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Editing Contracts/Firm offer

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{{Contract law}}
A '''firm offer''' is an [[Offer and acceptance|offer]] that will remain open for a certain period or until a certain time or occurrence of a certain event, during which it is incapable of being revoked. As a general rule, all offers are revocable at any time prior to acceptance, even those offers that purport to be irrevocable on their face.


In the United States, an exception is the merchant firm offer rule set out in [[Contracts/Uniform Commercial Code|Uniform Commercial Code]] - § 2-205, which states that an offer is firm and irrevocable if it is an offer to buy or sell goods made by a merchant and it is in writing and signed by the offeror.<ref>{{cite web|url=https://www.law.cornell.edu/ucc/2/article2.htm#s2-205 |title=Uniform Commercial Code - § 2-205. Firm Offers|website=Cornell University Law School, Legal Information Institute}}</ref> Such an offer is irrevocable even in the absence of [[consideration]]. If no time is stated, it is irrevocable for a reasonable time, but in no event may a period of irrevocability exceed three months. Any such term of assurance in a form supplied by the offeree must be separately signed by the offeror.
In the [[United States]], a '''firm offer''' allows merchants to make offers to buy or sell irrevocable for up to three months provided that the offer be put down in writing or otherwise authenticated.  Such offers are defined by UCC § 2-205 of the [[Uniform Commercial Code]] of the United States.  


However, even when the period of irrevocability expires, the offer may still remain open until revoked or rejected according to the general rules regarding termination of an offer.
A firm offer in effect creates an [[option contract]] without requiring any [[consideration]] from the prospective buyer. Because the firm offer holds the seller to a higher standard than the potential buyer, it reflects a change from traditional [[common law]], which treated all parties to a contract the same way, to a more modern view that holds certain parties to a higher standard of behavior.


If the offeree rejects, fails to accept the terms of the offer, fixed or otherwise, or makes a counter-offer, then the original offer is terminated.
There are two versions of the UCC firm offer rule in effect.  The old UCC § 2-205 states that an offer is firm and irrevocable if:
* it is an offer to buy or sell goods
* it is made by a merchant
* it is a signed writing
 
There are at least two additional requirements.  First, in no event will the period of irrevocability be longer than three months.  Second, if the [[offeree]] submits a form on which the [[offeror]] is supposed to set out the offer, then the irrevocability condition must be separately signed by the offeror.  If all of these conditions are met, then the offer will be irrevocable either for the period stated in the offer, or for a reasonable time if no time is stated in the offer.
 
Thus, if there is a stated time period of 6 months, then the 3 month limit applies and the offer ceases to be legally enforceable after 3 months. If a reasonable time period would be longer than 3 months, the limit nevertheless applies and terminates the offer's enforceability after 3 months.
 
The new UCC § 2-205 does away with the "signed writing" requirement.  Instead, it requires an "authenticated record."  Also, instead of a separate signature for firm offers, the proposed UCC § 2-205 requires separate "authentication."  This is slightly broader language - a signature qualifies as authentication, but so does any other visual mark or sound intended to indicate adoption of the terms; a signed writing is an authenticated record, but so is any other inscription in a tangible or electronic medium that may be retrieved in a perceivable form.
 
These changes are intended to make the UCC provision more similar to the [[U.N. Convention on Contracts for the International Sale of Goods]], and to clear up any ambiguities that may exist as to whether a firm offer may be made electronically.


==See also==
==See also==
* [[Contracts/Uniform Commercial Code|Uniform Commercial Code]]
* [[Uniform Commercial Code]]
 
* [[U.N. Convention on Contracts for the International Sale of Goods]]
==References==
{{reflist}}


[[Category:Business law]]
[[Category:Business law]]
[[Category:Articles lacking sources (Erik9bot)]]
[[Category:Contract law]]
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