Quick Tip: Firming Up Your Understanding of Merchant’s Firm Offers
I recently discovered a common misconception among law students and bar exam takers about merchant's firm offers. Some people think that both parties must be merchants for a firm offer to be valid.
No! This isn't accurate.
Under UCC § 2-205 of the Uniform Commercial Code, specifically regarding a merchant's firm offer, it is not required that both parties be merchants.
Here are the key points of U.C.C. § 2-205:
A firm offer is an offer by a merchant to buy or sell goods in a signed writing that gives assurance that the offer will be held open.
This offer is irrevocable, even without consideration, for the time stated, or if no time is stated, for a reasonable time. However, this period of irrevocability cannot exceed three months.
To break it down by party:
Offeror: Only the offeror needs to be a merchant for the offer to be considered a firm offer under UCC § 2-205. (A "merchant" is defined in U.C.C. § 2-104(1) as a person who deals in goods of the kind or otherwise holds themselves out as having knowledge or skill peculiar to the practices or goods involved in the transaction.)
Offeree: The offeree does not need to be a merchant. The offeree can be any person or entity capable of entering into a contract.
So, to sum up, for a firm offer under Article 2 of the U.C.C., only the party making the offer needs to be a merchant. The other party can be a non-merchant.
