A firm offer is a legally binding offer that cannot be revoked or modified until it’s accepted or rejected. This type of offer is typically used in commercial real estate, business sales, and other types of commercial transactions.
Essentially, a firm offer means that the person making the offer must honor it if the person to whom the offer is made chooses to accept it. The offer must stay in effect until it’s rejected or accepted, unless the parties involved agree otherwise.
A firm offer is the antithesis of an option agreement. An option agreement gives the person receiving the offer the right to accept at any time before a certain date. The offeror in an option agreement can revoke the offer any time before the expiration of the offer’s term.
A firm offer is different in that the offeror can’t revoke the offer, even if the offer isn’t accepted. This is important in cases where one party is offering a purchase or lease of property, for example, with a large downpayment or non-refundable earnest money. A firm offer ensures that the funds won’t be taken away if the offer is rejected.
The consequences for a party who fails to keep a firm offer can be severe. A breach of this type of offer can result in the other party seeking damages for any losses incurred as a result of the breach. In addition, an offeror can be held liable for any money received as part of the offer, such as earnest money.
Firm offers must be written in plain language so that all parties involved are aware of its terms. It’s also important that the offer be signed by the offeror in order to be legally binding. This creates a clear record of the offer and acceptance and makes it much easier to enforce later.
Understanding the concept of a firm offer is important for understanding legal agreements and other business commitments. Making sure that an offer is clearly stated and properly signed is essential for both parties involved in any type of agreement.