Geoffrey Caesar, Solicitor

An invitation to treat is a term used in contract law to describe a situation where one party is willing to receive offers from another party but intends to be legally bound by a contract when further negotiations occur. An invitation to treat is not an offer but a preliminary stage in forming a contract.

The distinction between an offer and an invitation to treat is crucial because it determines when a contract is formed and the parties’ rights and obligations. An offer is a clear and definite proposal that can be accepted by the other party to create a legally binding contract. An offer must be specific, complete, capable of acceptance, and made to be bound by the acceptance. On the other hand, an invitation to treat is merely an expression of interest or willingness to negotiate. It does not contain the essential terms of the contract or the intention to be bound.

There are many situations where an invitation to treat can arise, such as advertisements, display of goods in shops, tenders, and auctions. In these cases, the party making the invitation to treat is not obliged to sell or accept any offer from the other party but can choose whether to enter into a contract. The following are examples of how invitations to treat are interpreted in specific circumstances based on relevant English law cases.

Examples of different scenarios

Note that some of the examples below refer to ‘plaintiff’ due to the age of the cases. In civil law, the term ‘plaintiff’ was replaced with ‘claimant’ with the introduction of the Civil Procedure Rules in 1999.

Advertisements

Generally, advertisements are considered invitations to treat, not offers, because they are usually vague and incomplete and do not show an intention to be bound by any contract. For example, in Partridge v Crittenden (1968), the defendant advertised some birds for sale in a magazine but was charged with unlawfully offering for sale a wild bird contrary to the Protection of Birds Act 1954. The court held that the advertisement was not an offer but an invitation to treat; therefore, the defendant was not guilty.

There are some exceptions where advertisements can be regarded as offers, especially when they are unilateral offers that promise something in return for the performance of an act by anyone who reads the advertisement. For example, in Carlill v Carbolic Smoke Ball Co Ltd (1893), the defendant advertised a reward of £100 to anyone who used their smoke ball product and still contracted influenza. The plaintiff bought and used the product but contracted influenza and claimed the reward. The court held that the advertisement was an offer, not an invitation to treat, because it was clear, specific, and showed an intention to be bound by anyone who performed the act.

Display of goods in shops

Generally, the display of goods in shops is considered invitations to treat, not offers, because they are merely invitations for customers to make offers to buy the goods. The shopkeeper can then decide whether to accept or reject the offer. For example, in Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1953), the defendant operated a self-service shop where customers could pick up goods from shelves and pay at the cash desk (unusual at the time!). The plaintiff argued that this was an unlawful sale of certain drugs that required supervision by a pharmacist under the Pharmacy and Poisons Act 1933. The court held that there was only a sale once the customer paid at the cash desk and that the display of goods was not an offer but an invitation to treat.

There are some exceptions where the display of goods can be regarded as offers, especially when they are accompanied by clear and specific terms that show an intention to be bound by any contract.

In Fisher v Bell (1961), the defendant displayed a flick knife with a price tag in his shop window. He was charged with offering for sale an offensive weapon contrary to the Restriction of Offensive Weapons Act 1959. The court held that he was not guilty because displaying the knife was not an offer but an invitation to treat.

Tenders

Generally, tenders are considered invitations to treat, not offers, because they are invitations for contractors or suppliers to make offers for providing goods or services. The party inviting tenders can choose whether to accept or reject any offer. For example, in Spencer v Harding (1870), the defendant invited tenders to purchase his stock-in-trade by a specific date. The plaintiff submitted the highest tender, but the defendant refused to sell. The court held that there was no contract because inviting tenders was not an offer but an invitation to treat.

Some exceptions exist where tenders can be regarded as offers, especially when they are made in response to a specific request or when they contain clear and definite terms that show an intention to be bound by any contract. For example, in Harvela Investments Ltd v Royal Trust Co of Canada (1986), the defendant invited two parties to submit sealed bids to purchase some shares and promised to sell them to the highest bidder. The plaintiff submitted the higher bid, but the defendant sold it to the other party. The court held that there was a contract because inviting bids was an offer, not an invitation to treat, and the plaintiff had accepted the offer by submitting the higher bid.

Auctions

Generally, auctions are considered invitations to treat, not offers, because they are invitations for bidders to make offers for buying the goods. The auctioneer can then decide whether to accept or reject any offer. For example, in Payne v Cave (1789), the defendant bid the highest for a lot at an auction but withdrew his bid before the hammer fell. The plaintiff sued for breach of contract. The court held that there was no contract because making a bid was not an acceptance of an offer but an offer itself and that the defendant was entitled to withdraw his offer at any time before the auctioneer accepted it.

There are some exceptions where auctions can be regarded as offers, especially when they are made without reserve or when they contain clear and definite terms that show an intention to be bound by any contract. For example, in Warlow v Harrison (1859), the defendant advertised an auction of horses without reserve, meaning that he would sell to the highest bidder regardless of the price. The plaintiff bid highest for a horse, but the defendant refused to sell. The court held that there was a contract because advertising an auction without reserve was an offer, not an invitation to treat, and the plaintiff had accepted the offer by making the highest bid.

Conclusion

In conclusion, an invitation to treat is a term used in contract law to describe a situation where one party is willing to receive offers from another party but intends to be legally bound by a contract when further negotiations occur.

An invitation to treat is not an offer but a preliminary stage in forming a contract. There are many situations where an invitation to treat can arise, such as advertisements, display of goods in shops, tenders, and auctions. In these cases, the party making the invitation to treat is not obliged to sell or accept any offer from the other party but can choose whether to enter into a contract. The distinction between an offer and an invitation to treat is crucial because it determines when a contract is formed and the rights and obligations of the parties.