Legal Definitions - firm offer

A firm offer is a specific type of promise made by a business (known legally as a "merchant") to keep an offer to sell goods open for a certain period, making it legally impossible for them to withdraw that offer during that time. This concept is governed by Article 2 of the Uniform Commercial Code (UCC), which applies to the sale of goods.

For an offer to be considered "firm," several conditions must be met:

• The seller must be a merchant, meaning they regularly deal in goods of the kind being offered or hold themselves out as having special knowledge or skill regarding the goods.
• The offer must be for the sale of goods (e.g., products, merchandise, equipment, raw materials, rather than services or real estate).
• The merchant must make the promise to keep the offer open in writing and sign it.

A key feature of a firm offer is that the buyer does not need to provide any separate payment or "consideration" to keep the offer open; the merchant's signed written promise alone makes it binding. If the offer specifies how long it will remain open, that period is binding. If no time period is stated, the offer will generally remain open for a reasonable time, but for no longer than three months.

Here are some examples to illustrate how a firm offer works:

• Example 1: Office Equipment Supplier

  Imagine "Corporate Tech Solutions," a company that regularly sells office computers and peripherals (making them a merchant), sends a written proposal to "Innovate Marketing Agency." The proposal details a bulk purchase of 50 new laptops at a specific price per unit and includes the statement, "This pricing is guaranteed for 45 days from the date of this proposal." The document is signed by Corporate Tech Solutions' sales director.

  How it illustrates the term: This is a firm offer because Corporate Tech Solutions is a merchant selling goods (laptops), the offer is in a signed writing, and it explicitly promises to keep the offer open for 45 days. Innovate Marketing Agency can take its time to decide within those 45 days, and Corporate Tech Solutions cannot revoke the offer or change the price during that period, even if their own costs for laptops increase.

• Example 2: Specialty Food Distributor

  "Gourmet Goods Inc.," a major distributor of imported cheeses and specialty foods, provides a signed, written quote to "The Artisan Bistro" for a large order of rare cheeses for their new menu. The quote lists the prices and quantities but does not specify how long the offer is valid.

  How it illustrates the term: Gourmet Goods Inc. is a merchant, and the cheeses are goods. The offer is in a signed writing. Since no specific duration is mentioned, this firm offer would remain open for a reasonable time, but no longer than three months, as per the UCC. The Artisan Bistro can accept the offer within that three-month window, and Gourmet Goods Inc. is bound by the terms and cannot withdraw the offer.

• Example 3: Industrial Machinery Manufacturer

  "Precision Robotics Co.," a manufacturer and regular seller of automated assembly line machinery, emails a signed proposal to "Global Manufacturing Ltd." for a custom robotic arm system. The email states, "This offer for the robotic arm system will remain open for acceptance for 90 days."

  How it illustrates the term: Precision Robotics Co. is a merchant, the robotic arm system is a good, and the offer was made in a signed writing (an email with a clear indication of intent to sign) promising to keep the offer open for 90 days. Global Manufacturing Ltd. can rely on this price and terms for three months, and Precision Robotics Co. cannot retract the offer or alter its conditions during that time.