An option contract is formed when an offeree prevents the offeror form revoking his or her offer by paying the offeror compensation to keep the offer open for an agreed-upon period of time.

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This is known as an option agreement, where the offeree pays the offeror to keep the offer open for a set amount of time. This prevents the offeror from revoking the offer during that time period.

An Option Contract Is Formed When an Offeree Prevents the Offeror