case study related to invitation to treat

OFFERS & INVITATIONS TO TREAT

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JUMP TO: BILATERAL & UNILATERAL OFFERS : Errington v Errington & Woods | Carlill v Carbolic Smoke Ball INVITATIONS TO TREAT : Gibson v MCC, Storer v MCC | Harvey v Facey | Partridge v Crittenden | Grainger v Gough | Bowerman v ABTA | Fisher v Bell | Pharmaceutical Society of GB v Boots | Spencer v Harding | Harvela v Royal Trust Co of Canada | Blackpool & Fylde Aero Club v Blackpool BC | Payne v Cave | Barry v Davies COMMUNICATION OF AN OFFER : Taylor v Laird REVISE | TEST

OFFERS AND INVITATIONS TO TREAT

An offer is ‘an expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed.’ Treitel

BILATERAL AND UNILATERAL OFFERS

All contractual offers are either bilateral or unilateral.

Another key distinction between a bilateral and unilateral contract is that in a bilateral contract the exchange of promises takes place simultaneously whereas in a unilateral contract the making of the promise and the performance of the act usually occur at different points.

An example of a unilateral offer made to one party is Errington v Errington & Woods (1952) (CoA) .

Mr. Errington paid the deposit on a house and offered to give it to his son and daughter-in-law if they paid the mortgage instalments. Once the act of paying all of the instalments had been completed then the house would belong to them. The couple split up but the daughter-in-law continued to make the repayments. Mr. Errington died and his widow tried to claim the house as her own but the court held that it would be unfair to revoke the offer. If the daughter-in-law finished making repayments she would own the house as originally offered. This case also arises in Revocation .

An example of a unilateral offer made to multiple parties is Carlill v Carbolic Smokeball Company (1893) (CoA) .

An advert for an anti-influenza smokeball offered £100 to anyone who used the ball but still caught the flu. Mrs Carlill, having read the advert, bought and used a smokeball but it didn’t work and she became ill. When she claimed the £100 the company refused to pay. The court held that the defendant had made a unilateral offer ‘to all the world’; their advert had offered £100 in return for a specified an act, buying and using a smokeball that didn’t work. They had also shown intention to be bound by stating that £1,000 was in an account ready for any claimants. Mrs Carlill had fulfilled the act and therefore they were bound to their offer and must pay Mrs Carlill £100.

See ‘Case Summary…the background to Carlill v Carbolic’ for more detail on this seminal case.

INVITATIONS TO TREAT

Sometimes what seems like an offer is in fact an invitation to treat.

An invitation to treat, instead of being an offer, is an invitation to the other party to make an offer. Unlike a party making an offer, a party communicating an invitation to treat does not intend to be bound by their statement.

There are 5 specific scenarios where we must distinguish between offers and invitations to treat…

UNCERTAIN OFFERS

If the wording of an offer is not CLEAR and CERTAIN then it cannot be a valid offer. Words such as ‘might’, ‘may’ or ‘perhaps’ could indicate that this is an invitation to treat and that the party did not intend to be bound.

Compare the two cases below…

To read an in-depth case summary and comparison of Gibson v MCC and Storer v MCC click here .

The case of Harvey v Facey (1893) (PC) is another good example. Mrs. Facey owned a piece of land called Bumper Hall Pen in Jamaica. Harvey asked Mr. Facey to send him a telegraph stating whether he was willing to sell Bumper Hall Pen and what the lowest price was that he would accept for the property. Facey replied stating £900. Harvey took this as an offer and accepted. When Harvey discovered that Facey was trying to sell the property to the city of Kingston he sued for breach of contract. However, the Privy Council found that Facey had made no clear offer to sell only an invitation to treat. Facey’s telegram had not stated any clear intention to be bound, he was simply responding to a request for information. Harvey’s telegram stating that he would buy for £900 was an offer that Facey rejected.

Most adverts are invitations to treat and not offers  (Partridge v Crittenden (1968) (HC)) .

The defendant had placed an advert for ‘live birds’ in a specialist journal. He was charged with ‘offering for sale’ live birds in contravention of s.6(1) Protection of Birds Act 1954 . However, the court ruled that he was not guilty because his advert was not an offer. Rather he had made an invitation to treat, the general public was being invited to make an offer.

In Grainger v Gough (1896) (HoL) this rule was explained. The defendant was a wine merchant who had sent out a wine catalogue and price list. When Grainger ordered some wine Gough refused to sell at the stated price. Grainger sued for breach of contract. The House of Lords found that the catalogue was an invitation to treat and not an offer. If all adverts, or catalogues, were offers then the seller would be legally bound to sell to anyone who had seen the advert. Bearing in mind that most sellers have limited stock this would be unreasonable. However, in obiter it was proposed that if the offeror was a manufacturer (who could make an unlimited amount) then this principle may not apply and their advert may constitute an offer.

This principle was also applied in Bowerman v Association of British Travel Agents Ltd (1996) (CoA) . Bowerman booked a holiday that was advertised as being covered by ABTA in case of cancellation. When the holiday was cancelled ABTA claimed that this was an advert and therefore not a binding offer. The Court of Appeal disagreed; the advert was making a unilateral offer…buy this holiday and we will cover you if it is cancelled. Any ordinary person on the street would have read the advert in this way, therefore ABTA were bound by their offer.

GOODS ON DISPLAY

The general rule is that goods on display in shops are invitations to treat  (Fisher v Bell (1961) (HC)) .

A shopkeeper was charged with the offence of offering to sell knives under the Restriction of Offensive Weapons Act 1959. However, he was not found guilty because the knives in the shop window were an invitation to treat and not an offer. The customer would have to make an offer to the shopkeeper if they wanted to buy one.

After this case the statute was amended by the Restriction of Offensive Weapons Act 1961 to close this loop hole. The wording was amended to include weapons that a seller exposes or has in his possession for the purpose of sale or hire. Under this law Bell would have been found guilty.

This is still the case if the goods are available in a self-service shop (Pharmaceutical Society of Great Britain v Boots Cash Chemists (1953) (CoA)) . The customer makes the offer to buy when they take the goods to the counter. It will then be for the shopkeeper to accept or decline the offer.

