Contracts/Firm offer: Difference between revisions

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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]], a '''firm offer''' allows merchant sellers to make certain offers irrevocable for up to three months provided that the offer be put down in writing or otherwise authenticated. Such offers are efined by UCC § 2-205 of the [[Uniform Commercial Code]] of the United States. 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.
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.


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:
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.
* 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.
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.


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


[[Category:Business law]]
[[Category:Business law]]
[[Category:Contract law]]

Latest revision as of 21:38, September 26, 2023


Contracts Treatise
Table of Contents
Contracts Outline
Introduction and Definitions
Introduction
Definitions
Elements
Contract law in the United States
Contract formation
Parties
Offer
Acceptance
Intention to Bind
Formal requisites
Mailbox rule
Mirror image rule
Invitation to deal
Firm offer
Consideration
Consent
Implication-in-fact
Collateral contract
Modification
Merger
Uniform Commercial Code
Uniform Commercial Code
Course of dealing
Course of performance
UCC-1 financing statement
Uniform Commercial Code adoption
Defenses against formation
Lack of capacity
Duress
Undue influence
Illusory promise
Statute of frauds
Uncertainty
Non est factum
Contract interpretation
Governing law
Construction and Operation
Parol evidence rule
Contract of adhesion
Integration clause
Contra proferentem
Excuses for non-performance
Mistake
Misrepresentation
Frustration of purpose
Impossibility
Impracticability
Illegality
Unclean hands
Unconscionability
Accord and satisfaction
Rights of third parties
Privity of contract
Assignment
Delegation
Novation
Third-party beneficiary
Performance or Breach
Necessity of performance
Sufficiency of performance
Anticipatory repudiation
Cover
Exclusion clause
Efficient breach
Deviation
Fundamental breach
Termination
Termination
Rescission
Termination and rescission
Abrogation and rescission
Subsequent contract
Termination
Forfeiture
Remedies
Restitution
Specific performance
Liquidated damages
Punitive damages
Quasi-contractual obligations
Estoppel
Quantum meruit
Actions
Actions in General
Parties to Action
Pleading
Evidence
Questions of Law and Fact
Instructions
Trial and Judgment

A firm offer is an 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 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.[1] 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.

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.

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.

See also[edit | edit source]

References[edit | edit source]

  1. ↑ Uniform Commercial Code - § 2-205. Firm Offers,
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