21. Will this communication operate as a legally effective revocation of his offer to deliver the stacks?

An ordinary offer is revocable at the will of the offeror, even if he has promised not to revoke for a certain period. However, there are several exceptions to the general rule allowing revocation: (i) the standard option contract; (ii) firm offers under the UCC; and (iii) temporary irrevocability as the result of the offeree's part performance or detrimental reliance.

Article 2 of the UCC allows for circumstances in which a promise to keep an offer open is enforceable (i.e., the offer becomes irrevocable), even if no payment has been made to keep it open (i.e., no consideration) under § 2-205, if: (i) the offer is made by a merchant (a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction); (ii) the merchant's offer is in a signed writing; and (iii) the writing gives explicit assurance that the offer will be held open (e.g., «this offer will be held open for 10 days»). When an offer meets these three criteria, it will be held irrevocable even though there is no consideration given for keeping it open.

If the UCC firm offer states a time period for how long the offer remains open and irrevocable, that time period governs how long the offer remains irrevocable. If the firm offer did not state a period of time, it will be held irrevocable for a reasonable time. A firm offer cannot be made irrevocable for more than three months, even if contracted to remain open for longer.

An offer creates a power in the offeree to enter into a contract. The offeree enters the contract by making his acceptance. In most cases, the offer does not by itself bring a contract into being, and the contract is formed only when the offer is accepted. One kind of offer, however, known as an option, is not only an offer to contract, but is at the same time a contract in which the offeror promises that he will keep the offer open for a certain amount of time. At common law, the only way an option contract could be formed was if the offeree gave the offeror consideration in return for the offer. Otherwise, the option was revocable.

The consideration doctrine is designed to enforce promises that are «bargained for.» There are some promises which, although the promisor makes them without bargaining for anything in return, nonetheless induce the promise to rely upon to his legal detriment. Where the offeror could reasonably expect that the offeree would rely to his detriment on the offer, and the offeree does so rely on, the offer will be held irrevocable as an option contract for a reasonable length of time. These situations require that the offeror would reasonably contemplate reliance by the offeree in using the offer before it is accepted.

B is correct. This communication is a legally effective revocation of the offer to deliver the stacks because the UCC firm offer rule did not apply. Under the UCC's firm offer rule, an offer by a merchant contained in a signed writing which by its terms gives assurance that it is firm will be irrevocable notwithstanding lack of consideration for the time stated in the offer (if less than three months). A merchant is a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction. Because the accountant was not a merchant of law books or stacks, his November 10 offer to deliver the book stacks does not fall under the UCC firm offer rule and can be revoked at any time. Further, because the lawyer did not give consideration to support an option, the offer is revocable at any time prior to acceptance by the lawyer.

A is incorrect. This answer reaches the correct answer with the wrong reasoning. The communication amounted to a revocation, but not because of a pre-existing obligation to pay for the law books. The call of the question is asking whether the accountant's communication on November 12 will operate as a legally effective revocation of his offer to deliver the stacks. While it is true that the lawyer did not give consideration to support the option, this does not best address the accountant's communication. Rather, the communication was a revocation because the accountant was not a merchant, thus precluding the application of the UCC firm offer rule.

C is incorrect. Although some of the elements of the UCC firm offer rule are satisfied based on the fact that it was in writing and contained an assurance that it would be held open until November 15, it was not a firm offer. The accountant was not a merchant, as required to make a firm offer. Moreover, absent consideration, no option was created.

D is incorrect. There is no indication that the accountant should have reasonably foreseen that the lawyer would detrimentally rely on the promise not to sell the stacks to anyone else, or that the lawyer did rely such that he suffered a detriment. Thus, any reliance by the lawyer on the accountant's promise was not reasonable.