Invitation to Offer
1. Meaning of Invitation to Offer
Definition:
An Invitation to Offer (or Invitation to Treat) is when a person invites others to make offers to enter into a contract.
It is not an offer itself, but a preliminary communication asking others to propose terms.
Key point: No party is legally bound by an invitation to offer until an actual offer is made and accepted.
Simply put: “Inviting someone to make an offer” is an invitation to offer.
2. Key Features
Not an Offer:
It cannot be accepted to form a binding contract.
Preliminary Step:
It is a step before an actual offer.
No Legal Obligation:
The person making an invitation to offer is not legally bound to accept any offers received.
Purpose:
To indicate willingness to negotiate or invite offers from the public.
3. Examples of Invitation to Offer
Advertisements:
Example: “50% off on all shirts at XYZ store”
Customers make the offer by purchasing; the store can accept or reject.
Display of Goods in a Shop:
Items displayed with price tags in a store.
Customers make the offer at the cash counter; shopkeeper can accept or reject.
Auction:
Auctioneer invites bids (offers) from participants.
Bidder’s offer is accepted when auctioneer strikes the hammer.
Tenders / Quotations:
A company inviting tenders is not offering a contract, but asking others to submit offers.
4. Case Laws on Invitation to Offer
A. Pharmaceutical Society of Great Britain v. Boots Cash Chemists (1953) – English Case
Display of goods on the shelf was an invitation to offer, not an offer.
Customer made the offer by bringing goods to the cashier, and contract formed on acceptance at cashier.
B. Carlill v. Carbolic Smoke Ball Co. (1893) – English Case
Distinguished between invitation to offer and unilateral offer.
Court held advertisement may be treated as an offer if it shows intent to be bound (exception).
C. Lalman Shukla v. Gauri Dutt (1913) – Indian Case
Reward advertisements are considered invitations to offer, except when terms show clear intent to be bound (unilateral contract).
5. Difference Between Offer and Invitation to Offer
| Feature | Offer | Invitation to Offer |
|---|---|---|
| Definition | Proposal that creates legal obligation when accepted | Preliminary communication inviting others to make offers |
| Legal Effect | Can be accepted to form contract | Cannot be accepted to form contract |
| Obligation | Promisor bound on acceptance | No obligation to accept |
| Example | “I sell my car to you for ₹5 lakh” | “Car for sale at showroom for ₹5 lakh” |
6. Conclusion
Invitation to Offer is the first step in contract negotiation.
It does not create a binding contract.
Once the offer is made in response and accepted, a contract is formed.
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