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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.
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
- Uniform Commercial Code - § 2-205. Firm Offers, Cornell University Law School, Legal Information Institute