There is a good public policy reason behind this rule. Were goods on display to amount to ‘offers’ customers might be regarded as accepting them by merely selecting goods around the shop. If this were the case a valid contract would be formed and the customer would technically be in breach of contract if they changed their mind and wanted to return the items before arriving at the checkout.

Automatic machines represent a standing offer, acceptance is activation of the machine (i.e. issuing a ticket). This principle was established in  Thornton v Shoe Lane Parking (1971) (CoA) which involved a ticket machine at a car park barrier. For more on this case see the page on Exemption Clauses .

CALL FOR TENDERS

A call for tenders is not an offer but an invitation to treat. Instead, the submitted tender constitutes an offer (Spencer v Harding (1870) (Court of Common Pleas)) .

Harding distributed a circular stating; ‘we are instructed to offer…for sale by tender the stock in trade of Messrs G Eilbreck and Co’. Spencer submitted the highest tender but it was refused. He was unable to sue for breach of contract because the call for tenders was only an invitation to treat and not an offer. It invited other parties to make an offer by submitting a tender, and as the court stated, ‘there was a total absence of any words to intimate that the highest bidder is to be the purchaser’. Therefore Spencer had not entered into a contract but had merely made an offer which was not accepted.

EXCEPTIONS TO THE RULE – SPECIFIC BIDS

If a call for tenders states that a specific bid (e.g. the highest) will be chosen then it does constitute an offer (Harvela Investments Ltd v Royal Trust Co of Canada (1986) (HoL)) .

This is because the offeror has made a unilateral offer – a specific act (be the highest bidder) with intention to be bound – and the offeree has fulfilled the request.

EXCEPTION TO THE RULE – COLLATERAL OFFERS

A call for tenders is accompanied by a collateral offer to at least consider all tenders which are submitted correctly (Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council (1990)(CoA)) .

A call for tenders was made by Blackpool BC. The deadline was 12pm on 17th March. BFAC submitted on 11am but their tender was never reviewed. The court said that while the Council was not obliged to accept BAFC’s specific tender they were duty bound to consider it.

Like other adverts, an advert for an auction is an invitation to treat, there is no offer to sell particular goods or to hold the auction at all (Harris v Nickerson (1873) (HC)) .

COMMUNICATING AN OFFER

A valid offer must be communicated to the offeree. They can then decide whether to accept or reject it  (Taylor v Laird (1856 (Court of Exchequer)).

The captain of a ship voluntarily demoted himself to crew member. When the ship returned home the owner refused to pay him any salary at all, not as the captain nor crew member. Even though he had demoted himself his offer to change position had not been communicated to the ship’s owners and they had therefore not been given the opportunity to accept or reject his offer.

Communication can be done in writing, orally or implied from conduct, or a combination of these. A unilateral offer (e.g. Carlill v Carbolic Smoke Company (1893) ) that is made to more than one person is instantly communicated to the whole world when it is made.

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Key Case | Fisher v Bell (1961) | Formation of Contract - Invitation to Treat

Last updated 26 May 2021

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Under the ordinary law of contract, the court determined, that the display of an article with a price on it in a shop window is an invitation to treat and therefore not an offer for sale.

CASE SUMMARY

Claimant: Fisher (a police officer)

Defendant: Bell (Shop owner)

Facts: A flick knife was exhibited in a shop window with a price tag attached to it, the court had to determine whether this amounted to an invitation to treat or an offer for sale. If the presentation in the window was an offer for sale, the defendants had committed an offence under the Restriction of Offensive Weapons Act 1959 which prohibited the offering of flick knives for sale. The police sought a prosecution for the offence, but the court used the law of contract to determine the display as an invitation to treat and therefore not an offer for sale. The police officer (Fisher) sought an appeal.

Outcome: Not liable

Legal principle: It is perfectly clear that according to the ordinary law of contract the display of an article with a price on it in a shop window is merely an invitation to treat

• Invitation to treat
• Case: Fisher v Bell (1961)

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Invitation to Treat: Legal Definition, Formation of Contract and Exceptions

What is an invitation to treat.

An Invitation to Treat is a preliminary step in contract formation , signalling a willingness to negotiate or receive offers rather than constituting a binding offer. An invitation to treat (sometimes known as an ‘invitation to bargain’ in the US) invites other parties to make an offer to form a contract.

Why is the distinction between an Offer and an Invitation to Treat Important?

The significance lies in understanding who is making the commitment. If A makes an offer and B accepts it, A is bound by that commitment. However, if A only extends an invitation to treat, B can make an offer in response, and A is not bound until they accept B’s offer.

An Invitation to Treat is not an offer but is preliminary to potential offers. It’s like saying, “I’m willing to negotiate!” but not presenting a definitive proposal.

Examples of an Invitation to Treat

To clarify the distinction, let’s explore some common scenarios:

• Goods on Display in a Shop : Items displayed in a shop window or on a shelf are invitations to treat. The customer makes an offer to purchase by choosing to buy an item. The shop then decides whether to accept this offer. This explains why shopkeepers can refuse sales, even if you’re willing to pay the displayed price.
• Advertisements : Generally, advertisements are invitations to treat, inviting others to offer to buy. Consider a situation where a company advertises a product at a discounted price. If the stock runs out, they are not obligated to provide for every potential customer since the advertisement wasn’t an offer in the legal sense.
• Auctions : At an auction, when an auctioneer invites bids on an item, it’s an invitation to treat. The bidders make offers by placing their bids. The auctioneer can then decide whether or not to accept the highest bid.
• Tender Processes : If a company or government agency needs a particular service or product, they might invite tenders or bids. This invitation is an invitation to treat. Each tender submitted is an offer, which the inviting party can either accept or reject.

Exceptions and Nuances in Invitation to Treat

Like all legal principles, there are exceptions and nuances to this rule:

• Advertisements : Though typically considered invitations to treat, there are exceptions. For instance, if an advertisement specifies a reward for a particular action (e.g., “Reward of $500 for return of lost cat”), this is considered an offer. Once the action is completed (someone returns the cat), the offer is deemed accepted, and the reward is owed.
• Unilateral Contracts : Sometimes, an act can be an invitation to treat and an offer. In unilateral contracts, one party promises something in return for the act of another. For example, a reward for lost property is a unilateral contract.

