Information about Firm Offer

Contract Law
Part of the common law series
Contract
Contract formation
Offer and acceptance  · Mailbox rule
Mirror image rule  · Invitation to treat
Firm offer  · Consideration
Defenses against formation
Lack of capacity to contract
Duress  · Undue influence
Illusory promise  · Statute of frauds
Non est factum
Contract interpretation
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
Breach of contract
Anticipatory repudiation  · Cover
Exclusion clause  · Efficient breach
Fundamental breach
Remedies
Specific performance
Liquidated damages
Penal damages  · Rescission
Quasi-contractual obligations
Promissory estoppel
Quantum meruit
Subsets: Conflict of law Commercial law
Other areas of the common law
Tort law  · Property law
Wills and trusts
Criminal law  · Evidence

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.

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.

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 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

• Uniform Commercial Code
• U.N. Convention on Contracts for the International Sale of Goods