What is a Firm Offer?
A firm offer is an irrevocable offer presented in a verified medium which is good for a specific period of time. The offer may be an offer to buy or sell. If accepted, the firm offer is used to develop a contract which can be signed by all parties involved, thus committing them to the agreement. The laws surrounding firm offers vary from nation to nation, but generally the term “firm offer” is used to describe an offer made by a merchant, with the offer being directed at a consumer or another merchant.
Historically, only written and signed offers were considered firm offers. However, the law has shifted in many areas of the world, and today such an offer must simply be “authenticated,” allowing for the use of other media. For example, a firm offer may be transmitted electronically with a mark which acts as a signature. The language of the offer must also clearly indicate that it is firm.
Unless specified otherwise, a firm offer lasts 30 days. After this period, the offer is considered void. If a party wants to accept the offer after this period, it must request another offer. The set time period is designed to ensure that the offer is not allowed to float eternally, and to create reasonable expectations and limits for both parties. If a caterer submits a firm offer for a job, for example, it wants to know if it will be rejected so that it can submit other offers for the same period of time and avoid missing out on business while waiting to hear back on an offer.
Both goods and services can be included in a firm offer. The offer usually describes in detail what is being offered and at what price, and provides other specifics which will be used to structure a contract. For example, it might state that a caterer is offering to handle a wedding banquet for 100 people, or that a merchant is offering to purchase a set number of units at a given price.
In the United States, the Uniform Commercial Code (UCC) provides guidelines for firm offers, among many others thing. The Code is designed to make sure that commercial transactions are handled consistently and smoothly across the United States, and to confirm that people understand the underlying terms and conditions for contracts, offers, and other activities undertaken by merchants of all sizes.
Mutsy-The same is true when you buy a home. If the price is firm that means that there is no negotiation regarding the price and you should expect to pay the asking price noted if you want to buy a home.
If you buy a home with the firm offer example you also have an opportunity to a contract review beforehand as well as inspection right along with an appraisal clause.
The inspection right really allows for you to bow out should the inspection reveal that the home’s repairs will be too costly and the appraisal clause allows for you to void a contract in which the property did not appraise for the amount that the seller is asking.
This happens more often than not because of the high amount of foreclosures. Many people pricing homes really do not know what the true market value is because the market has been depressed for so long.
Also, this will discharge of contract is required in that case because a bank will not finance a property for more than what it is worth.
Anon76776- That is really a good question and unfortunately I do not know the answer. I know that many times a firm's offer of credit involves prequalification.
A bank will usually offer a prequalification notice for a set period of time. For some firms that time frame is usually thirty days when buying a car and about sixty days when buying a home.
Some contracts allow you to change the interest rate offered if a better rate comes along, while others require you to lock in the rate offered at the time of approval.
A firm offer definition really allows the other party the specifics of the contract in order to do business. For example, a bank will offer prequalification for a set period of time, beyond that timeframe the matter will result in a void contract and the applicants would have to reapply.
This is the bank’s way of putting pressure on the applicants to buy a home so that the bank can benefit from the financing and various bank fees.
Trying to research an assignment for school about a merchant's firm offer and why it is important. Your site was easy to read and helped a lot. Thanks.
I also need to figure out if someone selling an item on eBay would be governed by the UCC and/or if other uniform acts apply. Also, if a user agreement might supersede the UCC.
Sure wish I could get a little help on this before Monday.
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