Difference between an Invitation to Treat and an Offer

Is an advertisement in a magazine or on television typically considered an offer or an invitation to treat.

Advertisements in magazines or on television are typically considered an invitation to treat rather than a binding offer in contract law. This distinction means the advertiser is willing to negotiate or receive offers but isn’t making a definitive proposal that can be immediately accepted to form a contract.

There are exceptions, like specific reward advertisements, but generally, such ads invite potential buyers to make offers, which the seller can accept or reject. This approach allows advertisers flexibility and prevents them from being contractually obligated to supply goods or services in unforeseeable demand situations.

How Does An ‘Invitation To Treat’ Lead To The Formation of A Contract?

When a party responds to an invitation to treat, they typically make an offer. A binding contract is formed if the party who initiated the invitation to treat accepts this offer.

For instance, in a store, displayed goods invite customers to make offers. When customers bring an item to the counter, they offer to buy it. If the cashier accepts and processes the transaction, a contract is established between the buyer and the seller.

Can A Shopkeeper Refuse To Sell An Item At The Displayed Price If Items In A Shop Are Invitations To Treat?

When customers present an item for purchase, they effectively offer to buy. The shopkeeper can then accept or reject this offer, even if the rejection is due to an error in the displayed price. This legal distinction gives shopkeepers flexibility and discretion in their sales, protecting them from unforeseen circumstances or honest mistakes.

• Eisenberg, M.A., 1994. Expression rules in contract law and problems of offer and acceptance .  Cal L. Rev. ,  82 , p.1127.
• Contract: Legal Definition, Foundations, Legal Capacity, Breach and Remedies
• Contract of Adhesion
• Express vs Implied Terms
• Offer and Acceptance under Contract Law
• Private Law
• Significance of Specific Performance in Real Estate Contracts

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Main section, contract | formation, offer: invitation to treat, study note | degree, introduction.

It is necessary to distinguish between an offer and an invitation to treat. An invitation to treat is a preliminary statement, merely supply of information and often inducing negotiation. There is no commitment to sell or offer which could be accepted.

Distinction between offer and invitation to treat

Harvey v facey [1893] ac 552.

The case involved a dispute over the sale of a property (in Jamaica) and an alleged agreement made via telegram correspondence.

Plaintiff: Will you sell us Bumper Hall Pen? Telegraph lowest cash price

Defendant: Lowest price for Bumper Hall Pen £900

Plaintiff: We agree to buy Bumper Hall Pen for the sum of nine hundred pounds asked by you

The court had to determine whether there had been an offer and acceptance of that offer.

The Privy Council decided that in the initial exchange of telgrams: the plaintiff was asking questions about the property and clearly not making an offer to buy the property and defendant was simply answering the second part of the plaintiff's question. The defendant entered into a discussion but did not commit, so the defendnat's first telegram contained an invitation to treat not an offer.

The plaintiff's final telegram is the first unequivocal statement. However, because the defendant's statement was not viewed as an offer the plaintiff was unable to answer by accepting. Therefore, this telegram is essentially the plaintiff making an offer, which the defendant has chosen not to accept.

The case has been criticised as some argue that the defendant's telegram implied a promise to sell for £900.

Today, the Law of Property (Miscellaneous Provisions) Act 1989 s2(1) , requires contracts for the sale of land to be writing and signed by both parties.

Gibson v Manchester City Council [1979] 1 WLR 294

The plaintiff was a council tenant. The council, the defendant, had sent the plaintiff a letter inviting an application to buy the council house he was living in. The defendant's letter stated: .. The Corporation may be prepared to sell the house to you at the purchase price of £2,725... If you would like to make formal application to buy your Council house, please complete the enclosed application form... .

The plaintiff completed and returned the application. There was a change of Government and the plans to allow tenants to buy their council properties were dropped. Therefore, the defendant refused to accept the plaintiff's application.

Was the council in a breach of a contract?

The court held that the defendant's letter was not a contractual offer, which the plaintiff could accept. The formal application by the plaintiff was an offer, that the defendant did not accept.

Lord Diplock : The words 'may be prepared to sell' are fatal... [the defendant's letter is] setting out the financial terms on which it may be the council will be prepared to consider a sale and purchase in due course... .

Storer v Manchester City Council [1974] 3 All ER 824

An earlier case also involving a council tenant's right to buy his property. The defendant sent the plaintiff a document titled Agreement for Sale and a letter which stated: If you will sign the Agreement and return it, I will send you the Agreement signed on behalf of the council in exchange .

The plaintiff signed and returned the Agreement for Sale . After the Labour party took control of the council, the defendant did not return a signed copy and refused to sell the property.

Did an offer exist, which the plaintiff accepted?

The court held that there was a binding obligation on the defendant to sell.

Lord Denning : In contracts you do not look into the actual intent in a man's mind. You look to what he said and did. A contract is formed when there is, to all outward appearances, contract. A man cannot get out of a contract by saying 'I did not intend to contract' if by his words he has done so... .

Objectively, the letter appeared to commit the council to selling the property if the plaintiff returned the documents. The defendant's subjective argument that it was not their intention to be bound was not sufficient.

Issues arise in determining whether items on display in a shop constitute an offer or an invitation to treat. The timing of the acceptance is a central factor. A contract is concluded and becomes binding on the parties once the offeree accepts the offer (in full and to all the terms).

After a customer selects a product from the shelf he can change his mind until he takes the item to a checkout. At this point the customer is making an offer to pay for the goods and the store accepts when payment is taken.

Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953] 1 QB 401

Regulations required a registered pharmacist to supervise the sale of certain drugs. Customers could select the items from the shelves and take them to specific pay point to purchase. The defendant had suitably qualified persons at the pay point in stores.

When was the contract of sale was concluded? If it was before the pay point then the defendant would be committing an offence.

Somervell LJ stated that the system was: .. a convenient method of enabling customers to see what there is and choose articles which they wish to have and then to go up to the cashier and offer to buy what they have chosen so far... . Therefore, the contract was not concluded until the sale at the pay point.

Self-service in a shop is classified simply as an invitation to treat. By taking goods to a pay point the customer is making an offer to buy and it is up to the vendor to accept that offer by taking payment.

