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28. Is the price increase effective with respect to catalog orders the retailer receives from the lawyer during the month of February?
Assume that on January 15, having at that time received no reply from the lawyer, the retailer notified the lawyer that effective February 1, it was increasing the prices of certain specified items in its catalog.
On December 15, a lawyer received from a retailer of supplies an offer consisting of its catalog and a signed letter stating, «We will supply you with as many of the items in the enclosed catalog as you order during the next calendar year. We assure you that this offer and the prices in the catalog will remain firm throughout the coming year.»
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The UCC allows an offer to be irrevocable under certain circumstances even if no recitation of the payment of consideration is made under § 2-205 if the offer: (i) 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) is contained in a signed writing; and (iii) gives explicit assurance that the offer will be held open. When an offer meets all these criteria, it will be irrevocable even though there is no consideration given for keeping it open.
If a firm offer states a time period for how long it will remain open and irrevocable, that time period governs how long the offer will be 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.
B is correct. As a seller of office supplies, the retailer is a merchant under the UCC. The seller's offer to the lawyer was a firm offer because it was made by a merchant, was contained in a signed writing, and provided the necessary assurances. The fact that the period of irrevocability exceeded three months did not automatically invalidate the firm offer, but rather, the offer will only be firm for three months before becoming revocable. Because, as of January 15, the three-month period had not yet elapsed, the offer is still firm and the retailer is not free to change the prices contained in the December 15 offer.
A is incorrect. Some offers can be held to be irrevocable when an offeree takes action in reliance on the offer before the formation of a formal contract. However, the facts do not show substantial reliance on the offer.
C is incorrect. When an offer meets all the criteria for a UCC firm offer, it will be held irrevocable even though there is no consideration given for keeping it open.
D is incorrect. As explained above, when the offer purports to be firm for more than three months, the firm offer is not invalidated but rather irrevocable for only three months. After the three months have passed, the offeror may then revoke the offer.