The Supreme Court clarifies: exercising an option is a receptive act. If the declaration arrives after the agreed deadline, the right expires and the late manifestation is only valid as a new contractual proposal.
Court
Civil Supreme Court
Ruling No.
15840/2025
Date
06/13/2025
The dispute originated from a complex real estate transaction carried out by Alfa & Figli Ltd. in liquidation.
With a 2014 ruling, the Court annulled the preliminary contract signed on March 27, 2003 with Primo, as well as the final contract dated April 24, 2003 signed with Secondo, concerning the sale of a property, as they were concluded by the company's administrator in conflict of interest.
The Court also declared Secondo forfeited from the option right relating to the purchase of an additional portion of the same lot, as it had been exercised beyond the contractually stipulated deadline.
With a ruling dated June 25, 2020, it confirmed the declaration of forfeiture from the option right, noting that the exercise declaration, although dispatched by the October 31, 2013 deadline, only reached the company on November 3, 2013.
Secondo alleged violation of Articles 1331 and 1334 of the Civil Code, arguing that dispatch of the declaration within the deadline was sufficient, invoking the principle of split effects between sender and recipient.
The Supreme Court deemed the grounds for appeal unfounded, reiterating that exercising the option right constitutes a receptive act, consisting of the declaration of acceptance of the proposal that the other party has committed to keeping firm.
The option produces effect only when it enters the recipient's sphere of knowledge. Consequently, when the parties have established a deadline for exercising the option, the acceptance declaration must reach the proposer before expiration.
In the absence of timely receipt, the proposer is released from the obligation arising from the option and the late manifestation can only have value as a new contractual proposal, lacking automatic effects.
The applicability of the principle of split effectiveness of communications between sender and recipient has been excluded—a principle that applies to procedural acts but not to substantive law acts, which include exercising the option right.
Art. 1331 Civil Code - Option
While assimilating the option to an irrevocable proposal, Article 1331 does not derogate from the general rule on contract perfection.
Art. 1326 Civil Code - Contract
Requires the proposer's knowledge of acceptance for contract perfection.
The following practical recommendations of immediate utility for legal practitioners and real estate contracting can be drawn from this ruling:
When an option right has a final deadline, it is essential to choose communication methods that ensure receipt of the declaration within the deadline (e.g., hand delivery, certified email/PEC, advance registered mail). Mere dispatch within the deadline is insufficient.
Those intending to exercise the option must avoid communications "close to" the deadline. Any delays in delivery result in automatic forfeiture of the right, without possibility of remedy.
When drafting the contract, it is advisable to expressly specify whether the deadline refers to dispatch or receipt of the declaration, thereby preventing interpretative disputes.
Exercising the option right is a substantive law act, which means the principle of split effects between sender and recipient does not apply. It is therefore erroneous to rely on the dispatch date of the communication.
A manifestation of will received beyond the deadline does not keep the option alive but may at most constitute a new contractual proposal, requiring new and independent acceptance by the counterparty.
Unilateral acknowledgment acts of the option's exercise, if originating from the right holder themselves, have no curative effect nor can they substitute for timely receipt of the declaration.
Forfeiture from the option and contract annulment may entail restitutory obligations if possession of the property has already been transferred. This aspect must be carefully considered during litigation and defense phases.
If you have entered into a contract with option rights or are about to do so, it is essential to verify that the exercise methods comply with Supreme Court principles. Timely legal assistance can prevent forfeiture of rights.