I'd like to make a contract with my associate to buy something from them at a future time. In the financial world, options like these (for stocks and commodities) are traded all the time. I'm looking for something very similar, but because the thing I'm trading is not a traditional financial instrument, I won't be going through a broker.
Where can I find some reference material for how to write such a contract with proper legal language? The purchase is also very small so I would rather not hire a specialized lawyer just for this, as the lawyer's fee would be many times more than the purchase amount.
You can assume I have read https://law.stackexchange.com/a/6264/19001. I am still asking this, because I am wondering specifically about appropriate language for an option contract, pertaining to:
- Timing (expiration, early exercise, European vs. American style)
- Responsibility (how to specify which person has right to exercise, is it possible to make exercise mandatory)
- How exactly the article to be traded must or can be described (for example commodities specify a baseline quality for the commodity)
- Whether the price of the contract is specified in the contract
- How to proscribe automatically voiding the contract in certain situations (such as if exercise becomes impossible)
To be clear about my situation, I'm actually planning something similar to a covered call. However, it might be nice if I could set it up so that at expiration, the contract MUST be exercised unless certain conditions are met, while before expiration it MAY be exercised if the relevant party wishes. The subject of the contract would also be a unique item rather than a commodity, so it would be nice if exercise could be satisfied by trade of only that specific item rather than any item of the like kind.
The goal here is that:
- It's detailed enough that we're unknowingly assuming legal risk because it doesn't cover some weird corner case
- It's not so complicated that we're unknowingly assuming legal risk because we can't understand it
- That I do not have legal ownership of the item until such time as I choose to officially exercise the contract