by consideration is a contract that keeps the offer open; a counteroffer or inquiry by the option holder does not terminate it, unlike a counteroffer to an ordinary revocable offer.
- Procedural posturePostura procesal
- The option holder sued for specific performance after the seller claimed the option had been terminated by a counteroffer; summary judgment for the seller was reversed and rendered for the buyer.
Facts
Westside granted Humble an option, for a stated consideration, to buy a tract of land within a fixed period. Before the period ended, Humble wrote proposing that the contract be amended to require the seller to extend utility lines, stating the offer was otherwise unchanged; later, still within the period, Humble notified Westside that it exercised the option. Westside refused to convey, arguing that the request for utilities was a counteroffer that rejected and terminated the option.
Procedural posture
Humble sued for specific performance. The trial court granted summary judgment for Westside and the court of civil appeals affirmed; the Supreme Court of Texas reversed and rendered judgment for Humble.
Issue
Whether an optionee’s proposal of additional terms terminates an option supported by consideration.
Holding
No. The option was a binding contract to keep the offer open; Humble’s proposal did not reject the option, and its later unconditional exercise within the period formed the contract of sale.
Reasoning
The counteroffer rule exists because an ordinary offeror is free to revoke and may treat a counteroffer as a rejection; an option holder, by contrast, has bought the right to accept during the period, and a proposal to modify does not surrender that right unless the holder clearly says so. The exercise notice was unconditional and timely.
Rule (own words)
If you paid for the time, you can shop for better terms and still take the deal you paid to hold.
What-ifs
- No consideration for the option: Dickinson governs; the request for utilities would be a counteroffer and the seller could treat the offer as rejected.
- Humble’s letter said it would exercise only if utilities were provided: a conditional acceptance, which is a counteroffer; the option remains, but the later unconditional exercise would be needed.
- UCC analog: a merchant’s signed firm offer under § 2-205 is irrevocable without consideration for the stated time, up to three months.
Likely follow-upsRepreguntas probables
Why does the counteroffer rule not apply to options?
What did Humble pay?
Say the answer out loud before revealing each part. Rate yourself honestly; the case comes back sooner when you miss.Di la respuesta en voz alta antes de revelar cada parte. Califícate con honestidad; el caso vuelve antes si fallas.
Panic kit: “Could you repeat the question, please?” · “Let me make sure I have the facts right: …” · “I'm not certain, but I'd argue … because …”Kit de pánico: “Could you repeat the question, please?” · “Let me make sure I have the facts right: …” · “I'm not certain, but I'd argue … because …”