When a merchant offeror makes a written offer to buy or sell goods giving assurances that the offer will be held open?

A hotelier opening a new inn in the Pacific Northwest sent letters to all known hotel and motel suppliers on June 1, alerting them to his need for such items as ice buckets, televisions, linen, and mattresses. The hotelier received a letter dated June 8 from a hotel supply company, stating that the company had 250 ice buckets left in stock and will sell them to the hotelier for $1 each. The company added that it must receive the hotelier's answer by November 1 and will hold the ice buckets for the hotelier until then. On July 1, the company sold 200 of the ice buckets to a competing hotel chain, which had recently opened a hotel on the East Coast. On July 2, the company sent the hotelier a fax stating it had only 50 ice buckets left for sale. The hotelier received the fax that day, but put it aside and never read it. On July 10, the hotelier notified the company that he was accepting the company's offer to sell 250 ice buckets. The company, upon receiving the hotelier's acceptance, shipped the remaining ice buckets. The hotelier sues the company for failing to deliver all 250 ice buckets.
Will the hotelier prevail?

A. No, because the hotelier is not a hotel supply merchant.

B. No, because the company's offer was to remain open for more than three months.

C. Yes, because the company promised in a signed writing to hold the offer open.

D. Yes, because the hotelier never read the company's July 2 fax.

The hotelier will prevail. Ice buckets are movable goods; therefore, Article 2 of the UCC applies. The June 8 letter from the supply company is a firm offer under UCC section 2-205. No consideration is required, because the company is a "merchant" (i.e., one who ordinarily deals in goods of the kind sold) of ice buckets. Where a time period for the offer is stated, the period of irrevocability is that period, except that the period cannot exceed three months. Here, the three-month period would end on September 8. The company's fax stating that it had only 50 ice buckets left to sell constitutes an invalid attempt at revocation, because it is within the three-month period of irrevocability. (A) is incorrect because section 2-205 does not require that the offeree of a firm offer be a merchant; it requires that the offeror be a merchant, and the company is (see above). (B) is incorrect because a firm offer that states a period longer than three months is still firm for the first three months. (D) is incorrect because the hotelier's knowledge, or lack thereof, of the "revocation" of the company's offer is irrelevant because it was invalid; the fact that the company made a firm offer prevents it from revoking the offer within the stated time, not to exceed three months.

An art collector was interested in buying a painting from his neighbor. The neighbor told the collector that he could have the painting for $30,000. The collector wanted to think the purchase over. Therefore, the two agreed in writing that the neighbor would keep the offer open for 30 days in exchange for $500, which the collector paid. The terms of the written agreement provided that the offer would expire at 11:59 p.m. on September 30 if the collector failed to accept by that time. On September 20, the collector telephoned his neighbor and told him, "The more I think about it, the less I think that I want your painting." The neighbor responded, "That's your decision to make." On September 26, one of the neighbor's friends was visiting him, saw the painting, and offered his friend (the neighbor) $35,000 for it.
On September 27, the neighbor mailed a $50 check to the collector with a letter stating that he was terminating his offer to the collector regarding the painting and refunding 10% of the money that the collector paid him to keep the offer open. He mailed the letter at 11:59 p.m. on September 27. The collector received the letter at 11:30 a.m. on September 29. On September 28, at 9:30 a.m., the collector mailed a letter to his neighbor stating that he had decided to purchase the painting and a certified check in the amount of $30,000 was enclosed. Two hours later, the neighbor sold the painting to his friend for $35,000. The neighbor received the collector's letter on October 1 and immediately mailed the check back to the collector.
Can the collector maintain a successful legal action against his neighbor?

A. Yes, because the neighbor sold the painting after the collector's effective acceptance, and before the neighbor's revocation became effective.

B. Yes, because in his revocation the neighbor did not refund the full $500 to the collector.

C. No, because the neighbor effectively revoked his offer before the collector accepted.

D. No, because the collector's power to accept lapsed before he effectively accepted.

The collector's power to accept lapsed because the option contract specified that the offer would expire at 11:59 p.m. on September 30. Hence, the power had to be exercised prior to that time and it was not. The mailbox rule does not apply to the exercise of options. In such cases, acceptance is effective when received by the offeror, here on October 1. Thus, (D) is correct. (A) is wrong because, for the reasons discussed above, the collector did not effectively accept before his option expired. (C) is wrong for two reasons: (i) a revocation is not effective until received; and (ii) because the contract is an option, the offeror's power to terminate the offer through revocation is limited. Even if the revocation had arrived earlier, the neighbor lacked the power to revoke. (B) is irrelevant. Returning the consideration, in and of itself, would not give the offeror the power to revoke in an option situation.

A farmer who supplies several local bakeries with grains wanted to sell his rye before the growing season was over. The farmer sent the following e-mail to a local baker: "Will sell my unprocessed rye, 20 bushels maximum, best price $100 per bushel, firm for 48 hours. /s/ Farmer." Unsure how the baker would respond, and anxious to find a buyer for the rye, the farmer made the same offer to the baker's chief competitor by e-mail later that same day. The baker was delighted to receive the offer, but needed a day or so to figure out how much rye she needed. When she accepted the farmer's offer the next day, e-mailing to him an order for 20 bushels, she was aware of the farmer's offer to her competitor, and that her competitor had also e-mailed an order to the farmer for 20 bushels. Unbeknownst to the baker, the farmer has only 30 bushels of rye left in his fields.
Assuming the farmer is a merchant with respect to rye, which of the following states the probable legal consequences of the correspondence between the parties?

A. The farmer has a contract with the baker and her competitor for 15 bushels each.

B. The farmer has a contract with the baker's competitor for 20 bushels and a contract with the baker for the remaining 10 bushels.

C. The farmer has a contract with the baker for 20 bushels and a contract with her competitor for 20 bushels.

D. The farmer has a contract with neither the baker nor her competitor.

The farmer has two contracts, one with the baker and one with the competitor, for 20 bushels each. Because his e-mail provided a firm price for 48 hours and the farmer is a merchant, the offer was an irrevocable firm merchant's offer during the 48 hours. Under the UCC, which governs here because goods are involved, a written offer signed by a merchant giving assurances that it will stay open will be irrevocable for the time stated. The farmer qualifies as a merchant of rye (one who deals in goods of that kind sold) and his offer was written and signed and contained words of firmness ("firm for 48 hours"), so it was irrevocable for 48 hours. The baker accepted the offer within the stated time. Thus, a contract was formed between the baker and the farmer. A contract was also formed between the baker's competitor and the farmer because the competitor accepted the farmer's offer. Therefore, the farmer is obligated to both the baker and her competitor for 20 bushels. If the farmer does not have the appropriate quantity in his field, he will have to procure it from somewhere else or be in breach. (A) and (B) are incorrect because they do not reflect the terms of the contracts agreed to by the parties. If a seller is unable to fully perform because of an unforeseen circumstance (i.e., impracticability), he must allocate deliveries between customers. First, this is not an unforeseen circumstance. Second, allocating between customers does not change those contracts. It is still a breach, and the customers may cancel the contract. (D) is incorrect because, as explained above, the farmer has a contract with both the baker and her competitor.

What is a merchant's promise to leave an offer open called?

What is the term for when a merchant gives a written signed assurance that he or she will not revoke an offer for a stated period of time?

What is a merchant's firm offer?

When the Offeror takes back the offer it is called?