The Distinction Between An Offer And An Invitation To Treat Is Often Hard To Draw As It Depends On The Elusive Criterion Of Intention. But There Are Certain Stereotyped Situations That The Distinction Is Determined By Rules Of Law”

An Invitation to Treat on the other hand is an advertisement or a promotion which asks for offers to be made and will not lead into a legally binding obligation. "A statement of this nature if it is not meant to be binding is known as an invitation to treat." (J. Beatson 1998)

These two terms can often be difficult to distinguish between and can lead to disputes, which is why the court system has certain rules of law, which identify the two terms in certain situations. It is important to point out that the courts are the best way of settling a dispute between parties concerning offers, as the rules of the English law of contract were created entirely by the English court system. "The principals of the English law of contract are almost entirely the creation of the English courts" (J. Beatson 1998)

There are certain situations where rules of law have been established when looking at offers and an I.T.T these are:

* Advertisements

* The display of goods

* Tenders

* Auctions

In each of these the courts have tried to set certain rules by way of precedent, so as to elucidate the criterion of intention.

Advertisements

Over the years it has been established that generally advertisements will be treated as an I.T.T and not obligations to enter into a binding agreement. (Partridge V Crittenden [1968] 1 W.L.R 1204) These advertisements are usually for goods that are for sale and can appear in many places including:

* Newspapers

* Catalogues

* Periodicals

* Magazines

However there are certain situations where an advertisement can be an offer and not just an I.T.T. (Carlill V Carbolic Smoke Company LTD [1893] 2 Q.B 49) the courts have shown that for an advertisement to be seen as an offer then it has to be very specific and detailed. In this case there were other implications, for example £1000 was placed in a bank account as a show of good faith, this highlighted the validity of the offer. So the more specific an advertisement the more likely it is to be seen as an offer.

Display of Goods

Displays of goods with price tags are also usually invitations to treat. (Fisher V Bell [1961] 1 Q.B 394.) Self-service shops such as supermarkets are usually treated in the same way. (Pharmaceutical Society of Great Britain V Boots Cash Chemists (Southern LTD) [1952] 2 Q.B 795.) It was held that if the display of goods were an offer then we would not be able to change our minds once an article had been selected off the shelf. There is also the reason that a shopkeeper would have to do business with a rival and thus put himself out of business.

Tenders

Like advertisements, tenders are generally considered to be an invitation to treat. But if the request for a tender is specific and detailed enough this could also become legally binding. (Harvela Investments LTD V Royal Trust Co. of Canada (CI) LTD [1986] A.C 207)

Auctions

An auction is usually an invitation to treat. "An auctioneers request for bids is an invitation to treat, the bid is the offer which the auctioneer can accept or reject." (J. Poole 2001) this is highlighted by the 'The Sale Of Goods Act 1979, s. 57 (2) provides that acceptance is the fall of the hammer and that any bidder may withdraw his bid before that time.' (Harris V Nickerson (1873) L.R. 8 Q.B 286) However if the auctioneer says he will sell to the highest bidder (without reserve) then he has made an offer, and the highest bidder will have entered into a binding agreement (Warlow V Harrison (1858) 1 E&E 309.)

Conclusion

In conclusion the criteria of intention is hard to distinguish but with certain rules this area of English contract law will become comprehensible. The rules are generally speaking as follows. For advertisements or tenders if they are specific and detailed, or have other special promises then it will most likely be treated as an offer, however if they are general and vague then they will be treated as invitations to treat. As for the display of goods, this will be treated, as an invitation to treat this is because if it were to be treated as an offer we would be severely limited in our choice and we would miss out on the best deals "a shop is for bargains, not for compulsory sales." (Winfield (1939) 55 L.Q.R 499.) For auctions a distinction has been observed that an auction being advertised to take place on a certain day it is said to be an invitation to treat, but an auction that has been advertised for sale 'without reserve' it will be treated as an offer.

Contract Tutorial Essay 1

Offers And Invitations To Treat

By Anthony Finch