In Francis v Vista Del Mar Developments Ltd (2019) UKPC 14 Lady Arden stated the issues for determination on the appeal to the Privy Council from the Cayman Islands Court of Appeal as follows:-
“When one person gives another (the option holder) a conditional option to buy her land, the option holder will be entitled to exercise the option when the conditions for exercising it are fulfilled by following any procedural requirements set by the terms of the option. A new contract then arises between the parties and their relationship changes from one of option giver and option holder to one of vendor and purchaser. This appeal concerns the consequences for their relationship, in the context of proceedings for specific performance, if the option holder delays in exercising her option rights or in enforcing her rights under that new contract to which exercise of the option has given rise.”
Lady Arden stated the relevant law on options as follows:-
“41. … an option will only be effectively exercised if it is exercised in strict conformity with its terms: …
42. Where … the parties have not provided a specified time within which the option holder must exercise his repurchase option, it must be exercised within a reasonable time. What is a reasonable time is a question of fact to be determined in the light of all the circumstances …
43. Moreover, … once an option is exercised, a new contract comes into existence between the parties to the option:…
44. Where an option gives the right to acquire land, as a matter of law its exercise changes the relationship between the parties in a fundamental way. This is because, once the new relationship arises, the option holder as purchaser becomes in equity the owner of the property. …”
The Privy Council concluded that the option had been validly exercised and within a reasonable time.