Fisher v Bell [1967] 1 QB 394

A criminal case involving the sale of restricted weapons.

The defendant had a knife displayed in his shop window with a sale price. Sale of that type of flick knife was prohibited under the Restriction of Offensive Weapons Act 1959 .

Was the defendant guilty of offering for sale a restricted knife?

The court found that the knife in the window was an invitation to treat not an offer. Therefore, the defendant was acquitted.

Advertisements

The general rule is that advertisements are invitations to treat not offers. It is important to note that generally, an offer should be made to a particular person or class of persons.

Partridge v Crittenden [1968] 2 All ER 421

The defendant placed an advertisement in a periodical, Classified Advertisements section stating: Bramblefinch cocks, Bramblefinch hens 25s each .

Was the defendant offering for sale a wild bird contrary to the Protection of Birds Act 1954 ?

The court found that the advertisement was an invitation to treat not an offer. Therefore, the defendant was acquitted.

It is reasoned that if an advertisement was considered an offer then anyone responding and asking for the items would be accepting. This would mean the seller would be bound and could cause difficulties if, for example, the stock had run out.

Cases are determined on the objective intention behind the advertisement. The courts will consider whether: the wording is sufficiently clear to be an offer, the advertiser intended to be bound and there are issues of limited supply.

Rewards are an interesting aspect of advertising and tend to be treated differently by the courts.

For information

Advertisements of rewards for information have generally been treated as offers not invitations to treat.

Williams v Carwardine [1833] EWHC KB J44

The defendant placed advertisements stating that: .. whosoever would give such information as might lead to a discovery of the murder of the said Walter Carwardine, should, on conviction, receive a reward of £20... .

The plaintiff gave information but was refused the reward.

Was the defendant obliged to pay the reward advertised?

The advertisement was sufficiently precise, with no negotiation required so constituted an offer. The supply of information was an acceptance and the money should be paid.

For consumers

Rewards advertised to encourage consumers also raise the question of whether they should be considered offers or invitations to treat.

Lefkowitz v Great Minneapolis Surplus Stores (1957)

An American case which is not binding English courts, however the reasoning is interesting.

The defendant placed the following advertisement in a newspaper: Saturday 9 A.M. Sharp 3 Brand New Fur Coats Worth to $100.00. First Come First Served $1 Each .

The plaintiff was the person to come into the store but the owner refused to sell to him.

Was the defendant's advertisement an offer?

The court decided that the wording was sufficiently precise and there would be no issues of limited supply, as only three coats were advertised as available. Therefore, the advertisement was found to be an offer not an invitation to treat. The plaintiff had accepted the offer by being the first person to come into the store, as specified.

Carlill v Carbolic Smoke Ball Co. [1893] 1 QB 256

The defendant placed an advertisement stating: £100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the influenza after having used the ball three times daily for two weeks according to the printed directions supplied with each ball... £1000 is deposited with the Alliance Bank, showing our sincerity in the matter... .

The plaintiff made a claim for the reward but it was refused. The defendant argued that the advertisement: was mere puff , had not been addressed to specific persons and that the plaintiff had not communicated notice of her acceptance.

Had the plaintiff accepted the offer?

The court dismissed the defendant's pleas.

It found that the advertisement was not mere puff as the defendant had explicitly stated money had been set aside to make such payments. A reasonable person reading the advertisement would take it to be a serious offer which amounted to a binding obligation. Although, an offer must usually be addressed to specific person or class of persons, the advertisement was being made to anyone who met the criteria set out and this was sufficient. Furthermore, the court held that the wording of the advertisement meant the plaintiff did not have to communicate acceptance, as clearly the defendant did not expect every customer to contact them on purchasing the item, rather only those who used the product as directed and then caught influenza.

Therefore, the case established that advertisements can constitute an offer to the public at large and can be worded to waive the need to communicate acceptance prior to a claim.

Rewards are unilateral contracts. A unilateral contract binds the promisor to perform his promise if the other party performs the required act. This is in contrast to a bilateral contract where one party offers a promise in return for the promise of the other.

36. Offer and invitation to treat: examples.

In addition to the commonly occurring situations dealt with separately in the following paragraphs 1 , the distinction between an offer and an invitation treat has been considered in the following cases. It must be stressed that none of them is conclusive as to the outcome

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Invitation to Treat

An invitation to treat is a preliminary communication made by one party to another with the aim of eliciting an offer to enter into a contract. It is not an offer but rather an invitation to negotiate or make an offer. In other words, an invitation to treat is a statement or action that indicates a willingness to receive offers from another party but does not amount to a legally binding offer.

Examples of invitation to treat include advertisements, price lists, and catalogs, which are not offers but rather an indication of the goods or services that are available for sale. When a customer responds to an invitation to treat by making an offer to purchase the goods or services, the seller can either accept or reject the offer. The seller's acceptance of the offer creates a legally binding contract between the parties.

An invitation to treat is not the same as an offer. An offer is a specific proposal made by one party to another with the intention of creating a legally binding contract. An invitation to treat, on the other hand, is a preliminary communication that does not create any legal obligation until an offer is accepted.

You can learn more about this topic and relevant case law with our Contract Law notes.

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In the realm of contract law , understanding the distinction between an 'invitation to treat' and an 'offer' is fundamental. This article delves into the nuances of these two legal concepts, providing clarity through meaning, examples, and real-life scenarios. Beginning with an exploration of the invitation to treat concept and its examples, the article delineates the key differences between offers and invitations to treat. Further, it sheds light on contract law offer definition and characteristics, as well as tips for identifying an offer within a legal context. Finally, readers will be guided through how courts determine the nature of a proposal, whether it's an offer or an invitation to treat, by examining common examples and their interpretation. This comprehensive analysis will prove invaluable for anyone seeking to grasp these essential aspects of contract law.

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Invitation to Treat vs. Offer: Meaning and Examples

An invitation to treat is a pre-contractual communication that expresses a willingness to negotiate an agreement but does not amount to a legally binding offer. It is an essential concept in understanding the formation of contracts. Here are some common examples of invitation to treat:

• Advertisements in newspapers or magazines
• Shop displays showing items with price tags
• Catalogues or price lists distributed by companies
• Auctions, where the bidder makes an offer, and the seller can choose to accept or reject

For instance, when a store displays a product with a price tag, it's not making a binding offer to sell that product for the specified price. Instead, the display serves as an invitation to treat, and the customer makes an offer by presenting the product for purchase at the counter.

