Contracts/Invitation to deal: Difference between revisions

An Invitation to treat (or invitation to bargain in the United States) is a concept within [contract law]].^[1] In Andrew Burrows' words, an invitation to treat is

"an expression of willingness to negotiate. A person making an invitation to treat does not intend to be bound as soon as it is accepted by the person to whom the statement is addressed."^[2]

A contract is a legally binding voluntary agreement that is formed when one person makes an offer, and the other accepts it. There may be some preliminary discussion before an offer is formally made. Such pre-contractual representations are known variously as “invitations to treat”,” requests for information”, or “statements of intention”.

True offers, may be accepted to form a contract, whereas representations such as invitations to treat may not. However, although an invitation to treat cannot be accepted, it should not be ignored, for it may nevertheless affect the offer. For instance, where an offer is made in response to an invitation to treat, the offer may incorporate the terms of the invitation to treat (unless the offer expressly incorporates different terms). If, as in the Boots case (below), the offer is made by an action without any negotiations (such as presenting goods to a cashier), the offer will be presumed to be on the terms of the invitation to treat.

Case law

Template:Contract law Generally, advertisements are invitations to treat, so the person advertising is not compelled to sell to every customer. In Partridge v Crittenden [1968] 1 WLR 1204, it was held that where the appellant advertised to sell wild birds, was not offering to sell them. Lord Parker CJ commented that it did not make "business sense" for advertisements to be offers, as the person making the advertisement may find himself in a situation where he would be contractually obliged to sell more goods than he actually owned. In certain circumstances such as unilateral contracts, an advertisement can be an offer, as in Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256, where it was held that the defendants, who advertised that they would pay anyone who sniffed a smoke ball in the prescribed manner and caught influenza would be paid.£100, were contractually obliged to pay £100 to whoever accepted it by performing the required acts.

A display of goods for sale in a shop window, or within a shop, is an invitation to treat, as in the Boots case, ^[3] a leading case on supermarkets. The shop owner is thus not obliged to sell the goods, even if signage, such as "special offer", accompanies the display. Also, in Fisher v Bell [1961] 1 QB 394, it was held that displaying a flick knife for sale in a shop did not contravene legislation which prohibited "offering for sale anoffensive weapon". If a shop mistakenly displays an item for sale at a very low price it is not obliged to sell it for that amount.^[4] For an offer to be capable of becoming binding on acceptance, the offer must be definite, clear, and objectively intended to be capable of acceptance. If it is a mere preliminary move into negotiation which may lead to a contract, it is not an offer but an invitation to treat. The offerer must have been initiating negotiations from which an agreement may or may not in time result. The important point to note is that, since an invitation to treat is not an offer, but rather a phenomenal preliminary to an offer, an invitation to treat is not capable of an acceptance which will result in a contract.

In England, auctions are governed by the Sale of Goods Act 1979 (as amended). 57(2) provides: “A sale by auction is complete when the auctioneer announces its completion by the fall of the hammer, or in other customary manner. Until the announcement is made any bidder any retract his bid”. s. 57(3) provides further: “An auction sale may be subject to a reserve price” However, if the auction is held "without reserve" then the auctioneer obliged to sell to the highest bidder.^[5][6] the highest bidder; this was affirmed in the Court of Appeal in Barry v Davies [2000] 1 WLR 1962. 'Payne v Cave (1789) 3 TR 148

An example of an invitation to treat is a tender process. In the case of Spencer v Harding ^[7], the defendants offered to sell by tender their stock, but the court held that they had not undertaken to sell to the person who made the highest tender, but were inviting offers which they could then accept or reject as they saw appropriate. In exceptional circumstances, an invitation for tenders may be an offer, as in in Harvela Investments v Royal Trust of Canada [1986]^[8], where the court held that since defendants had made clear an intention to accept the highest tender, then the invitation to tender was an offer accepted by the person making the highest tender.

See also

• Contract
• Offer and acceptance

Notes

References

• Andrew Burrows, Casebook on Contract (Hart Publishing, 2007) Ed.