Under the Uniform Commercial Code (UCC), a firm offer is an irrevocable offer to buy or sell goods made in writing by a merchant (the offeror), which is binding upon the merchant for a specified period of time, regardless of whether the other party (the offeree) accepts the offer.

Key Takeaways 

• A firm offer is an irrevocable written commitment made by a merchant to keep an offer open for a certain amount of time, not to exceed three months.
• Unlike other agreements, such as option contracts, where a commitment to keep an offer open for a certain amount of time must be supported by consideration to be binding, firm offers may be enforced without it. 
• If a firm offer is breached, the offeree may seek legal remedies such as specific performance, monetary damages, or injunctive relief.

Application of Firm Offers to Merchants and Key Elements

Firm offers under the UCC apply to merchants, which, for these purposes, are defined as individuals or entities who deal in goods of the kind involved in the transaction or who otherwise hold themselves out as having knowledge or skill peculiar to the goods or practices involved in the transaction (note that this definition also applies to those who employ agents or brokers who are merchants in their own right).

To be considered a firm offer, the offer must be made by a merchant, be in writing, and expressly state by its terms that it will be held open. This makes the offer irrevocable for the period stipulated in the offer, or, if no time is so stipulated, a reasonable time, provided, however, that the period of irrevocability may not exceed three months.

Irrevocability of Firm Offers Despite the Lack of Consideration

In traditional contract law, an offeror may revoke their offer at any time before its acceptance. In this sense, firm offers may be distinguished from option contracts in that the latter require consideration from the offeree in exchange for the offeror's commitment. That is, with an option contract, the offeree pays a fee to “lock in” the right to accept the offer within a specific timeframe. This payment essentially operates as consideration to bind the offeror and grant the offeree the exclusive option to purchase the goods (or sell them, depending on the nature of the transaction). By contrast, a firm offer does not require any upfront payment from the offeree because the merchant's written commitment to keep the offer open for a specific period is binding in of itself.

Remedies for Breach of a Firm Offer

If the offeror of a firm offer breaches the agreement by revoking the offer before the specified time has elapsed, or refusing to honor the offer, the offeree may seek legal remedies including:

• Specific Performance: The court may order the offeror to specifically perform the contract as originally offered, forcing them to fulfill their obligations.
• Damages: The offeree may be entitled to monetary damages to compensate for any losses incurred as a result of the breach, such as lost profits or expenses incurred in reliance on the offer.
• Injunctive Relief: In some cases, injunctive relief may be granted to prevent the offeror from revoking the firm offer, meaning that the court may issue an order prohibiting the offeror from taking any actions that would effectively cancel or withdraw the offer, essentially enforcing the offeror's commitment during the specified period.