Firm offer
Encyclopedia
A firm offer means an irrevocable offer made by a merchant. 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. An exception to this general rule exists under the Merchants Firm Offer Rule:
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.
UCC 2-205 Firm Offers
An offer (A) by a merchant to buy or sell goods (B) in a signed record that by its terms gives assurance that it will be held open is not revocable for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such 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.
Note: That 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.
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:
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 United Nations 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.
A firm offer in effect creates an option contract
Option contract
An option contract is defined as "a promise which meets the requirements for the formation of a contract and limits the promisor's power to revoke an offer." Restatement of Contracts § 25 ....
without requiring any consideration
Consideration
Consideration is the central concept in the common law of contracts and is required, in most cases, for a contract to be enforceable. Consideration is the price one pays for another's promise. It can take a number of forms: money, property, a promise, the doing of an act, or even refraining from...
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
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
, 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.
UCC 2-205 Firm Offers
An offer (A) by a merchant to buy or sell goods (B) in a signed record that by its terms gives assurance that it will be held open is not revocable for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such 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.
Note: That 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.
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
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 United Nations Convention on Contracts for the International Sale of Goods
United Nations Convention on Contracts for the International Sale of Goods
The United Nations Convention on Contracts for the International Sale of Goods is a treaty offering a uniform international sales law that, as of August 2010, has been ratified by 77 countries that account for a significant proportion of world trade, making it one of the most successful...
, and to clear up any ambiguities that may exist as to whether a firm offer may be made electronically.
See also
- Uniform Commercial CodeUniform Commercial CodeThe Uniform Commercial Code , first published in 1952, is one of a number of uniform acts that have been promulgated in conjunction with efforts to harmonize the law of sales and other commercial transactions in all 50 states within the United States of America.The goal of harmonizing state law is...
- United Nations Convention on Contracts for the International Sale of GoodsUnited Nations Convention on Contracts for the International Sale of GoodsThe United Nations Convention on Contracts for the International Sale of Goods is a treaty offering a uniform international sales law that, as of August 2010, has been ratified by 77 countries that account for a significant proportion of world trade, making it one of the most successful...