Call and put contract clauses

The democratic system developed in Poland as well as the free market economy led to the transposition of a number of institutions adopted and fully functioning in the economies of the Western European countries and developed in the judicatures of the states of legal systems related to the Anglo-Saxon legal system.

The optional call and put clauses are commonly used by lawyers dealing with merger and acquisition transactions and corporate issues. Often in the case of an investment agreement between the parties to the transaction, the new investor receives the right to use the call or put option specified in accordance with his interest, which results from the investment objective.

This market practice is commonly used in most investment contracts currently concluded, as it allows the parties to shape the composition of the shareholders/shareholders of the company covered by the contract to remain unchanged even if they wish to dispose of the shares in the company by one of the shareholders

First, it should be pointed out that the doctrine of law is not uniform in terms of the qualification of the nature of the optional provisions contained in the content of a particular contract.

Part of the doctrine of the law considers that the option is a certain contract of the nature of an initial contract under which the rightholder may, by using the option, request the conclusion of a sale agreement for shares/shares in the company, while the remainder of the doctrine considers that the option agreement is in fact only an offer whereby the duration of the contract may benefit from the right to accept the offer and thus require the tenderer to sell/purchase the shares or shares specified in the offer, however, that right to accept the offer is not of a legal character.[1].

The offer nature of call and put options indicates P. Mazur, by writing [...] it must be assumed that the statutory provisions creating the put or call option are of an offer nature.

It is only possible to accept that they set up a preliminary agreement if the circumstances of the case clearly indicate that the parties' intention was to give them such a character[2].

According to the dominant view in the doctrine, it is appropriate to assume that, in the case of explicit provision by the parties in respect of the clauses in question, they will only be offered if the parties expressly decide differently to adopt the contractual preliminary nature of those provisions.

After considering the nature of the optional provisions in general, I will now refer to their different types of options, indicating the type-specific design. The most popular types are call and put options.

In the first a case entitled to the option may require, within a certain period of time, the obliged person to sell to him shares/shares held in the company concerned at a certain price.

In contrast, in the case of a put option, the rightholder may require the option to acquire shares or shares in a particular company from the required option, at a specified time.

Put options are often introduced to the statutes of closed joint stock companies, allowing one of shareholders, the sale of shares held by them in the event that certain conditions are fulfilled, and call options on the basis of which the eligible shareholder may demand, under the circumstances indicated, the acquisition of shares belonging to another shareholder at a pre-specified price[3].

The market practice described above is commonly applied in most investment agreements currently concluded, as it allows the parties to shape the composition of the shareholders/shareholders of the company covered by the agreement to remain unchanged even if they wish to dispose of the shares in the company by one of the shareholders, which increases the certainty of the investment and restricts access to the company of the entities third with a simultaneous accumulation of shares before existing associates.