Difference between Offer and Invitation to Treat (Offer)
It is important to distinguish between an offer and an invitation to treat because the legal consequences are different. An offer can be accepted to form a contract, while an invitation to treat cannot. Or to put it another way, an offer is an essential element to establish an agreement, while an invitation to treat is not (until it becomes an offer).
What is an Offer?
An offer is a definite proposal made by one party to another party to enter into a contract. The offer must be clear and specific, and it must be communicated to the other party. An offer can be accepted by the other party, resulting in a binding contract, or it can be rejected.
For example, if a seller offers to sell a specific item at a specific price to a buyer, and the buyer accepts the offer, a contract is formed. The offer must contain all the terms of the agreement, including the price, the payment terms, and any other conditions that must be met.
What is an Invitation to Treat (Offer)?
An invitation to treat, on the other hand, is not a definite proposal but rather an invitation for the other party to make an offer. It is a way of inviting the other party to make a proposal or offer. An invitation to treat is not a binding offer and cannot be accepted to form a contract. Instead, it is a preliminary communication that precedes the offer.
An example of an invitation to treat is a store displaying goods for sale on its shelves. The display of goods is an invitation for customers to make an offer to purchase the goods. The customer’s offer to purchase the goods is then accepted or rejected by the store.
Another example of an invitation to treat is an advertisement. An advertisement is not an offer but rather an invitation for the public to make an offer to purchase the advertised goods or services.
Difference between Offer and Invitation to Treat (Offer) in a tabular form
|Offer||Invitation to treat|
|A definite proposal made by one party to another party to enter into a contract||An invitation for the other party to make an offer|
|Must be clear and specific||Not necessarily clear and specific|
|Made with the intention of creating a legally binding agreement||Made as a preliminary communication to precede an offer|
|An offer can be accepted by the other party to form a contract.||But an invitation to treat cannot be accepted to form a contract. Instead, the other party must make an offer in response to the invitation to treat.|
|An offer is usually made in the context of a potential contract.||While an invitation to treat is usually made in the context of a potential negotiation.|
Relevant case laws on Offer and Invitation to Treat (Offer)
Here are a few examples of case law involving offers and invitations to treat:
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1953)
In the case of Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1953), the defendants, Boots Cash Chemists, operated a self-service pharmacy where customers could purchase medicine without the assistance of a pharmacist. The plaintiffs, the Pharmaceutical Society of Great Britain, argued that this violated the Pharmacy and Poisons Act 1933, which required a pharmacist to be present whenever prescription medicine was sold. The court ruled that the display of medicine for sale in the self-service pharmacy was an invitation to treat and not an offer. Customers were required to request the medicine from a pharmacist, who would then determine whether to sell the medicine based on the customer’s needs and the pharmacist’s professional judgment.
Harris v Nickerson (1873)
Harris v Nickerson was a case in which the plaintiff, Mr. Harris, claimed that the defendant, Mr. Nickerson, had breached a contract by withdrawing certain items from an auction that had been advertised in the London papers. The court held that the advertisement was not an offer to contract, nor was it a warranty that all the items advertised would be put up for sale. Instead, it was simply a declaration to inform potential buyers that the sale was taking place. As such, Mr. Nickerson was not legally bound to auction the items in question on any particular day, and the plaintiff’s claim was dismissed.
Fisher v Bell (1961)
In Fisher v Bell (1961), the court held that the display of a flick knife in a shop window, accompanied by a price tag, was not an offer for sale, but rather an invitation to treat. This means that the shopkeeper was not offering to sell the knife to anyone who saw it in the window, but rather inviting potential customers to make an offer to buy the knife.
Under the general principles of contract law, an offer is a definite and unconditional statement of willingness to enter into a contract on certain terms. In order to be considered an offer, there must be an intention to create legal relations, and the terms of the offer must be sufficiently certain and definite.
In this case, the court determined that the display of the knife in the window, accompanied by a price tag, was not an offer because it did not meet the requirements of an offer under contract law. The display of the knife was not a definite and unconditional statement of willingness to sell the knife, and it was not intended to create legal relations. Instead, the court held that the display was simply an invitation to treat, or an invitation for potential customers to make an offer to buy the knife.
As a result of this decision, the defendant was not found guilty of offering a flick knife for sale, contrary to the Restriction of Offensive Weapons Act 1959.
Summarizing the discussion
The final expression by the offeror that he is willing to be bound to his promise is called an “offer”. It is possible for someone to make a statement or provide some information without really making an offer to sell their goods in order to entice others to make an offer based on that information. When a party, without expressing his final willingness, proposes specific terms on which he is willing to negotiate, he does not make an offer but merely “invite(s)” the other party to make an offer on those terms. For instance, a bookseller might send a catalogue containing a pricing list of various books to a large number of people. This serves as an “invitation to treat”. Any party who is interested may make an offer and the bookseller may accept or reject the offer.
Likewise, advertisements for bids/ tenders are only an “invitation to offer”. The bid/tender constitutes an offer that can be either accepted or rejected. Therefore, an auctioneer is not bound to accept even the highest bid made (or offer made).
I hope this helps clarify the differences between an offer and an invitation to treat.
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