Future Business Leaders of America (FBLA) Business Law Practice Exam

What is a firm offer?

1. An informal agreement between friends

2. A merchant's verbal promise to negotiate

3. A merchant's written promise to hold an offer open

4. A temporary discount provided to customers

The correct answer is: A merchant's written promise to hold an offer open

A firm offer refers specifically to a merchant’s written promise to hold an offer open for a specified period of time. This concept is primarily established under the Uniform Commercial Code (UCC), which governs commercial transactions in the United States. The key characteristic of a firm offer is that it must be made by a merchant and must contain a clear assurance that the offer will remain open and not be revoked for a specified duration. This protects the offeree's reliance on the offer, allowing them the time needed to evaluate the proposal without the risk of it being taken off the table unexpectedly. In contrast, an informal agreement between friends lacks the formalities and legal enforceability that characterize a firm offer. Similarly, a verbal promise to negotiate does not provide the same level of assurance or commitment, as it does not guarantee that an offer will remain open. Lastly, a temporary discount offered to customers is unrelated to the concept of a firm offer, as discounts do not serve as binding promises to hold an offer open for a certain timeframe. Thus, the definition of a firm offer is distinctly tied to the assurance given by a merchant in a written format to keep an offer available for acceptance.