Weinstein v. KLT Telecom, Inc.

Summary

The Supreme Court of Missouri held that consideration for a put option agreement is measured when the option agreement is formed, rather than when the option is exercised. Because KLT Telecom assumed the risk that the shares could lose value, the subsequent bankruptcy-related loss of value did not constitute a failure of consideration, and the court reversed the summary judgment entered for KLT Telecom and remanded the case.

Holdings

1. The adequacy of consideration for a put option is measured at the time the option agreement is executed, not when the option is exercised.
2. Exercise of the option ripened the unilateral option contract into a bilateral contract governed by the terms of the underlying option agreement, and no new remeasurement of consideration was required.
3. Weinstein did not fail to perform because the shares, although worthless, existed as the shares represented by the certificate and were tendered through the escrow agent.
4. The denial of Weinstein's motion for summary judgment was not reviewable on appeal.

Questions Presented

1. Whether consideration for a put option must be measured when the option agreement is executed or when the option is exercised.
2. Whether the loss or elimination of the stock's value after execution of the put option constituted a failure of consideration or failure of performance relieving KLT Telecom of its obligation to purchase the shares.
3. Whether the trial court's denial of Weinstein's motion for summary judgment was reviewable on appeal.

Disposition

reversed_and_remanded