This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
A contract may contain an express provision that one or either party may terminate such contract at his option. Full effect is given to such provisions and the exercise of such option operates as a discharge of the contract.1 Until such option is exercised the contract is binding upon both parties.2 Where the option to terminate the contract at will exists, a question presented for decision is what amounts to the exercise of such option. The right to avoid a purchase of stock is not exercised by acting as a stockholder giving a proxy and offering the stock for sale. Such acts amount to affirmance, not rescission.3 So an option to avoid a contract within a year from the date of the making thereof is not exercised by a written request for an extension of such time to enable the party making the request to determine whether it would be possible for him to go on with the contract.4 An option to terminate a contract employing a teacher by giving one week's notice may be exercised by refusal to employ such teacher before the school opens, and the teacher is then entitled to but one week's salary.5 An option to rescind a contract for breach and recover money paid thereunder may be exercised before the date of the maturity of the last payment.6 Under a contract for the sale of iron providing that the manufacturer should not be liable for loss or damage arising from non-fulfillment by reason of strikes or fires, and allowing him if he wishes to transfer his contract to any reputable manufacturer, destruction of the manufacturer's mill by fire discharges the contract at his election and he is not bound to transfer the contract or obtain the iron elsewhere.7 However, if notice of delay by reason of epidemics, strikes and the like, must be given to obtain an extension of time by the terms of the contract, the happening of such event does not extend the time •unless such notice is given.8 A provision allowing a contract to be cancelled "for any good cause" on sixty days' notice by either party, means any cause assigned in good faith.9 So a provision in a mining contract that the owner may terminate it if satisfied that the system of mining was prejudicial to the mine does not give him the right to terminate it arbitrarily.10
22 0rr v. State, 56 Ark. 107; 19 S. W. 319.
23 Van Etten v. Kelly. 66 O. S. 605; 64 N. E. 560.
1 Louisiana, etc., Ry. v. District Commissioners, 87 Fed. 594; 31 C. C. A. 121; Thayer v. Allison. 109 I1l. 180; Morrissey v. Broomal. 37 Neb. 766; 56 1ST. W. 383; Booth v.
Ratcliffe, 107 N. C. 6; 12 S. E. 112; Foster v. Henderson, 29 Or. 210; 45 Pac. 899.
2 Kenny v. Knight, 119 Fed. 475.
3 Jessop v. Ivory. 158 Pa. St. 71; 27 Atl. 840.
4 Ford v. Dyer. 148 Mo. 528; 49 S. W. 1091.