Difference between Offer and Invitation to Treat

Understanding the difference between an offer and an invitation to treat is crucial, as it determines when a legally enforceable contract is formed. Here are some key distinctions between the two concepts:

As a rule of thumb, an offer is a proposal made by one party to another with clear terms and an intention to be bound by those terms upon acceptance, while an invitation to treat is a communication that encourages negotiation but does not imply a binding contract.

Contract Law Offer Definition and Characteristics

In contract law , an offer is a statement of specific terms that, if accepted, creates a legally binding agreement between the parties involved. An offer must possess certain characteristics to be legally effective:

• Intention to create legal relations: The person making the offer must intend to be legally bound by the proposed contract.
• Definite and certain terms: The terms of the contract must be clear and precise, leaving no ambiguities.
• Communicated to offeree: The offer must be brought to the knowledge of the person to whom it is made.

It is important to note that there are different types of offers, such as unilateral offers and bilateral offers. In a unilateral offer, one party makes a promise in exchange for the other party's performance of a specified action, while a bilateral offer involves both parties mutually exchanging promises.

Identifying an Offer in a Legal Context

Identifying whether a communication is an offer or an invitation to treat ensures the correct application of contract law and prevents misunderstandings. Here are some guidelines to help you identify an offer in a legal context:

• Examine the language used: A clear expression of willingness to be bound is indicative of an offer, whereas a more passive or conditional phrasing might suggest an invitation to treat.
• Consider the specifics: Offers usually contain specific terms and details, while invitations to treat often involve more general terminology.
• Analyze the context: The surrounding circumstances can provide valuable clues about whether a communication is an offer or an invitation to treat. For instance, courts often treat online advertisements as invitations to treat because of the possibility of limited stock or errors in pricing.

Imagine a situation where a car dealership sends out an email stating, "We have a limited number of brand-new cars for sale starting from £20,000. Contact us for more information." This communication is likely an invitation to treat, as the email invites potential buyers to negotiate the terms of a contract, such as the specific make and model of the car, rather than presenting them with a contractual offer.

Common Examples of Invitation to Treat vs Offer and Their Interpretation

Various real-life scenarios involve communication that may be interpreted as either an invitation to treat or an offer. Understanding these examples can help you grasp the difference between the two concepts and how courts interpret them.

• Advertisements: In general, advertisements are considered invitations to treat. This is because advertisers do not intend to enter into contracts with everyone who sees the advertisement. However, if an advertisement contains specific terms and a clear intention to be legally bound, it may be regarded as an offer.
• Shop displays: Items displayed in shops with price tags are typically seen as invitations to treat. When a customer selects a product, they make an offer to the retailer, who can then accept or reject it.
• Auctions: The auctioneer's call for bids is usually an invitation to treat, while each subsequent bid constitutes an offer. The auctioneer can accept or reject the bids, and the sale contract is formed when the hammer falls.
• Tenders: Requests for tenders are generally invitations to treat, encouraging potential contractors to submit offers. The person requesting the tender can then accept a tender offer or reject all offers.
• Price quotes and estimates: Providing a price quote or estimate is typically considered an invitation to treat, as the one providing the quotation expects a response before entering into a binding agreement. However, circumstances may vary, and some quotations can be considered offers if the language and context convey clear terms and a willingness to be bound.

For instance, a car dealership has a sign stating, "Any car for £500 down payment." This advertisement might be deemed an offer if it includes specific terms and conditions about the cars' availability, binding the dealership to sell a car for the mentioned down payment. If no terms or conditions are mentioned, it would likely be considered an invitation to treat, as the dealership would expect customers to negotiate contract terms before finalising the agreement.

How Courts Determine the Nature of a Proposal: Offer or Invitation to Treat

Courts play a crucial role in determining whether a proposal is an offer or an invitation to treat by examining the communication and all relevant factors. Several criteria are considered in the legal process:

• Language and phrasing: In general, judges look at the language used in the communication to determine whether it expresses a serious intention to be legally bound by specific terms. Clear and unambiguous language would suggest the presence of an offer, while passive or conditional phrasing might be indicative of an invitation to treat.
• Specificity of terms: The presence of definite and specific terms in the communication can help determine its nature. An offer typically has clear terms and conditions, while an invitation to treat is often more vague and general in nature.
• Context and surrounding circumstances: The context and circumstances surrounding the communication can be essential in establishing whether it is an offer or an invitation to treat. The courts may consider factors such as the parties' relationship, industry practices, and the broader factual background.
• Past dealings: Courts may also analyse the parties' past dealings and interactions to glean insights into the nature of their communications. This can help determine whether a given communication fits the pattern of an offer or an invitation to treat.

A well-known case that highlights the distinction between an offer and an invitation to treat is the English case of Carlill v Carbolic Smoke Ball Company [1893]. The company advertised that they would pay £100 to anyone who caught the flu after using their smoke ball as instructed. The courts held this advertisement to be a unilateral offer since it contained specific terms, and the indication of a deposit in a bank showed the company's intention to be legally bound. The plaintiff claimed the reward, providing a valuable example of an advertisement constituting an offer rather than an invitation to treat.

Ultimately, the determination of whether a communication constitutes an offer or an invitation to treat depends on applying these guidelines to the specific facts of each case. A thorough understanding of the differences between these concepts can help inform your decisions in real-life scenarios and guide you through contract negotiations and legally binding agreements.

Invitation to Treat vs. Offer - Key takeaways

Invitation to Treat vs. Offer: Invitation to treat is a pre-contractual communication indicating a willingness to negotiate, while an offer expresses a willingness to enter into a contract on specific terms and creates a legally binding agreement upon acceptance.

Difference between offer and invitation to treat: Offers imply a binding legal commitment, while invitations to treat do not and instead lead to offers made by the other party.

• Invitation to treat examples: Advertisements, shop displays, catalogues or price lists, and auctions.
• Contract law offer definition: An offer is a proposal made by one party to another with clear terms and an intention to be bound by those terms upon acceptance.
• How courts determine the nature of a proposal: Courts consider factors such as language and phrasing, specificity of terms, context and surrounding circumstances, and past dealings to ascertain whether a communication constitutes an offer or an invitation to treat.

