Legal Definitions - firm bid

A firm bid is a definite and binding offer to enter into a contract that cannot be withdrawn or altered by the person making the offer (the bidder) for a specified period. If the other party accepts the firm bid within that timeframe, a contract is formed, and the bidder is obligated to fulfill the terms of their offer. It signifies a serious commitment by the bidder to stand by their proposed terms.

Here are some examples illustrating a firm bid:

• Example 1: Construction Project

  Imagine a city council inviting construction companies to submit proposals for building a new public library. "Apex Builders" submits a detailed proposal, stating, "This bid of $20 million to construct the new library is firm for 90 days from the date of submission."

  This illustrates a firm bid because Apex Builders cannot change their price or withdraw their offer for three months. If the city council accepts their bid within those 90 days, Apex Builders is legally bound to build the library for $20 million according to the terms they proposed.

• Example 2: Government Procurement

  A state department issues a request for proposals (RFP) to acquire new software for its financial management system. "DataFlow Solutions" submits a bid for $750,000, and the RFP specifies that all bids must be firm for 120 days to allow for thorough review and selection.

  In this scenario, DataFlow Solutions has made a firm bid. For 120 days, they cannot revoke their offer to provide the software for $750,000. If the state department decides to award the contract to DataFlow Solutions within that period, DataFlow Solutions must honor the terms and price stated in their bid.

• Example 3: Corporate Acquisition

  "Innovatech Corp." is looking to sell one of its non-core divisions. "Growth Equity Partners" submits an offer letter stating, "Our offer of $50 million to acquire the manufacturing division is firm and irrevocable for 45 days, subject to satisfactory completion of due diligence."

  This demonstrates a firm bid because Growth Equity Partners is committed to purchasing the manufacturing division for $50 million for the next 45 days. Innovatech Corp. can accept this offer at any point within that period, and Growth Equity Partners cannot back out without facing potential legal consequences, provided their investigation into the division's finances and operations (due diligence) doesn't uncover any significant undisclosed issues.