Introduction
In the law of contract in England and Wales, a legally binding agreement is formed when there is an offer, acceptance, consideration, and an intention to create legal relations. A crucial first step in this process is identifying a valid offer. However, not all communications that seem to be offers are treated as such by the law. Many are classified as an 'invitation to treat'. The distinction between an offer and an invitation to treat is fundamental because it determines when the parties become legally bound. An offer, once accepted, creates a contract, whereas an invitation to treat is merely a preliminary step that invites others to make an offer. This essay will explain the difference between these two concepts, using key case law to illustrate how the courts distinguish between them in practice.
Defining an Offer and an Invitation to Treat
An offer is a clear and certain statement of the terms upon which the offeror is willing to be bound if the proposal is accepted by the party to whom it is addressed (the offeree). The essential feature of an offer is that it demonstrates an intention to be bound without any further negotiation as soon as the other party accepts. As Lord Denning stated in Storer v Manchester City Council [1974] 1 WLR 1403, you should look at the correspondence and the conduct of the parties to see if they have come to an agreement on everything that was material. If so, a contract is formed.
In contrast, an invitation to treat (ITT) is an expression of willingness to enter into negotiations which, it is hoped, will lead to the conclusion of a contract at a later date. It is an invitation for others to make an offer, which the person making the invitation is then free to accept or reject. Common examples of invitations to treat include advertisements, goods displayed in a shop, and invitations to tender. The law has developed clear rules for these common commercial situations, which provide certainty for both buyers and sellers.
The Distinction in Practice: Case Law Examples
The courts have established several presumptions to help decide whether a statement is an offer or an ITT. These are best understood by examining the case law.
Advertisements
The general rule is that an advertisement is an invitation to treat, not an offer. This was established in Partridge v Crittenden [1968] 1 WLR 1204. In this case, the defendant placed an advert in a magazine stating "Bramblefinch cocks, Bramblefinch hens, 25s each". He was charged with the offence of ‘offering for sale’ a wild bird. The High Court held that the advertisement was an ITT and not an offer. The court reasoned that if it were an offer, the advertiser could find themselves contractually obliged to sell more goods than they actually owned. This "limited stock" argument means that it is more reasonable to see the advert as an invitation for potential buyers to make offers to buy the goods, which the seller can then accept or reject.
However, there is an important exception to this rule. If an advertisement contains a clear promise and shows a definite intention to be bound, it can be an offer. The leading case is Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256. The company advertised a 'smoke ball', claiming it would prevent influenza and promised to pay £100 to anyone who used the product as directed and still caught the flu. To show their sincerity, they deposited £1,000 in a bank. Mrs Carlill used the smoke ball but caught the flu and claimed the £100. The company argued their advert was a 'mere puff' or an ITT. The Court of Appeal disagreed, holding that the advert was a unilateral offer to the world at large. The clear terms of the promise and the deposit of money showed an intention to be bound. Acceptance occurred when Mrs Carlill performed the condition of using the ball, and she was therefore entitled to the £100.
Goods on Display
Similarly, goods displayed in a shop are generally considered invitations to treat. In Fisher v Bell [1961] 1 QB 394, a shopkeeper displayed a flick knife in his window with a price tag. He was charged with offering an offensive weapon for sale. The court held that the display was an ITT, not an offer. The potential buyer makes the offer when they present the item at the cash desk, and the shopkeeper is then free to accept or reject that offer.
This principle was further clarified in the context of self-service shops in Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401. The case concerned the sale of medicines which, by law, had to be sold under the supervision of a pharmacist. The claimant argued that the sale was completed when the customer took the medicine from the shelf (an acceptance of an offer). If this were true, Boots would have been in breach of the legislation as there was no pharmacist supervising at the shelves. The Court of Appeal held that the display of goods was an ITT. The customer made the offer to buy when they took the goods to the till, and the contract was only formed when the cashier (under the supervision of a pharmacist) accepted that offer. This reasoning protects the shopkeeper's freedom to contract, for instance, by allowing them to refuse a sale to a minor.
Conclusion
In conclusion, the difference between an offer and an invitation to treat is based on the intention of the party making the statement. An offer demonstrates a clear intention to be legally bound by specific terms upon acceptance, while an invitation to treat is simply an invitation to negotiate or for the other party to make an offer. While this distinction can sometimes seem technical, the presumptions developed by the courts in cases like Partridge v Crittenden and Boots Cash Chemists provide a degree of certainty in everyday commercial transactions. The exceptional case of Carlill v Carbolic Smoke Ball Co shows that these presumptions can be displaced where the words and conduct of a party clearly demonstrate an intention to make an offer. Ultimately, the distinction is a crucial element in determining the point at which a legally enforceable contract comes into existence.
References
Cases
- Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256
- Fisher v Bell [1961] 1 QB 394
- Partridge v Crittenden [1968] 1 WLR 1204
- Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401
- Storer v Manchester City Council [1974] 1 WLR 1403
Books
- McKendrick, E. (2021) Contract Law: Text, Cases, and Materials. 10th edn. Oxford University Press.
