A best and final offer represents the ultimate offer to be made in a negotiation or bidding process. Parties use the terminology to convey the intention that further negotiation will not be undertaken – the offer may only be accepted or rejected.
Best and final offers are usually seen in circumstances where a party is dealing with multiple bids. One common example is the sale of real estate. When a market is hot, a seller may receive multiple offers. Rather than attempt to enter into negotiations with multiple parties, the seller may simply ask each potential buyer to make a best and final offer. Some people refer to this circumstance as a “bidding war.” The seller then reviews the terms of all of the offers and decides which one to accept. Sometimes, determining which offer is best is more complicated than simply comparing the prices offered. For example, different bidders may include a variety of contingencies and other terms which must be considered.
Businesses in a number of industries also request best and final offers as part of their bidding processes. For example, construction companies may seek best and final bids from potential subcontractors. Similarly, an industrial company that produces a product may need to purchase supplies from numerous vendors. The producer may ask interested parties to submit bids. In some cases, a best and final offer is requested, especially in a final round of negotiations.
Additionally, governmental entities may request best and final offers from a variety of vendors. These requests can relate to services or products. As discussed above, price is important, but should not be the only consideration. The governmental entity will also weigh other terms of an offer, including a bidder’s reputation for quality and reliability.
In the examples above, one party requested best and final offers from bidders. However, any potential contracting party may label an offer as a best and final offer, signifying to the other party that no further improvements to the offer are anticipated.