Firm Offer

Definition

A firm offer is a promise made by an offeror to keep an offer open for a specified period of time, preventing the offeror from revoking the offer during that time. It is a legally binding commitment that ensures the offer remains available for acceptance by the offeree.

5 Must Know Facts For Your Next Test

1. A firm offer is irrevocable, meaning the offeror cannot withdraw the offer during the specified time period.
2. Firm offers are typically used in commercial transactions to provide stability and reliability in the contracting process.
3. The Uniform Commercial Code (UCC) recognizes firm offers in the sale of goods, requiring them to be in writing and signed by the offeror.
4. Firm offers are an exception to the general rule that offers can be revoked at any time before acceptance.
5. Promissory estoppel may be used to enforce a firm offer even if it does not meet the UCC's requirements.

Review Questions

• Explain how a firm offer relates to the concept of agreement in contract law.
  • A firm offer is a crucial element in the formation of a contract, as it establishes a binding promise from the offeror to keep the offer open for a specified period. This allows the offeree to consider the offer and decide whether to accept it, without the risk of the offer being revoked. The firm offer creates a framework for the parties to reach an agreement, as the offeree can rely on the offeror's commitment to the terms of the offer during the specified time.
• Describe the role of consideration in the context of a firm offer.
  • Consideration is generally required for a contract to be legally binding. However, in the case of a firm offer, the offeror's promise to keep the offer open is itself considered sufficient consideration, even if the offeree has not yet provided any consideration. This is because the firm offer creates a unilateral contract, where the offeror's promise to keep the offer open is exchanged for the offeree's power of acceptance. The offeror's forbearance from revoking the offer during the specified time period is the consideration that supports the firm offer.
• Analyze how the concept of promissory estoppel may be applied to enforce a firm offer that does not meet the Uniform Commercial Code's requirements.
  • The doctrine of promissory estoppel may be used to enforce a firm offer even if it does not strictly comply with the Uniform Commercial Code's requirements, such as being in writing and signed by the offeror. Promissory estoppel is a principle that allows a court to enforce a promise if the offeree has reasonably relied on the promise to their detriment. In the context of a firm offer, if the offeree has substantially relied on the offeror's promise to keep the offer open, and it would be unjust to allow the offeror to revoke the offer, the court may apply promissory estoppel to enforce the firm offer, even if it does not meet the formal requirements of the UCC.

Related terms

Offer: A proposal to enter into a legally binding agreement, made by one party (the offeror) to another party (the offeree).

Revocation: The act of withdrawing or canceling an offer, terminating the offeree's power of acceptance.

Acceptance: The offeree's agreement to the terms of the offer, completing the formation of a contract.