Contract Law – What Is a ‘Firm Offer’?

A firm offer refers to a binding offer made by one party to another in a contract. It is an offer that is irrevocable for a specified period of time, during which the offeror cannot revoke or withdraw the offer, even if there is no consideration (payment) given in return.

Firm offers are for a set period of time and cannot be withdrawn within the time stated in the offer. To be valid a firm offer must be:

  • Made by a trader
  • In writing
  • State the amount of time the offer will be held open.

The purpose of a firm offer is to provide certainty and stability in business transactions. It allows the offeree (the party receiving the offer) to rely on the offer and plan accordingly, without the risk of the offer being revoked unexpectedly. This is particularly important in commercial dealings where parties may need time to negotiate terms, secure financing, or obtain approvals.

A firm offer is a binding and irrevocable offer made by one party to another. It is a special type of offer that guarantees that the offeror will not revoke or withdraw the offer for a specified period of time. This means that once a firm offer is made, the offeror is legally obligated to honor the terms of the offer during the stated period.

To be considered a firm offer, certain conditions must be met:

  1. The offer must be made by a merchant or a business entity, as firm offers are typically associated with commercial transactions
  2. The offer must be made in writing and include a specific time period for which the offer will remain open.

One important aspect of a firm offer is that it can create a binding contract once it is accepted by the offeree. This means that if the offeree agrees to the terms of the offer within the specified timeframe, a contractual agreement is formed, and both parties are legally obligated to fulfill their respective obligations.

It’s crucial to note that a firm offer cannot be revoked by the offeror during the stated period, even if they change their mind or receive a more favorable offer from someone else. This provides the offeree with a sense of security and assurance that they can rely on the terms of the offer for the specified duration.

However, once the specified period expires, the offer is no longer valid, and the offeror is no longer obligated to honor it. Therefore, it’s essential for the offeree to accept the firm offer within the designated timeframe to ensure its validity.

More Cleverness: Sales of goods – Consumer protection Act.

Posted in Business Law, Contract Law.