Invitation to treat is a term of contract law to distinguish advertisements or merchandise displays from formal contract offers.
It is an offer to receive an offer. Under UK law, the price tag on an item displayed in a shop window (or advertised over public media) is an invitation-to-treat and not an offer of sale (the acceptance of which constitutes a contract).
An invitation to treat is a tool to get negotiations going and show the terms which one party may be willing to accept, as opposed to an offer in which one party is prepared to be legally bound by upon acceptance. An invitation to treat is different to an offer as it only invites the party to make an offer and it is not intended to be binding.
An invitation to treat is when a client invites contractors to make him/her an offer. For example, when the client advertises a job on internet or newspaper, it is usually an invitation to treat rather than an offer. The offer only comes into existence after the client reviews the tenders handed in by the contractors and accept the offer.
An offer is defined as an expression of willingness to enter into a contract on definite terms, as soon as these terms are accepted. It is made by a person known as the offeror and addressed to the offeree. Thus, if A writes to B stating his desire to sell his property to B at a specified price, A is said to have made an offer to B. A is the offeror and B the offeree. An offer may be express (where the offeror specifically makes his intentions known to the offeree, whether in writing or by word of month), or it may be implied from the conduct of the parties, particularly the offeror. An offer is valid only if its terms are definite, but not where they are vague.
Offer and “Invitation to Treat”
An offer, as defined above, must be distinguished from an invitation to treat, The latter is merely an invitation to make an offer and no contract can result from it alone. The best example is afforded by the display of goods in a shop or supermarket. According to decided
cases this amounts to an invitation to treat, not an offer; it is the customer or prospective buyer who makes an offer to the shopkeeper or attendant, or cashier, by picking up the goods and expressing the desire to buy them.
Pharmaceutical Society of Great Bruam V. Boots (1953)
The defendant had a self-service store in which certain listed drugs were displayed on the shelves. It was an offence to sell such drugs unless the sale was done under the supervision of a registered pharmacist. A customer selected some of the drugs from the shelves. The defendants had placed a registered pharmacist on duty at the cash desk near the exit, but not near the shelves. The defendants were charged with the offence of selling listed drugs without the supervision of a registered pharmacist. If the sale took place when the customer picked up the drugs from the shelves, the defendants would be liable; but if the sale took place at the cash desk where the registered pharmacist was stationed, then the defendants were not liable. The court therefore had to determine where the sale took place.
Held: The defendants were not liable because the display of goods on the shelves was merely an invitation to treat, not an offer; it was customer who made an offer by selecting the article and taking it to the cashier.
Fisher V. Bell (1960)
A shopkeeper displayed a flick-knife in his shop window with a price tag behind it. He was charged with the offence of offering a flick-knife for sale. The court had to determine whether the shopkeeper‘s act amounted to offering the flick-knife for sale. Held (Lord Parker, CJ): ―It is clear that, according to the ordinally law of contract, the display of an article with a price on it a shop window is merely an invitation to treat. It is in no sense an offer for sale the acceptance of which constitutes a contract‖. Since there was no
offer for sale, the shopkeeper was not liable.
Another example of an act that amounts to an invitation to treat rather than an offer is to be found in advertisements inviting tenders. The advertiser merely invites tenders for a particular purpose. It is the tenderer who, by his tender, makes an offer to the advertiser and the latter is thereby converted into an offeree; and it is upon the offeree to accept or reject a particular tender. (A tender is an offer for the supply of goods or services).
An acceptance is an assent to the terms of an offer. It must correspond with the terms of an offer, and it is for this reason that a counter offer, cross-offer or conditional assent is not an acceptance in the legal sense of the word. An acceptance may be made in anyway that is expedient, but sometimes the offer itself may dictate the mode of acceptance. For example, the offeree may be required to notify his acceptance in writing or to lodge it at a named place or to a named person, or to communicate it within a specified period of time, e.t.c. Generally, the prescribed mode of acceptance must be adhered to; it is only in exceptional circumstances that
an equally reflective mode of acceptance may be upheld. An acceptance may be express (where the offeree directly assents to the terms of the offer), or it may be by conduct.
