Distinguish between an offer and an invitation to treat giving examples to illustrate the distinction

Distinguish between an offer and an invitation to treat giving examples to illustrate the distinction

Distinguish between an offer and an invitation to treat. Give examples to illustrate the distinction

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.

Introduction

An offer is made when a person shows a willingness to enter into a legally binding contract. An invitation to treat (I.T.T) is merely a supply of information to tempt a person into making an offer. However the distinction between the two can often be misleading and ultimately misinterpreted. When misinterpretations and complications occur then it is down to the courts to decide and to distinguish between the two terms, so a person is not led into a binding contract of which he does not want to be a part of but is merely supplying information to which an offer is to be made (See Harvey V Facey [1893] A.C 552).
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Harvey V Facey [1893] A.C 552

In this case, Facey (D) was in negotiations with the Mayor and Council of Kingston regarding the sale of his store. Harvey (P) sent Facey a telegram stating: “Will you sell us Bumper Hall Pen? Telegraph lowest cash price-answer paid.” On the same day, Facey sent Harvey a reply by telegram stating: “Lowest price for Bumper Hall Pen £900.” Harvey sent Facey another telegram agreeing to purchase the property at the asking price. D refused to sell and P sued for specific performance and an injunction to prevent Kingston from taking the property. The trial court dismissed on the grounds that an enforceable contract had not been formed and P appealed. The Supreme Court of Jamaica reversed and D appealed.

Issue: Is a statement of the minimum price at which a seller would sell an offer?

Holding and Rule: No. A mere statement of the minimum selling price is an invitation to treat and not an offer to sell. The court held that by replying to P’s question regarding the lowest price of the property, D did not make an affirmative answer to the first question regarding his willingness to sell. The court held that D had made an invitation to trade and not an offer.

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An invitation to treat is an action inviting other parties to make an offer to form a contract. These actions may sometimes appear to be offers themselves, and the difference can sometimes be difficult to determine. The distinction is important because accepting an offer creates a binding contract while "accepting" an invitation to treat is actually making an offer.

Advertisements are usually invitations to treat, which allows sellers to refuse to sell products at prices mistakenly marked. Advertisements can also be considered offers in some specific cases. Auctions are sometimes invitations to treat which allows the seller to accept bids and choose which to accept. However, if the seller states that there is no reserve price or the reserve price has been met, the auction will be considered an offer accepted by the highest bidder.

The main cases relevant to offers and invitations to treat

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  • Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256
  • Fisher v Bell [1961] 1 QB 394
  • Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] EWCA

Basically, an ITT is advertisement (made by the seller) and the offer is when the customer approaches the seller with an offer to buy.


So in an everyday example...you walk into a shop and see an item for £9.99 (this would be an ITT), you then take it to the counter and prepare to pay £9.99 (the offer). The important concept here is that an ITT is not binding i.e. when you go to the counter and the clerk says "oh sorry this item is actually £29.99", you have no defence in demanding to be sold it for £9.99.

This is also called the 'Counter Offer' in which you can either accept or decline...or counter offer yourself

 

 

 

 

 

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