Steiner v. Thexton: The California Supreme Court Considers the Consideration

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On March 18, 2010, the California Supreme Court reversed the Court of Appeal’s judgment in Steiner v. Thexton, an opinion issued in May 2008. In Steiner, the Court of Appeal held that an agreement containing a contingency allowing the buyer the sole and absolute discretion to terminate the agreement if the buyer was unable to obtain entitlements for the development was “really an attempt to create an option agreement,” which failed for lack of consideration. In overturning the Court of Appeal’s decision, the Supreme Court agreed with the lower court that the agreement was an option – not a bilateral sales agreement - but held that sufficient consideration existed to render the option irrevocable.

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