Monday, December 1, 2014

MBE Fast Fact: The Firm Offer Rule

The Firm Offer Rule is definitely one those distinctions between the common law of contracts and the UCC that you'll want to keep in mind when preparing for the MBE. Under the common law of contracts an option contract is available in which the offeree gives consideration for a promise by the offeror not to revoke the offer. Because the offeree provides consideration, the promise not to revoke is binding on the offeror. Such offer may not be revoked for the specific time period stated in the offer.

But under the UCC, the rules change in a very significant way. Under Article 2 of the UCC, if a merchant offers to sell goods in a signed writing and the writing gives assurances that it will be held open, then the offer may not be revoked for the period specified by the merchant. Consideration is not required. Watch for situations in which no time period is stated; under such circumstances, the offer may not be revoked for a reasonable period of time, but in no event may that time period exceed 3 months.

That last part is important; even if the merchant claims that the offer will remain open for 4 months, the merchant making the offer will only be bound to keep the offer open for 3 months. But the merchant can always limit the time period in which he is required to keep the offer open by specifically stating a time period less than 3 months.

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