Irrevocable Offers

Question 1

Firm Offer

Answer 1

Under the common law, a firm offer is an offer which is irrevocable because an option has been paid for by one of the parties. Under the UCC, an option need not be paid for if the firm offer was made by a merchant who signed it in writing giving assurance that the offer will remain open for a certain or reasonable length of time not to exceed three months.

Question 2

Option

Answer 2

An option is a purchased right to perform or to require performance of the terms of a contract within a specified length of time.

Question 3

Option Contract

Answer 3

An option contract is a contract which includes an option, that is, an agreement between parties which is supported by consideration and which involves a promise to hold an offer open for a specified period of time.

Question 4

Caldwell v. Cline

Answer 4

Under Caldwell v. Cline, if an offer states that it will be open for a certain number of days, the first day is the day the offeree receives the offer.

Question 5

Mailbox Rule and Acceptance of Options

Answer 5

The Mailbox Rule does not apply to acceptance of an option. The acceptance (exercising the option) is valid when received.