Monday, February 18, 2013

Limitations on Firm Offers

The following question was asked by a reader in the comments of the blog:


If a merchant expressly states in signed writing that the offer is open for 6-months, is the offer (1) irrevocable for the first 3 months but subsequent revocable between 3-6 month period OR (2) irrevocable for the full 6-month period?


Response:

An important distinction between the common law and the UCC is how each treats a promise not to revoke an offer. Under the common law, offers are revocable unless consideration is given to keep the offer open (though you should always keep in mind substitutes for consideration, such as promissory estoppel).

Under UCC article 2, however, offers made by merchants that are written and signed by the merchant giving assurances that the offer will be held open, will be irrevocable without consideration for the time stated, or for a reasonable time, but not to exceed 3 months. The 3 month rule applies whether or not a particular time period is stated in the offer. Thus, if an offer stated that it would be irrevocable for six months, the offer would only be irrevocable for 3 months.

Note another angle tested on the MBE: If a written and signed offer by a merchant states that it will be irrevocable for only 1 month, the period of irrevocability will last only one month, rather than the 3 months that would apply if no time period were stated.



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