Firm offers apply to the sale of goods between merchants and are governed by section 2-205 of the Uniform Commercial Code (UCC). Under these rules, a firm offer is one that is made in writing for a prescribed period of time and is irrevocable during that time.
If no time period is specified in the offer, it may still be considered a firm offer if:
- There is an offer to sell or buy goods;
- There is a signed agreement between two parties that the offer is open, but a specific time period is not mentioned; and
- Both parties are merchants familiar with the buying and selling of goods.
When the above conditions are met, the UCC states that the offer will be valid (stay open) for no longer than three months. If you are creating a firm offer, it is essential that the language is clear and unambiguous — i.e., “The seller agrees to offer 500 widgets for $10 per widget; this offer is firm and remains open for 60 days.” If the offer is accepted within that timeframe, the contract becomes legally binding. If you receive notice that the offer has been revoked prior to your acceptance, you will no longer be able to accept it.
For an offer to remain open for more than three months, the agreement will need to include a promise of payment (consideration). No contract is valid without the inclusion of consideration, which is an exchange of items of value between the two contracting parties.
With the inclusion of consideration, the offer then becomes what is known as an option contract, which means that the offeror is being paid to allow the offeree to purchase the goods at a preset price and at a later date.
Williams Commercial Law Group, L.L.P., has the experience and reputation that you want when you are dealing with a business-related lawsuit. We are here to obtain the best possible outcome for your situation. Do not hesitate to contact Williams Commercial Law Group, L.L.P., at (602) 256-9400, and see how we can help you resolve your legal matter.