Case Details of Grainger & Son v Gough [1896]
Case name & citation: Grainger & Son v Gough [1896] AC 325 (HL)
Year of the case: 1896
Jurisdiction: The House of Lords, UK
Learned judge: Lord Herschell
Area of law: Offer and invitation to treat
What is the case about?
The case of Grainger & Son v Gough concerned a dispute between G&S and a customer, Gough, over the formation of a contract for the sale of wine.
Facts of the case (Grainger & Son v Gough)
Grainger & Son (G&S) was a wine merchant that circulated a catalogue containing a price list of its products. The claimant, Gough, placed an order for wine from the defendant, Grainger & Son (G&S), after seeing the price list in G&S’s catalogue. However, G&S refused to supply the wine to Gough, and Gough sued, alleging that a contract had been formed.
Issue that arose
The Court had to decide whether the price list in the catalogue constituted an offer or an invitation to treat.
Judgment of the Court in “Grainger & Son v Gough”
The decision was taken in favor of the defendant.
The Court ultimately held that the price list was an invitation to treat, and not an offer. This means that Gough’s order was not an acceptance of an offer, and a contract was not formed.
The reasoning behind the decision
The House of Lords observed that if the price list in G&S’s catalogue was treated as an offer instead of an invitation to treat, it would place an unreasonable burden on G&S to deliver an unlimited quantity of wine at the quoted prices upon receipt of any order. This is because the stock of G&S was objectively limited, making it impossible for them to fulfill an unreasonably large number of orders, which they would be unable to carry out. As a result, the price list was interpreted as an invitation for customers to make an offer to purchase the wine at the quoted prices, which G&S could then accept or reject. Here, since G&S did not accept the order placed by Gough, no contract came into place.
The legal point emerging from “Grainger & Son v Gough”
This case established the principle that an invitation to treat is not an offer, and that an offer must be accepted in order to form a contract.
The general principle concerning advertisements
Advertisements that offer specified goods at a certain price, such as those found in newspapers and magazines, are generally considered invitations to treat. This is because these advertisements may lead to further negotiation or bargaining between the parties, and it may not be reasonable to expect the advertiser to sell to everyone who responds to the advertisement since stocks could run out. An invitation to treat is not an offer and does not create a binding contract. Instead, it is an invitation for the other party to make an offer to purchase the goods at the advertised price. If the offer is accepted by the advertiser, a contract is formed.
Key Takeaways
- The case of Grainger & Son v Gough concerned the creation of a contract for the sale of wine.
- The Court had to decide whether a pricing list in a catalogue constituted an offer or an invitation to treat.
- The pricing list, according to the Court, was an invitation to treat, and no contract was made.
- The decision was founded on the premise that accepting the price list as an offer would be unfair to the seller.
- The case established that advertisements are usually seen as invitations to treat rather than offers.
List of references:
- https://www.pbookshop.com/media/filetype/s/p/1405700635.pdf
- https://www.acecollege.in/CITS_Upload/Downloads/Books/1029_File.pdf
- https://www.pearsonhighered.com/assets/samplechapter/e/l/l/i/Elliott_contract_C01.pdf
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