Frequently Asked Questions about Invitation to Treat vs Offer

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A pre-contractual communication expressing a willingness to negotiate an agreement but not amounting to a legally binding offer.

An offer is a binding legal commitment with specific terms, while an invitation to treat expresses a willingness to negotiate without legal commitment.

Advertisements in newspapers or magazines, shop displays with price tags, catalogues or price lists, and auctions.

What are the three characteristics of a legally effective offer?

Intention to create legal relations, definite and certain terms, and communication to the offeree.

What is a rule of thumb to distinguish between an offer and an invitation to treat?

An offer is a proposal with clear terms and an intention to be bound upon acceptance, while an invitation to treat encourages negotiation without implying a binding contract.

In a unilateral offer, what is the main distinction from a bilateral offer?

A unilateral offer involves one party making a promise in exchange for the other party's performance of a specified action, while a bilateral offer involves both parties mutually exchanging promises.

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Invitation to Treat Lawyers

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  What Is an Invitation to Treat?

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?

What is the case law surrounding invitation to treat, do i need a lawyer.

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.

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.”

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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What is an Invitation to Treat? 

By Saya Hussain Lawyer

Updated on January 16, 2023 Reading time: 5 minutes

This article meets our strict editorial principles. Our lawyers, experienced writers and legally trained editorial team put every effort into ensuring the information published on our website is accurate. We encourage you to seek independent legal advice. Learn more .

What is an Invitation to treat?

Common invitations to treat, how is it different to an offer.

• What About Online Shopping? 

Invitation to Treat and Consumer Law

Key takeaways, frequently asked questions.

An invitation to treat is a common scenario that arises in everyday life and business. An invitation to treat is an invitation to a party or parties to make an offer. However, unlike a contractual offer, there is no intention for the invitation to treat to be legally binding. This is, of course, until the parties take steps to formalise the offer in a binding contract. This article will explore what an invitation to treat is, provide examples and explain how it differs from an offer.

An invitation to treat is when you invite someone to make an offer. For example, you may merely deliver information to tempt the other party to make an offer. There is generally no intention to be bound by an invitation to treat, and it does not form a legally binding contract . 

That means you can accept or decline this offer. However, there are exceptions to this, discussed later in this article. 

We witness invitations to treat in our everyday life more often than we might think. This can include when searching for a new home or at the shopping centre browsing for new clothes. However, the most common example of an invitation to treat is a shop that places price tags on their goods, in-store or online. 

Suppose you have a clothing store and mark sale prices on the jumper rack. You accidentally put ‘$10’ on the price tag when it should be ‘$100′. A customer picks up the jumper believing they have found a great bargain. So, they bring it over to your checkout to purchase. Here, you realise the mistake and advise the customer that the price is $100. The customer can then agree or decline to purchase the jumper at that price. However, you do not have to honour the marked price, as this was an ‘invitation to treat’. The customer made the offer to purchase when they brought the jumper to the counter. 

You are driving down the highway when you see a sign for a stall selling mangoes. The sign states, ‘MANGO TRAYS $10’ You decide to pull over and purchase a tray of mangoes. You greet the stall owner and retrieve $10 from your wallet. Unfortunately, the stall owner states they are out of their usual $10 trays. However, they have premium mangoes available for $20 per tray. You are upset that they have advertised mangoes at $10 and now want you to pay double this price. However, the stall owner was under no obligation to sell mangoes at $10 per tray since this was merely an invitation to treat. 

Other examples of an invitation to treat include auction sales and tenders. In an auction, when the auctioneer calls for a bid, the law considers this to be an invitation to treat. Furthermore, a request to tender is also an invitation to treat. This is because an offer is only made once the tender document is submitted.

A tender can also be an example of an invitation to treat. For example, a new shopping centre opens, and the owner opens tenders from different restaurants to trade in the shopping centre. Various restaurants put in a tender, and only a few may be successful. The tender itself is not a contract and can generally be revoked at any time before a binding contract is agreed upon. Further, the shopping centre owner can accept or reject any of the tenders at their discretion.

Two of the critical elements of a binding contract are offer and acceptance. An offer is a definite intention to be bound by a contract, whether that be for the sale of goods or services. 

By contrast, an invitation to treat is where you display information about a good or service to entice people to purchase. You are inviting the other party to make an offer, which you can then accept or decline. The key factor will be whether the advertisement or statement was intended to be an offer.

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What About Online Shopping? 

The offer and acceptance process looks slightly different if you operate an online shop. Generally, the prices for your clothing online are an ‘invitation to treat,’ similar to brick-and-mortar stores. The below example shows the difficulty between online shops and brick-and-mortar stores, where the offer and acceptance are conducted online.

Suppose you are an online retailer of televisions. One of your employees is listing televisions online and accidentally marks the price of a new television as $3.99 instead of $399. A customer sees this price and quickly adds the television to their cart. They can go through the checkout process and pay the $3.99 for the TV. 

In this example, you and the customer would most likely be aware that a mistake occurred during pricing rather than the vendor being purposely misleading or deceptive. Therefore, your terms and conditions must specify that the customer’s offer is not accepted until you accept the customer’s offer. For example, you may only accept the customer’s offer once you send them an email confirming their order. You can avoid a costly mistake by clearly outlining when an offer and acceptance are made in your terms and conditions. 

Despite the current stance in courts on advertising and marked prices being ‘invitations to treat’, vendors are still obliged to comply with the Australian Consumer Law.

As a vendor, you must ensure that you do not engage in misleading or deceptive conduct, or conduct that is likely to mislead or deceive your customers. You must therefore be careful that your advertising does not mislead or deceive customers, as this is illegal.

For example, you cannot engage in false advertising, like stating that an item is 10% off its RRP when it is still at full price. You are also not able to engage in drip pricing. This is where you list the price but do not adequately disclose the additional fees and charges they must pay at the beginning of the purchase process.  

It is also important to consider whether accepting an invitation to treat as a result of your advertisement creates goodwill for your business. You will unlikely have many happy customers if you consistently fail to honour your advertised price. 

