In contract law, an “offer” and an “invitation to treat” are two different concepts. An offer is a definite proposal made by one party to another with the intention of creating a binding agreement upon acceptance. On the other hand, an invitation to treat is an indication that one party is willing to negotiate with the other party and is inviting them to make an offer.
The key difference between the two lies in the intention of the parties. An offer is made with the intention of creating a binding agreement upon acceptance, whereas an invitation to treat is made with the intention of initiating negotiations.
Here are some examples to illustrate the difference:
Example 1: A customer walks into a store and sees a television with a price tag of $500. This is an invitation to treat, as the store is inviting the customer to make an offer to purchase the television.
Example 2: The store then offers the television to the customer for $450. This is an offer, as the store is making a definite proposal to the customer with the intention of creating a binding agreement upon acceptance.
Example 3: The customer agrees to purchase the television for $450. This is acceptance, and a binding agreement is created between the customer and the store.
Example 4: The customer offers to purchase the television for $400, but the store refuses. This is not acceptance, as the store did not agree to the customer’s proposal.
One case that illustrates the difference between an offer and an invitation to treat is Fisher v Bell (1960). In this case, a shopkeeper displayed a flick knife in his shop window with a price tag. The shopkeeper was charged with offering a flick knife for sale, which was illegal under the Restriction of Offensive Weapons Act 1959. However, the court held that the display of the knife with a price tag was not an offer to sell but was merely an invitation to treat.
In conclusion, the distinction between an offer and an invitation to treat is an important one in contract law, as it determines when a binding agreement is created.