What is a binding written offer?
Definition
A “binding written offer” generally means a written offer that the offeror cannot revoke for a specified period, even though the offeree has not yet provided consideration. In a sale of goods, this is usually called a UCC “firm offer.”
“An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable . . . during the time stated . . . but in no event may such period of irrevocability exceed three months.” U.C.C. § 2-205[1]
Required elements under U.C.C. § 2-205
| Requirement | Meaning |
|---|---|
| Merchant | The offeror deals in the goods involved or holds out relevant expertise. |
| Goods transaction | The offer concerns the sale of movable goods. |
| Signed writing | The offer is authenticated in a written or electronic record. |
| Assurance of irrevocability | The writing indicates that the offer will remain open. |
| Limited duration | The stated period controls, but irrevocability cannot exceed three months. |
No separate consideration is required. If the offer states no period, it remains irrevocable only for a reasonable time. If the assurance appears on a form supplied by the offeree, the offeror must separately sign that assurance. U.C.C. § 2-205[1]
Outside the sale-of-goods context, a written offer ordinarily is not binding merely because it is written. It generally must be supported by consideration as an option contract, or become binding through acceptance and contract formation. An offer itself must manifest willingness to enter a bargain and invite assent that will conclude it. Restatement (Second) of Contracts §§ 24, 50[3] California likewise distinguishes valid offers from preliminary negotiations or agreements to negotiate. City of Moorpark v. Moorpark Unified School District, 34 Cal. App. 4th 1283, 1287 (1995)[2]