When listing goods and services for sale online or in-store, this will generally be construed as an invitation to treat. A formal offer will be made by the customer when they come to the checkout of your physical store or process payment from the online store’s cart. Therefore, you should have strong terms and conditions which outline when an offer and acceptance occur. Accordingly, this will avoid confusion and mitigate the risk of costly mistakes made when listing prices.

If you need help preparing sales terms and conditions for your website, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page .

It is when you invite someone to make an offer. You can then accept or decline this offer. If you accept the offer, it will become a legally binding and enforceable contract. 

The most common example is a shop that has price tags on its goods. This includes physical or online stores.

Your terms and conditions should specify that the customer’s offer is not accepted until you accept the customer’s offer. Outlining when an offer and acceptance are made will help avoid a costly mistake. 

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Offer and acceptance cases (10+case summary)

• 14 October, 2022

This is the comprehensive summary of all significant offer and acceptance cases in contract law.

Here you will find;

Invitations to Treat cases

Offer made to general public cases, counter-offer cases.

• Duration of the offer cases

Withdraw/ revocation of Offer cases

Acceptance of offer cases.

• Acceptance of offers by Post cases

Let get started

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Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] EWCA civ 6

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The following are the collections of invitations to treat cases

Gibson v Manchester City Council [1979] UKHL 6

Negotiations to enter into a contract may amount to an invitation to treat but not to an offer .

The city council decided to sell its houses to the tenants. Mr. Gibson applied for details of his house price and mortgage terms so he can buy it.

In February 1971 the council treasurer replied to Mr. Gibson via letter that, the council may sell the house to him at the purchase price of £ 2,180 it was further stated in the letter that

“…..This letter should not be regarded as an offer of a mortgage. If you would like to make a formal application to buy our Council house please complete the enclosed application form and return to me as soon as possible.”

In March 1971 Mr. Gibson filled out the application form and returned it to the Council.

In May 1971 council stopped the sale of houses consequently Mr. Gibson could not complete the purchase. Mr. Gibson sued the Council on the basis that the letter he had received stating the purchase price was an offer that he had accepted in March 1971

The Council had not made an offer; the letter giving the purchase price was merely one step in the negotiations for a contract and amounted only to an invitation to treat.

Read the full case here

Goods displayed in shops together with a price tag are merely an invitation to treat and not an offer.

Boot cash chemist is a medical store that sells medicines.

In their store, customers could pick drugs off the shelves by themselves and pay for them at the till.

The Pharmaceutical Society of Great Britain stated that practice is unlawful under the Pharmacy and poisons Act 1993. Society argued that the display of drugs was an offer.

The Court of Appeal decided the shelf display was like an advertisement for a bilateral contract and was therefore merely an invitation to treat.

The offer was made by the customer when medicines were placed in the basket and presented at the cash desk, and was only accepted by the shop at the cash desk. Since a pharmacist was supervising at that point no offense had been committed.

Fisher v Bell [1961] 1 QB 394

The defendant had displayed flick knives in his shop window contrary to section 1 of the Restriction of Offensive Weapons Act 1959 and was convicted of the criminal offense of offering such knives for sale.

On appeal, Lord Parker CJ stated that the display of an article with a price on it in a shop window was only an invitation to treat and not an offer, and the conviction was overturned.

The following are the offer Made to General Public cases

Louisa Elizabeth Carlill v Carbolic Smoke Ball Company [1893] 1QB 256

Offers can be made to the general public through advertisement.

The defendant is a manufacturer of “smoke balls” which were termed to be a cure for the flu during the flu pandemic.

The defendant advertised in several newspapers that he will provide a reward of £ 100 to any person who will use smoke balls three times daily for two weeks and contracted flu.

Mrs. Carlill saw the advertisement and bought the ball. After using it three times daily for months she contracted the flu. She claimed £ 100 from the defendant which he refused to pay on the ground that they had no contract with the plaintiff.

The court held that the defendant’s advertisement constitutes an offer to the world at large, which became a contract when it was accepted by Mrs. Carlill using the smoke ball and getting flu. The court ordered the defendant to pay £ 100 to the plaintiff.

The following are the Counter-offer cases

Hyde v Wrench [1840] 49 ER 132

The counteroffer terminates the original offer.

Hyde sued wrench for the breach of contracts because wrench offered to sell his farm to Hyde for £ 1,000, Hyde refused the offer and offered to buy it for £950 (counter-offer).

Wrench refused the counteroffer. After some time, Hyde accepts to buy the land for £1,000 as initially offered, but Wrench refused to sell to him.

It was held the counteroffer terminated the offer. Therefore the original offer was no longer available. Hyde lost the case.

Stevenson Jaques & Co v McLean [1880] 5 QBD 346

Request more information about the offer does not amount to a counter-offer

The plaintiffs were the merchants who bought iron and sold it to third parties. the defendant made an offer on a Saturday to sell iron to the plaintiffs at a cash-on-delivery price of 40 shillings and stated that the offer would remain available until the following Monday.

The plaintiffs replied by asking if they could buy the goods on credit.

They received no answer. On Monday afternoon they contacted the defendant to accept the offer, but the iron had already been sold to someone else. The plaintiffs sued for the breach of contract.

It was held that their reply to the offer had been merely a request for information, not a counter-offer, so the original offer still stood and there was a binding contract.

How Long Does an Offer Last? case law

The following are the cases that show How Long Should an Offer Last

Ramsgate Victoria Hotel v Montefiore (1866) LR 1 Ex 109

Where the offeror has not specified how long the offer will remain open, it will lapse after a reasonable length of time has passed.

Montefiore offered to buy shares from the Ramsgate Victoria Hotel Company at a certain price.

The company did not accept the offer until six months lapsed.

By that time the price of shares had decreased. Montefiore refused to pay for the shares.

The company sued Montefiore and prays for the specific performance of the contract because Montefiore did not withdraw his offer.

It was held that there was no contract between them. The offer has already lapsed. Based on the nature of the transaction six months was a reasonable time for an offer to lapse.

The following are Withdraw/ revocation of Offer cases

Payne v Cave (1789) 3 TR 148

An offer may be withdrawn at any time before acceptance.

Mr. Cave made the highest bid for goods sold in an auction. However, he withdraws his bid before the auctioneer’s hammer hits down.