The offer and acceptance are not enough to bring about a valid and binding contract. In the case of simple contracts, these are required to be supported by consideration, otherwise the contract is void. Specialty contracts are an exception. Why does the law insist on consideration before a valid contract can be made? The rationale behind this requirement is that the law of contract generally enforces only bargains and not bare promises for which no value is given. This follows from the fact that, the law of contract is
generally intended to promote commercial relations. These are relations which necessarily impose an element of bargain, an element without which there would be no commerce at all.
Indeed, it is on this element that the whole doctrine of consideration is centered. When we talk of bargain, what we have in mind is an exchange of relationship within the context of a money economy. This is clear from the fact that a party seeking to enforce a contract must prove that consideration has moved from him and that it consists of money or money‘s worth.
Types of Consideration
1.Executory of Consideration
The word executory is used to denote that the promised act is yet to be done. Thus A promises to sell and deliver to B sacks to charcoal in return for a price to be paid by B. Before delivery of the charcoal, A‘s promise to B is in the nature of executory consideration for B‘s promise to pay the price. Similarly, before payment of the price, B‘s promise to A is in the nature of executor consideration for A‘s promise.
2. Executed Consideration
The word executed is used here to denote that the promised act has already been done. To take the example given above, after A has delivered the charcoal to B, A is said to have furnished executed consideration for B‘s promise to pay the price. Similarly, after B has
paid the price he is said to have furnished executed consideration for A‘s promise to sell and deliver to him three sacks of charcoal.
Under a given contract, it is possible for the consideration furnished by one of the party to be executory, while that furnished by the other party is executed. Thus, in the above example if it is agreed that A is to deliver the charcoal in a week‘s time but that B is to
pay the price immediately, at that stage consideration furnished by A is executor while that furnished by B is executed.
The distinction between executor and executed consideration is particularly important while considering performance of the contract by the parties and the remedies available to the innocent party in the event of a breach of the contract by the other party. Thus where B has furnished executed consideration by paying the price but A has failed to deliver the charcoal B is said to have performed his part of the contract and he is entitled to recover the price from A ad also to damages from A for breach of contract; whereas if B‘s
consideration was merely executory but he was willing to pay the price, E would be said t be willing top perform the contract ad he would in this case be entitled to damages alone.
3. Past Consideration.
Once negotiations are over and the parties have struck a bargain, any subsequent or fresh promise made by either party in relation to that bargain is known as past consideration. The law is that for d promise to constitute valid consideration is must have been made during the negotiations. As such, past consideration is not valid consideration for the bargain in respect of which it is given ; it is in fact no consideration at all and the promises(promised party ) cannot rely on it.
After selling a horse to the plaintiff, the defendant promised the plaintiff in the following terms ” in consideration that the plaintiff at the request of the defendant, had bought of the defendant a certain horse, at and for a certain price, the defendant promised the plaintiff that the said horse was sound and free from vice. But the horse proved not to be ―sound and free from vic” ands the plaintiff sued on the above Held: The defendant‘s promise was given after the d sale and without any fresh consideration; it therefore amounted to past consideration, which the plaintiff could not rely on.
4. Sufficiency of Consideration
Consideration need not be adequate. Freedom of contract demands that the parties must be free to make their own bargain .No court of law will concern itself with the question whether the price agreed upon is worth the goods supplied. In short, the consideration
furnished by one party need not be equal or proportionate to that furnished by the other party. Thus, a creditor‘s forbearance to sue (i.e. a promise not to sue) may be sufficient consideration for a promise given by the debtor relation to a particular debt.
Alliance Bank, Ltd. v Broom (1864)
The defendant owed plaintiff bankers # 22,000 by way of overdraft. The plaintiffs pressed the defendant for payment, as result of which the defendant promised to give security for the overdraft. The defendant failed to provide the security and on being sued pleaded that the plaintiffs had furnished no consideration for his promise. Held: There was an implicit promise of forbearance for the defendant‘s promise.
But since by definition consideration indicates value, it must be real and not illusory. Thus, where a person is already legally bound (whether by contract or as a matter of public duty) to do a particular thing, a promise such as subsequently made by him to do that
same thing is not consideration which, could support any agreement at all. Thus, a policeman discharging his ordinary duties furnishes no consideration for a promise made by X to pay him for protection. Similarly, a person contractually bound to sail a ship home furnishes no consideration for extra pay if all that is done by him is to discharge his contractual obligation: