An invitation to treat is an action inviting other parties to assemble an offer to create a contract. These actions may seem to be offers themselves periodically, and the difference can sometimes be difficult to determine. The difference is significant because accepting an offer makes a binding contract, while “accepting” an invitation to treat is making an offer.
An invitation to treat (or invitation to bargain in the United States) is a notion within contract law that comes from the Latin phrase invitation ad offerendum, meaning “inviting an offer.”
An invitation to treat is an expression of willingness to negotiate. A person making an invitation to treat doesn’t intend to be bound as it is accepted by the individual to whom the statement is addressed.
Sometimes, a person may not offer to sell their goods, but makes some mention or gives some details to invite others to make offers. Correspondingly, inviting individuals to an auction where goods to be auctioned are displayed is not an offer for the sale of goods. The offer is created by the intending buyers in a bid. An offer will result in a contract when accepted by the fall of the hammer or some other customary way.
A contract is a legally binding uncoerced agreement formed when one individual makes an offer, and the other accepts it. There may be some prior dialogue before an offer is formally created. Such pre-contractual representations are understood variously as “invitations to treat,” “requests for information,” or “statements of intention.”
Genuine offers may be accepted to form a contract, whereas representations such as invitations to treat may not. Nevertheless, although an invitation to treat cannot be accepted, it should not be disregarded, for it may nevertheless impact the offer. For instance, where an offer is made in reply to an invitation to treat, the offer may include the terms of the invitation to treat (unless the offer expressly incorporates different terms). If, as in the Boots case (described below), the offer is made by an action without negotiations—such as showing goods to a cashier—the offer will be presumed on the invitation to treat.
Advertisements are usually invitations to treat, permitting sellers to refuse to sell products at erroneously marked prices. Advertisements can also be deemed offers in some specific cases. Auctions are sometimes invitations to treat, allowing the seller to accept bids and choose which to accept. Nevertheless, if the seller declares that there is no reserve price or the reserve price has been satisfied, the auction will be deemed an offer accepted by the highest bidder.
How Can I Tell Whether Something Is an Offer or an Invitation to Treat?
An invitation to treat will be anything exhibited to many individuals with an indefinite way of deciding who can accept. An offer will be directed at a specific individual with specified terms. So, if an item is shown saying it will be sold to the highest bidder or to the first to accept the marked price, it will be deemed an offer. If an item is exhibited in a store window, it will not be an offer.
What Is the Case Law Surrounding Invitation to Treat?
Typically, advertisements are not offers but invitations to treat, so the individual advertising is not coerced to sell. In Partridge v Crittenden a defendant charged with “offering for sale protected birds”—bramble finch cocks and hens that he had publicized for sale in a newspaper—was not offering to sell them. Lord Parker CJ expressed it did not make business sense for advertisements to be offers. The individual making the advertisement may find himself in a position where he would be contractually obliged to sell more goods than he owned.
In specific cases called unilateral contracts, an advertisement can be an offer; as in Carlill v Carbolic Smoke Ball Company, where it was held that the defendants, who promoted that they would pay £100 to anyone who sniffed a smoke ball in a specified way and yet caught influenza, were contractually obliged to pay £100 to whoever accepted it by conducting the required acts.
A presentation of goods for sale in a shop window or within a shop is an invitation to treat, as in the Boots case, a leading case involving supermarkets. Therefore, the shop owner is not obliged to sell the goods, even if signage such as a “special offer” accompanies the display. Also, in Fisher v Bell, picturing a flick knife for sale in a shop did not violate legislation that restricted “offering for sale an offensive weapon.” If a shop erroneously depicts an item for sale at a very low price, it is not obliged to sell it for that amount.
For an offer to become binding on acceptance, the offer must be definite, clear, and objectively intended to be capable of acceptance.
In England, auctions are controlled by the Sale of Goods Act 1979 (as amended).
Section 57(2) provides: “A sale by auction is complete when the auctioneer announces its completion by the fall of the hammer, or in another customary manner. Until the announcement is made any bidder may retract his bid”. S. 57(3) also delivers: “An auction sale may be subject to a reserve price.” Yet, if the auction is held “without reserve” then the auctioneer is obliged to sell to the highest bidder.
It is implied from Payne v Cave, an early case involving auctions, that each bid is thought to lapse when others make higher bids. Still, some auctioneers (such as eBay) have legally amended this premise so that, should a higher bidder withdraw his bid; they may accept a lower one.
The tender methodology is a disputed topic. In the case of Spencer v Harding, the defendants proposed to sell stock by tender, but the court held that there was no promise to sell to the highest bidder, just an invitation for offers which they could then accept or reject at will.
In special cases, an invitation for tenders may be an offer, as in Harvela Investments v. Royal Trust of Canada, where the court held that because defendants had made clear an intention to accept the highest tender, then the invitation to tender was an offer accepted by the individual making the highest tender. The Harvela case also made it evident that “referential bids” (e.g. “$2,100,000 or $101,000 above any other offer which you may obtain, whichever is the loftier”, as in the Harvela case) are void as being “contrary to public policy and not cricket.”
Do I Need a Lawyer?
Contract law is complex, and the applicable regulations may differ between states. If you want to be sure you are not making an offer but inviting offers only or thinking that you have a valid contract and want to enforce it, you should speak with a contract’s attorney. A qualified business attorney can also assist you with proper drafting and protection if you want to enter into a contract. Use LegalMatch to find the right contract lawyer for your legal needs.
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