The Problem
Buyer attempting to hold seller to last week’s offer.
The Key Point
If not expressly defined, the seller’s offer is good for a “reasonable time.”
The Solution
The price quote should state that prices are only good for a specific fixed period.
Q. We are a distributor based on the West Coast and last week we offered a price to a customer for two truckloads of mixed vegetables. Since our customer did not respond back to us, we assumed they found a better price or another seller. Today, seven days later, our customer emailed us and reported they have accepted our offer. Do we have to honor an offer we made seven days ago? The market has fluctuated higher since last week, and we can no longer secure that exact price. Please advise.
A. To avoid this problem in the future, we would advise including a notation on any offer (price quote) you provide stating that offers are only good for a specific fixed amount of time, say, twenty-four hours.
Ideally, buyers would be given enough time to fairly consider the offer, but not so much time they can “play the market” at your expense.
Where no explicit time constraint is included in the offer, the offer remains open for a “reasonable time.” If your buyer accepts your offer during this timeframe, a binding contract will be formed.
Based on your scenario, in our view, seven days is not a “reasonable time” for your buyer to expect the offer to remain open, therefore it appears that no binding contract was formed.
If we were talking about two days, rather than seven, and your buyer could show a history of accepting offers (without any objections from you) after this amount of time, your buyer’s claim to have accepted your offer and formed a binding contract would be more difficult to refute.
The Problem
Buyer attempting to hold seller to last week’s offer.
The Key Point
If not expressly defined, the seller’s offer is good for a “reasonable time.”
The Solution
The price quote should state that prices are only good for a specific fixed period.
Q. We are a distributor based on the West Coast and last week we offered a price to a customer for two truckloads of mixed vegetables. Since our customer did not respond back to us, we assumed they found a better price or another seller. Today, seven days later, our customer emailed us and reported they have accepted our offer. Do we have to honor an offer we made seven days ago? The market has fluctuated higher since last week, and we can no longer secure that exact price. Please advise.
A. To avoid this problem in the future, we would advise including a notation on any offer (price quote) you provide stating that offers are only good for a specific fixed amount of time, say, twenty-four hours.
Ideally, buyers would be given enough time to fairly consider the offer, but not so much time they can “play the market” at your expense.
Where no explicit time constraint is included in the offer, the offer remains open for a “reasonable time.” If your buyer accepts your offer during this timeframe, a binding contract will be formed.
Based on your scenario, in our view, seven days is not a “reasonable time” for your buyer to expect the offer to remain open, therefore it appears that no binding contract was formed.
If we were talking about two days, rather than seven, and your buyer could show a history of accepting offers (without any objections from you) after this amount of time, your buyer’s claim to have accepted your offer and formed a binding contract would be more difficult to refute.
Cliff Sieloff is a claims analyst for Blue Book Services’ Trading Assistance group
