Court Opinion

ID: 9624245
Source: CourtListenerOpinion
Date Created: 2023-08-22 06:55:24.974611+00
Date Added: 2024-06-11T11:42:16.188278
License: Public Domain

MAUGHAN, Justice
(dissenting):
For two reasons I dissent. First, the majority opinion states, as a general legal *627proposition, that an option is not a contract but a “unilateral writing.” I find no literature on the legal implications of unilateral writings, but I am concerned that our adoption of the phrase will be productive of mischief if it can be inferred that the rights of an optionee are markedly inferior to those of parties to a contract. An option for adequate consideration is universally regarded as a contract. Thompson1 defines an option as “a contract by which the owner agrees to give another the exclusive right to buy property at a fixed price within a specified time.” It is frequently described as a “unilateral contract” in the sense that the instrument is often signed by the owner only, the other becoming a party by paying the consideration and accepting the instrument.2 It is true that the exercise of the option creates another contract, but the relationship established by the option instrument is still a contract relationship, and the optionor’s repudiation or breach subjects him to damages under principles of contract law.
Secondly, the majority holds — apparently as a matter of law — that an optionee is not justified in making significant expenditures in reliance on the promise of an optionor. An optionor’s promise (as commitment made in a mere unilateral writing) is implied to be of lesser magnitude and sanctity, whatever the consideration for it, than promises made in contracts, and the op-tionee takes such promise seriously at his own risk.
The majority rejects the finding of the trial court that respondent acted reasonably and as contemplated in developing detailed, elaborate architectural and engineering plans in advance of option exercise. The trial court was obliged to find, says the opinion, that such preparation was “bad corporate judgment” because one of appellant’s witnesses testified that such plans are “unnecessary” for purposes of presentations to lenders or zoning boards. In this connection, it is noteworthy that, as experts in subdivision development, respondent’s officers qualify at least as well as appellant’s witness. They considered it prudent to develop detailed plans, and they made planning expenditures which were totally inexplicable except in the context of an intent to exercise respondent’s option.
Without doubt, the question whether respondent’s expenditures were reasonable and reasonably to have been contemplated .was an issue of fact.3 We do not properly substitute our findings for those of the trial court if there is competent and credible evidence to support the trial court findings.
In my view, the evidence that respondent acted responsibly during the option period in preparing for subdivision development of the optioned property is not only credible but compelling. To begin with, the total amount of preparatory expense (approximately $32,000.00) was about six percent of the purchase price stated in the option contract. If respondent had waited until the option was exercised to commence architectural and engineering work, it would have spent as much for interest during the succeeding six months as it spent for plans. It is a fundamental of subdivision development that the entrepreneur must act quickly after he incurs major loan costs to generate income. Any rational developer will complete all possible preliminary work before he incurs loan costs. It is principally for that reason that developers use option contracts. In this case, respondent gave itself seven months’ lead time for that purpose.
It may be true that elaborate architectural renderings and engineering plans are not “necessary” for presentations to lending institutions and zoning boards, but it cannot be said consistently with common business experience that they do not add to such presentations. It is hardly credible, in fact, that a bank would lend even the land acquisition costs in this case without being assured of the economics of the project, and developers don’t borrow just acquisition *628costs, they finance development as well. Architectural and engineering work-ups are essential components of economic feasibility reports.
Respondent had, in this case, an additional business reason for preparing elaborate plans during the option period. Paragraph 11 of the Option Contract precludes respondent from constructing any improvements or buildings on the Option Property until appellant has approved the “detailed plans and specifications therefor” in writing. Prudence would dictate that the optionee under such a contract get assurance before exercising the option that his projected plans are acceptable. Delays in optionor approvals after exercise could be ruinous in terms of loan costs alone. It is almost inconceivable that appellant did not expect “detailed plans and specifications” to be prepared during the option period.
I cannot read the authorities cited in the majority opinion to support either of its premises to which I object. In my judgment, an optionee can rely on the promise of his optionor, and the reasonableness of his reliance is a question of fact as to which the findings of the trial court should be treated with enormous respect.
WILKINS, J., concurs in the views expressed in the dissenting opinion of MAUGHAN, J.

. Thompson on Real Property, Volume 8A, Sec. 4443; Chournos v. Evona Inv. Co., 97 Utah 346, 94 P.2d 470.

. Keefer v. United Elec. Coal Companies, 292 Ill.App. 36, 10 N.E.2d 836; Whitworth v. Enitai Lbr. Co., 36 Wash.2d 767, 220 P.2d 328.

. 5 Corbin on Contracts, § 1012.