Offer and Invitation to Treat

Offer and Invitation to Treat farehamtutor co uk

Distinguishing between what is an Offer and Invitation to treat is essential for any contract law student. Find out what the difference is between the two by reading this post.

Why is the difference between an offer and invitation to treat important?

The importance of the difference can be summarised as follows:

  • Acceptance of an offer is required for a valid, legally enforceable contract to be created.
  • If there is no offer, there can not be valid acceptance. No valid acceptance would mean that there is no legally binding contract.
  • Consequently, if that there is an invitation to treat which is followed by acceptance,  there is no legally binding agreement.

With the above in mind we should look at what is not usually an offer:

Advertisements are not usually offers

  • TV adverts and adverts in general are usually not offers. Adverts are usually known as invitations to treat.
    • An invitation to treat is more or less an expression of interest that does not amount to an offer, because:
      • 1. There is objectively no intention to be contractually bound; and
      • 2. Further negotiations would be necessary before all necessary terms have been discussed. The reason for this is there is a lack of certainty of terms.
        • In essence there is no offer that is capable of acceptance without further negotiations or questions on the terms being offered.
    • Let’s look at it from a practical point of view. If normally TV adverts were ‘offers’, it would mean that every single viewer could accept the ‘offer’. This would lead to binding contracts. When the company could not supply the goods or perform the service (due to being overwhelmed by the number of orders), thousands if not millions of people could sue the company for breach of contract. For this reason, there is usually no intention to be contractually bound.
    • If we look at adverts in newspapers, etc. the same arguments apply. Adverts in newspapers, magazines, etc. are usually only invitations to treats (not offers) in law, because:
      • Most adverts are vague and do not tell you all necessary terms. This means there is too much uncertainty for there to be a valid offer.
      • Additionally, adverts usually ask you to visit your local store or phone a number to place an order. They are essentially saying that you cannot make an order there and then. This points to the fact there is no intention on their part to make an offer. They are asking you to approach them (or a third party) to negotiate. As you have to discuss terms further before knowing what is being offered and whether the item, etc. is available, there is usually no offer at that point.
    • Adverts of all kinds usually do not say that they will definitely accept your order if you phone, etc. If unusually they did say that they will definitely take your order and there was certainty of terms, possibly they could be making an offer. This is partially why ‘while stocks last’ is written, to ensure that they are not obliged to accept any orders they cannot fulfill.

Displays of price are not usually offers

  • Price labels in shops, supermarkets, etc. are not usually offers. They are usually known in law as invitations to treat. Arguably, when the cashier scans the item and asks for payment for the price an offer is made, which you can either accept or reject.
  • The difference between an offer and invitation to treat here can be explained by the fact that displaying a price is simply saying ‘I may be interested in selling’. This is just an expression of interest and therefore an invitation to treat.
  • However, once you take the item to the till and the cashier asks for payment, the cashier is effectively saying ‘I am definitely happy to sell you this item for £….’. At this point there is an offer, which can be accepted or rejected.

Displays of goods are not usually offers

  • Simply displaying an item in a shop, etc. is not usually an offer even if it has a price label. It is usually at the till when the cashier asks for payment that an offer is made.
  • The difference between an offer and invitation to treat here is explained in that displaying goods is effectively saying ‘I might be interested in selling this item £….’.

When is there an offer?

In brief:

  • Essentially an offer has certainty of terms and is capable of being accepted without the need for further negotiations/discussions on the terms being offered.

Let’s consider the following scenario:

  • Imagine that you see a advert on TV for an item.
  • You go to a local shop, see the item on sale with the price tag.
  • You go up to the cashdesk with the item.
  • The item is scanned. You are told the price and are asked to pay.
    • Arguably there is no offer until the time when you are told the price and asked to pay, because:
      • The advert was probably an invitation to treat (for the reasons discussed previously).
      • The price tag is probably an invitation to treat (again for the reasons discussed previously).
      • You going up to the till with the item is probably still an invitation to treat. Arguably at this stage you do not yet have confirmation of the price and whether the shop is willing to sell the item.
      • At the point when the price is confirmed and the willingness to sell is shown by the cashier is the offer is made. (You could then accept or reject the offer to sell).

One key point is an offer is capable of acceptance without the need for further negotiations.

Consider the difference between the following scenarios:

  • You go to the seaside and see some deckchairs tied up. There is a big sign saying ‘See an attendant for a deckchair. Charges apply’.
    • The sign is probably not an offer, because the terms are at this stage uncertain. Further discussions/negotiations would be needed in this scenario to know the relevant terms on offer.
  • Another day you go to the seaside and see a deckchair. There is a big sign saying ‘Feel free to use a deckchair for up to 2 hours (£5 fee)’. You sit down in a deckchair.
    • The sign is probably an offer, because it tells you all necessary terms. There is no need to ask further questions on the terms. You accept the offer by sitting down in a deckchair.
  • You go to the seaside and see a deckchair. Again you see a big sign, but this time it says ‘Deckchairs available. See attendant for details’.
    • Clearly there is no certainty of terms, so there can be no offer. If you later speak to the attendant who then gives you all the relevant terms, only at that point could an offer be made.

Generally:

  • There is usually no offer at the discussion/negotiation stage
  • Only when there is certainty of terms and the ‘offer’ can be accepted without further questions being asked on the terms being offered can there usually be an offer

I hope that the above has given you an insight into some of the differences between an offer and invitation to treat. It is intended just for general information. Consequently I have outlined some of the main points, rather than all relevant details, caselaw, etc. There are some more detailed rules on offer, which have not been included.

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Offer and Invitation to Treat farehamtutor co uk