Legal Definitions - merchant's firm offer

A merchant's firm offer is a special rule in contract law that applies when a merchant makes an offer to buy or sell goods. Unlike most offers, which can typically be withdrawn at any time before acceptance, a merchant's firm offer cannot be revoked for a certain period, even if the other party hasn't given anything in return to keep the offer open.

For an offer to be considered a merchant's firm offer, it must meet specific criteria:

• It must be an offer made by a merchant (someone who regularly deals in goods of the kind, or holds themselves out as having special knowledge or skill regarding the goods).
• The offer must be to buy or sell goods.
• It must be made in a signed writing.
• The writing must give an assurance that the offer will be held open for a stated period, or if no time is stated, for a reasonable time (which cannot exceed three months).

Here are some examples to illustrate this concept:

• Scenario 1: Restaurant Supply

  A restaurant owner, "The Gourmet Bistro," is looking to purchase a new commercial oven. "KitchenPro Distributors," a company that specializes in selling restaurant equipment, sends The Gourmet Bistro a detailed, signed quote for a specific oven model. The quote states, "This price is guaranteed for 30 days from the date of this offer."

  Explanation: KitchenPro Distributors is a merchant dealing in goods (commercial ovens). The offer is in a signed writing and explicitly assures that the price will be held open for 30 days. This constitutes a merchant's firm offer. KitchenPro Distributors cannot revoke this offer for the specified 30-day period, even if they find another buyer willing to pay more or their costs increase. The Gourmet Bistro has 30 days to accept the offer without worrying that it will be withdrawn.

• Scenario 2: Office Furniture Procurement

  A large tech company, "Innovate Solutions," needs to furnish a new office floor. They receive a written proposal from "Office Elegance Inc.," a major supplier of office furniture, for 50 ergonomic chairs at a specific bulk price. The proposal is signed by Office Elegance Inc.'s sales manager and includes a line stating, "This offer for ergonomic chairs will remain valid for acceptance for 60 days."

  Explanation: Office Elegance Inc. is a merchant of goods (office furniture). Their offer is in a signed writing and clearly states it will be held open for 60 days. This is a merchant's firm offer. Office Elegance Inc. is legally bound to keep this offer open for the entire 60-day period, meaning Innovate Solutions can take its time to review the proposal and make a decision without the risk of the offer being pulled back.

• Scenario 3: Construction Materials Bid

  A general contractor, "BuildRight Construction," is bidding on a new housing development project. To prepare their bid, they request quotes for lumber from various suppliers. "Timberland Supply Co.," a lumber wholesaler, sends BuildRight Construction a signed email detailing prices for specific types and quantities of lumber, adding, "These lumber prices are firm for 45 days."

  Explanation: Timberland Supply Co. is a merchant of goods (lumber). The email, being a signed writing, contains an assurance that the prices are firm for 45 days. This creates a merchant's firm offer. Timberland Supply Co. cannot withdraw these lumber prices for 45 days. This allows BuildRight Construction to confidently use these prices in their own bid for the housing development, knowing the material costs are locked in for that period.