Mr. Cave is not bound to purchase the goods. He was entitled to withdraw his bid (offer) at any time before the auctioneer’s hammer hit down (acceptance)

Byrne & Co v Leon Van Tienhoven [1880] 5 CPD 344

The revocation of an offer must be communicated to another party.

On 1 October Leon Van Tienhoven posted a letter from their office offering 1000 boxes of tinplates for sale to Byrne & Co. Byrne & Co received the letter on 11 October and accepts the offer on the same day via the telegraph. On 8 October Van Tienhoven sent another letter withdrawing the offer. The revocation letter reached Byrne & Co on 20 October.

The revocation of an offer could only be effective when communicated to the other party, while the acceptance of an offer by telegram is effective as soon as it was sent. Therefore there is a binding contract between parties.

The following are Acceptance of offer cases

Felthouse v Bindley (1862) 142 ER 1037

Silent cannot amount to acceptance.

Paul Felthouse wanted to buy a horse from his nephew John Felthouse. While they are discussing  the price Paul Felthouse wrote to John saying: “if I hear no more about him, I consider the horse mine at £ 30.15.” John did not reply, but he told Bindley, the auctioneer, not to sell the horse, unfortunately, Bindley sold the horse.

Acceptance must be communicated clearly and cannot be imposed due to the silence of one party.

Acceptance by Post cases

Generally, to be effective, acceptance must be communicated to another party.

That was stipulated by Lord Denning in the case of Entries Ltd v Miles Far East Corporation(1955) EWCA Civ 3 where Lord Denning stated inter alia that

the principal reason for this rule is that, without it, people might be bound by a contract without knowing that their offers had been accepted, which could obviously create difficulties in all kinds of situations.

The following case is an exception to that rule:

Adams v Lindsell (1818) 1 B & Ald 681

An acceptance by post takes effect when it is posted, rather than when it is communicated.

On 2 September the defendants wrote a letter to the Plaintiffs offering to sell wool. The letter required a reply to be made via post.

However, the Letter was incorrectly posted and delayed to reach Plaintiff. It was received by the Plaintiffs on 5 September.

Plaintiff posted their acceptance on the same day, but the acceptance reached the Defendants on 9 September.

The Defendants had sold the wool to another buyer on 8 September since they had not received an answer from the Plaintiffs on 7 September as expected.

The issue was whether a contract had been made before the sale to the third party on 8 September.

The court held that a contract was concluded as soon as the acceptance was posted so that the defendants were bound from the evening of 5 September and had, therefore, breached the contract by selling the wool to the third party.

• Hadley v Baxendale case summary
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Invitation to Treat vs. Offer in Australian Contract Law: Understanding the Difference

By Jackson McKinley

Under Australian contract law, a contract needs 4 essential elements — offer, acceptance, intention to create and valid consideration. So, it is important to be able to distinguish between an “offer”, which can lead to the formation of a valid contract, and an “invitation to treat”. In this article, we will explore the divergent definitions of an invitation to treat and an offer and discuss some of the key cases that help us to clarify the distinction.

What is an Invitation to Treat?

An invitation to treat is an invitation to negotiate or to make an offer. It will not, by itself, create a legally binding agreement. The most common examples of an invitation to treat are advertisements, catalogues, and price lists. These types of communications are not offers, but rather an invitation to the public to make an offer to buy goods or services.

One of the most well-known cases in Australia that has dealt with the concept of an invitation to treat is Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401 . In this case, the Court held that the display of goods in a self-service shop was an invitation to treat rather than an offer. [1] The customer’s selection of goods from the display was an offer, and the acceptance of the offer occurred at the checkout when the shop assistant accepted the customer’s payment. [2]

What is an Offer?

An offer is a definite and specific proposal that, if accepted, creates a legally binding agreement. It is an expression of willingness to contract on specific terms, and is capable of acceptance by the person to whom it is addressed. An offer can be made verbally, in writing, or by conduct. An offer can be made to individuals, groups or even the world.

One of the most famous cases in Australian contract law that has dealt with the concept of an offer is Carlill v Carbolic Smoke Ball Company [1892] 2 QB 484. In this case, the defendants advertised a product called the “smoke ball” which they claimed could cure the flu. The advertisement offered a reward of £100 to anyone who contracted the flu after using the smoke ball as directed. The plaintiff purchased and used the smoke ball as directed, but still contracted the flu. The defendants refused to pay the reward, arguing that the advertisement was not an offer. The court held that the Carbolic Smoke Ball Company’s advertisement was an offer made to the world, and that the plaintiff’s acceptance occurred when she used the smoke ball as directed. [3]

This differs slightly from the interpretation under US law. The Netflix documentary, ‘Pepsi, Where’s my Jet?’ explores The leading decision in Leonard v. Pepsico, Inc. [4] , popularised by the recent Netflix documentary, ‘Pepsi, Where’s my Jet?’, establishes what is considered to be an offer. In that case, PepsiCo had a promotional campaign called “Pepsi Points” that offered various prizes in exchange for collecting points found on Pepsi products. One of the prizes listed was a Harrier Jet, a type of aircraft used by the US military. John Leonard, a customer, collected 7 million Pepsi Points and sent them to PepsiCo along with a cheque for $700,000, which he believed was the amount needed to claim the Harrier. Unlike the decision in Carlill, the Court ultimately held that that advertisement was not an offer, because the reasonable person would not have considered that the company was actually offering a jet in their promotion. [5]

It is important to understand the difference between an offer and an invitation to treat, because of the creation of binding legal rights and when they arise. You should always seek legal advice prior to signing any agreement and, in particular, before accepting an offer which would become legally binding.

Foulsham and Geddes notes that this article is written for the purpose of providing generalised information and not to provide specialised legal advice. If you require qualified legal advice in relation to contract disputes and on anything mentioned in this article, our experienced team of solicitors at Foulsham & Geddes are here to help. Please get in touch with us on 02 9232 8033 today to make an enquiry.

[1] Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401.

[3] Carlil v Carbolic Smoke Ball Company [1892] 2 QB 484.

[4] 88 F. Supp. 2d 116.

[5] Leonard v. Pepsico, Inc. , 88 F. Supp. 2d 116.