Key Takeaways

  • An invitation to treat is not a legal offer but an invitation to negotiate or make an offer.
  • Advertisements are generally considered invitations to treat, unless they are exceptionally clear and specific.
  • Displays of goods, price tags, and website listings are also classic examples of invitations to treat.
  • Auction sales usually involve invitations to treat, though a “no reserve” auction may create a binding obligation.
  • Offers differ from invitations in that they contain definite terms and intention to be bound upon acceptance.
  • Courts often use case law (e.g., Pharmaceutical Society v. Boots, Carlill v. Carbolic Smoke Ball Co) to determine whether a communication constitutes an offer or invitation to treat.

Offer Versus Invitation to Treat

An offer is an invitation that is communicated by someone to another party to create a binding agreement with specific terms. The acceptance must result in a valid contract and is legally binding on all parties.

An invitation to treat is essentially an invitation to start negotiations with the intent to create an offer. Examples include a recruitment company inviting applicants or a restaurant's menu card that displays prices.

Advertisements

Advertisements are all around us — online, print billboards, magazines, newspapers, and television. Ads claim to sell the best products with lowest prices and great service. But, do they represent the commencement of a contract? In most cases, the answer is no. However, advertisers may be held accountable for any untruthful messages that are communicated in their advertisements. Although they may make certain claims about their products, and these claims must be provable, they are not being offered in the legal sense of a contract.

Advertisements are typically an invitation to treat because they lack the important information that would make it an offer. There are circumstances where an advertisement would be an offer.

If descriptive words are used to intend to bind someone and there is confidence in all the applicable terms, the advertisement is likely to be deemed an offer instead of an invitation to treat. Stating a price by itself is ordinarily an invitation to treat, but if the store binds itself to take a certain price by placing tags, there could be an offer which is accepted when the customer goes to the counter. An example would be if the store says, “We sell this item for $1.25,” This statement could be construed as having all the elements of an offer:

  • Contains all the terms
  • There is sufficient certainty regarding the terms
  • Ability to be accepted without any additional negotiations

Examples of Invitations to Treat in Contract Law

Courts consistently interpret various common situations as invitations to treat rather than offers. Understanding these examples can help clarify the distinction:

  • Store Displays and Price Tags: Goods displayed in a retail setting are typically invitations to treat. The customer makes the offer by bringing the item to the counter. This was confirmed in Pharmaceutical Society of Great Britain v Boots Cash Chemists (1953), where the court held that the sale occurs at the register, not the shelf.
  • Online Listings: E-commerce listings are usually treated the same way as physical displays. The website invites users to make an offer by placing an item in their cart and checking out.
  • Classified Ads and Job Postings: These merely solicit interest and are not contractual offers. They invite potential applicants or buyers to express interest and negotiate terms.
  • Tenders: A request for tenders is generally an invitation to treat. Each submitted tender is considered an offer, which the issuer may accept or reject.
  • Restaurant Menus: Menus are a form of invitation to treat. When a patron places an order, they are making the offer, which the restaurant may accept or decline.

Auction Sales

There is normally an agreement with auction sales that every seller and bidder must sell and discuss whether bids can be withdrawn. There are several cases that have addressed auction sales directly. Dating back as early as the late 1700's, some courts have determined that a call for bids is usually an invitation to treat. The bidder is making an offer, which the auctioneer can either accept or reject. In recent years, some judges have held a bid is an offer where there is no reserve. The reason is that the auctioneer is binding him- or herself to accept the highest bid.

Case Law Examples on Invitations to Treat

Several legal cases help define and distinguish an invitation to treat:

  • Carlill v. Carbolic Smoke Ball Co (1893): While most advertisements are invitations to treat, this landmark case ruled that a specific, unilateral promise (with clear intention and conditions) can be considered an offer. The company’s promise to pay £100 if the product failed was deemed a binding offer due to its specific and public nature.
  • Fisher v. Bell (1961): A shopkeeper displayed a flick knife in his store window. The court ruled this was an invitation to treat, not an offer to sell the item, reinforcing that product displays are not offers.
  • Partridge v. Crittenden (1968): An ad for caged birds in a magazine was held to be an invitation to treat. The court emphasized the practical limitations of treating general ads as offers—advertisers would be bound to potentially unlimited acceptances.
  • Harvela Investments v. Royal Trust Co. of Canada (1986): A rare exception, this case held that inviting sealed bids with a commitment to accept the highest was a binding offer, creating contractual obligations.

Acceptance of an Offer

It's important to differentiate because if a person thinks they are accepting an offer, but they are merely responding to an invitation to treat, acceptance would mean they are making an offer, not accepting the original one. All key terms as offered must be accepted and also communicated to the offeror by the offeree. If the offeree responds with a variation of any of the original terms, this is considered a counter offer, which essentially has the effect of ending the original offer.

Acceptance can be a bit tricky and confusing as it can raise a series of questions:

  • How does acceptance of a unilateral offer take place? In this situation, acceptance by conduct is satisfactory.
  • What about acceptance of a bilateral offer? The offeror must communicate acceptance.
  • What if the offeree specifies a method but uses another for communicating acceptance? Means of delivery can be flexible, provided acceptance occurs within the same stated timeframe.
  • How does simultaneous communication work? If acceptance is delivered through electronic means, it is accepted when deemed received.
  • Is postal acceptance an option? Acceptance is deemed accepted when it's posted.
  • What is the consequence of accepting an offer? Provided all other elements of a contract are present, this will create a valid and enforceable binding contract.

Offer Termination

There are several ways you may be able to terminate an offer:

  • Death of offeree
  • Acceptance of the offer
  • Counteroffer
  • Failure of a condition precedent
  • Revocation before acceptance
  • Lapse of time

Why the Distinction Matters

Distinguishing an offer from an invitation to treat is essential because it determines when a legally binding contract forms. Misinterpreting an invitation as an offer could lead to wrongful claims or misunderstandings in contract negotiations.

The implications include:

  • Contract Formation Timing: Offers can be accepted to form a contract; invitations cannot.
  • Legal Remedies: If a true offer is revoked improperly or accepted timely, remedies may apply. No such remedies exist for invitations to treat.
  • Business Practices: Understanding this distinction helps businesses structure communications (e.g., in ads or displays) to manage contractual obligations.

If you're navigating the legal boundaries between an invitation to treat and an offer, consider connecting with a contract attorney through UpCounsel’s marketplace for guidance tailored to your situation.

Frequently Asked Questions

1. What is an invitation to treat in contract law? An invitation to treat is a preliminary communication inviting others to make an offer, not a binding offer itself.

2. Why are advertisements usually invitations to treat? Because they’re addressed to the public and typically lack the certainty and intent required to form a binding contract upon acceptance.

3. Are online product listings legally binding offers? No, they are generally considered invitations to treat. The contract forms when the seller accepts the buyer’s offer at checkout.

4. Can an invitation to treat become an offer? Yes, if it includes clear terms and a willingness to be bound, it may be interpreted as an offer, especially in unilateral contracts.

5. What legal case established that store displays are invitations to treat? Pharmaceutical Society of Great Britain v Boots Cash Chemists (1953) clarified that store displays do not constitute legal offers.

If you need help with an advertisement offer or invitation to treat, you can post your legal need on UpCounsel's marketplace. UpCounsel only accepts the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.