Introduction:
There is a difference between an offer and an invitation to offer which mainly lies in the intention of the parties of the contract. An offer directly allows the parties to enter into a contract whereas, in case of an invitation to offer, it invites another party to make negotiations and himself make an offer to the seller. For example, displaying a book in a shop is an invitation to offer by the bookseller to the general public. Anyone can come and make an offer to the seller to buy those books. Hence, no one is legally bound to perform certain actions. to understand the difference between both let us look at them separately.
Meaning of a proposal or an offer:
An offer is an essential and basic element for the formation of a contract. It is described in section 2(a) of the Indian Contract Act, 1872. According to the Act, “when one person signifies to another his willingness to do or abstain from doing something with a view to obtain the assent of the other to such an act or abstinence, he is said to make a proposal”. Here, willingness to do or abstain from doing something means that the proposal or an offer may be made by the parties in order to obtain the assent of the other party having the same interest. So, it basically means an expression of readiness to do or to give something if desired by people having common interests.
For example, A is willing to sell his car to C for Rs. 2 lakhs, if C will accept to purchase the same from A, then A is said to have made an offer for the sale of the car to C. But if this statement is made without any intention to obtain the assent of the other party thereto, that cannot be treated as an offer.
What is an invitation to offer or an invitation to treat?
Sometimes a seller may not make any offer rather he may just give a statement or give some information in order to invite others to make an offer for the same. This is what is called an invitation to treat. For example, a bookseller sends catalogue of books indicating the price of certain books to many people. Here, the bookseller is just providing information about books to the general public. This is an invitation to treat. If any person is interested in buying the books then he can make an offer to the seller.
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Similarly, inviting a person to an auction is an invitation to offer and not an offer sale of goods. An offer will be made by the intending buyer in the form of a bid during the auction.
Here no one is bound to accept the offer, an auctioneer may even reject the highest bid.
An auctioneer is even free to cancel an auction sale announced by him.
In a case: Harris v. Nickerson, the defendant advertised a sale by auction. Plaintiff traveled to the place mentioned by the auctioneer but the auction was already withdrawn by the defendant, as a result, the plaintiff filed a suit against the defendant to recover his travel expenses. The court held that defendant is not liable as no contract was there between the two parties, this advertisement was merely an invitation to offer.
Basically, in an invitation to treat, the seller may enter into a contract with anyone from the general public who makes the best offer to him.
In the same way, an advertisement calling for tenders is merely an invitation to treat and not an offer or proposal. Whereas submission of a tender will be considered as an offer.
As discussed above, “the displaying of goods either in a show-window or inside the shop and such goods bear price tag, would not amount to an offer to sell goods at price mentioned on the price tag. It would be merely an invitation to treat”.
Harvey & Anor v. Facey & Ors is an example where the quotation of the price was held not to be an offer. The defendants, in this case, were the owners of the land known as Bumper Hall Pen. The plaintiff was interested in buying the same and sent a telegram to the defendants, “Will you sell us Bumper Hall Pen? Telegraph lowest cash price.” The defendants replied “Lowest price for the Bumper Hall Pen, 900 pounds.” Plaintiffs sent another telegram saying that “we agree to buy Bumper Hall Pen for 900 pounds. Please send us the title deeds.”
The defendant refused to sell the land and the plaintiffs brought a suit against the defendants for the breach of contract. It was held by the court that the defendants only quoted the lowest price and did not express their willingness to sell the land. It can just be considered as an invitation to offer from the plaintiff side to the defendants, which was further refused, and hence no contract was there.
It is also observed that the display of articles even on a self-service basis is not an offer but merely an invitation to offer.
Key Differences between an offer and an invitation to offer:
- An offer is the final willingness of both parties to create legal relations whereas, in an invitation to offer, it is not the final willingness but the interest of the party to invite the general public to offer him.
- An offer is defined in section 2(a) of the Indian Contract Act, 1872. Whereas, an invitation to offer is not clearly defined in the Act.
- The objective of an offer is to enter into a contract but for an invitation to offer, it is to receive an offer from the general public.
- The consequence of an acceptance of an offer is the formation of an agreement. Acceptance of an invitation to offer results in the formation of an offer by the party to whom it is made.
- An offer is essential to make an agreement but an invitation to offer is not one.
- In an offer, both the parties have an intention to enter into a legally binding agreement. Such an intention is missing in an invitation to offer.
Carlill v. Carbolic Smoke Ball Co.This case law made clear that the general offer is not an invitation to offer rather it will be considered as an offer.
In this case, the defendant company advertised that a reward would be given to any person who would suffer from influenza after using smoke balls according to the printed directions made by the company. The plaintiff, Mrs. Carlill, purchased the smoke balls and used them according to the directions given but suffers from influenza. So, the plaintiff filed a suit to recover the reward price. According to the defendants, the plaintiff did not accept the offer by communicated consent to the offer. But the court held that she accepted the general offer by using the smoke balls according to the directions of the company, therefore she was liable for getting the reward.
Illustration : A published an advertisement for selling his house at a price of ₹15 lakhs. A declined to sell his house to B who was ready to pay ₹15 lakhs as the price of the house of A. A sold his house to C who agreed to pay a price of ₹20 Lakhs. Whether B can sue A for purchase of the house?
In the above case, B who offered to buy the house of A at ₹15 lakhs, cannot sue A. When A published an advertisement in the newspaper regarding the selling of his house at ₹15 lakhs, then he clearly made an invitation to the offer. So, there is no agreement between A and B for the sale of his house. Moreover, as it is discussed above that the seller may enter into a contract with anyone from the general public who makes the best offer to him. So, in this case, C made the best offer and got the house.
So due to the above-mentioned reasons, B cannot sue A for declining to sell his house to B for ₹15 lakhs.
Conclusion:
It is necessary to differentiate between an offer and an invitation to offer. To understand this in simple words we can say that an offer is made from a seller to the buyer, whereas, an invitation to offer is made from a buyer to the seller. There are so many examples of an invitation to treat like auctioneering, display of goods in a shop, an invitation to tender, advertisement in a newspaper, display of the menu of a restaurant, and many more. An offer is more like a specific term comparatively.
So, the intention of the parties makes both the terms different from each other.
References:
• Differences between an offer and an invitation to offer, available at: Source (Last visited: 01-05-2021)
• Basic definition of an offer and an invitation to offer, available at: Source (Last visited: 01-05-2021)
• Dr. R.K. Bangia, Indian Contract Act, 6-8 ( Allahabad Law Agency, Faridabad, Fifteenth Edition, 2016)
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