Why is it important to distinguish between an offer and invitation to treat?

Answer 1

An offer / proposal are necessarily for the formation of an agreement. Section 2(a) of Contracts Act 1950 said when person signifies to another his willingness to do / to abstain from doing anything, with a view to obtaining the assent of that other to act / abstinence, he is said to make a proposal and invitation to treat means an invitation to make an offer.

A) There are many distinguishing between offer and invitation to treat. The first distinguishing is from meanings. Offer is an expression of willingness to contract on certain terms made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed, the offeree. Invitation to treat different with offer it means an invitation to make an offer. An invitation to treat is not an offer, but an indication of a person's willingness to negotiate a contract. Based on the case:

COELHO v. THE PUBLIC SERVICES COMMISSION[1964] M.L.J.12

In this case, the applicant, a Health Inspector under the Town Board, Tanjong Malim, applied for the post of Assistant Passport Officer in the Federation of Malaya Government Oversea Missions advertised in the Malay Mail dated 19 February 1957. Consequently, the applicant was informed that he was accepted and, after undergoing training, he was posted to the Immigration Office, Kuala Lumpur, where he remained until December 1958 when he was transferred to the Immigration Office at Johor Bahru.

On 5 November 1959, the Secretary to the Public Services Commission in a letter addressed to the applicant as 'Assistant Passport Officer on Probation' informed him that, following a report from the Controller of Immigration concerning his conduct in the irregular issue of certain passports, disciplinary action was being taken against him with a view to his dismissal. The applicant made representation as invited by the said letter and, on 24 December 1959, the applicant was informed that the respondent had decided that he should not be dismissed but that his appointment on probation be terminated forthwith by payment of one month's salary in lieu of notice.

The applicant now moved the court for an order of certiorari to quash the decision of the respondents on the grounds of error in law, want of jurisdiction, and failure to observe the principles of natural justice. (An order of certiorari is an order of the court directing that something be done; in this case, the court order applied for was one directing that the decision of the respondents be overturned).

It was held that:

1. That the Malay Mail advertisement was an invitation to qualified persons to apply and the resulting applications were offers.

2. The information conveyed to the applicant was an unqualified acceptance to join the overseas mission and he so understood it.

B) Second distinction between offer and invitation to treat is an offer maybe made orally in writing or by conduct such as example of an offer made by conduct is where a customer in a supermarket chooses goods and hands them to the cashier, who then accepts the customer's offer to buy. Invitation to treat may made by displaying goods in shop windows, on shelves, advertisement, tender / auction or a statement of price. Based on the case of:

PHARMACEUTICAL SOCIETY OF Great Britain v. BOOTS CASH CHEMIST LTD[1953] 1 A11 ER 482.

In this case the Defendant was being charged for failing to comply with one of the Great Britain Laws, i.e. The Pharmacy and Poisons Act, 1933 which stated that it was illegal to sell specified poisons without under supervision by registered pharmacist. The Defendant operated self-service shop where a customer may select any goods, which were being display in the shop. When the customer has picked the goods, after that, the payment was to be made at the cashier's desk. At the cashier's desk, the operator of the shop can't stop the transaction since the display of goods as regarded as proposal and when the customer picked the goods as regarded as acceptance, therefore, the self-service shop failed to comply the above-said law.

The self-service shop operated according to the above-said law display of goods only be regarded as invitation to treat and the customer was the one who made the proposal. Later on, at the cashier's desk a registered pharmacist supervised the transaction and was given authority to refuse the contract of sale, if violated any provisions in the above-said law.

It was held that the Defendant was not made an illegal sale since display of goods only be regarded as invitation to treat and the customer was the one who made the proposal. Later on, at the cashier's desk a registered pharmacist supervised the transaction and was given authority to refuse the contract of sale, if violated any provisions in the above-said law.

C) Another is an offer have a termination. There is based on counter-proposal, by using notice of revocation, lapse of time, by failure of acceptor to fulfill a condition precedent to acceptance and by the death of mental disorder of the proposer. For an invitation to treat there is no circumstances or conditions to termination a proposal. The termination of proposal is based on cased:

MACON WORKS AND TRADING SDN BHD v. PHANG HON CHIN & ANOR[1976] 2 M.L.J. 177.

In this case, the defendants gave an option to A her nominees to purchase a piece of land. The option was exercisable only after one LK showed no more interest in the land. The plaintiff's, A's nominee, exercised the option and claimed specific performance. The defendant resisted, contending inter alia, that the offer had already lapsed.

It was held that where no time was fixed, an offer would lapse after the expiration of a reasonable time (section 47 of the Contracts Act 1950). What is reasonable is a question of fact depending on the actual circumstances of each case and the nature of the business. Failure to accept within a reasonable time implies rejection by the offeree.

D) Otherwise, an invitation to treat is an action inviting other parties to make an offer to form a contract and it just a first step to negotiate, or indication of a person's willingness to negotiate a contract but an offer is a creates a binding contract, subject to compliance with the terms of the offer. It refers to the case:

M & J FROZEN FOOD SDN. BHD & ANOR v. SILAND SDN BHD & ANOR[1994] 1 M.L.J. 303.

In this case that Siland Sdn. Bhd (the first respondent) was the registered owner of a piece of land which it charged to the second appellant, Eu Finance Bhd. Due to a default on the part of the first respondent, the second appellant applied to the senior assistant registrar (the SAR) and obtained an order for sale of the property by public auction. M & J Frozen Food (the first appellant) was the highest bidder and was pronounced the purchaser of the property. The first appellant paid a 25% deposit of the total purchase price as provided under the conditions of sale, while the balance of purchase money was to be paid into court within 30 days from the date of sale. However, this was not done.

It was held that the provisions of the National Land Code 1965 showed that the sale at this juncture (at the fall of hammer) had only be concluded in the sense that the goods would no longer be offered for a sale to prospective buyers and the successful bidder could not be permitted to retract his acceptance. Thereafter, each party to the contract of sale must perform his part of the obligation and until then no executed or actual sale had been concluded. Therefore a reference to a sale being concluded at the fall of the auctioneer's hammer could only refer to that stage of the transaction of sale when there was concluded an agreement between the vendor and the highest bidder, the former to sell and the latter to purchase the goods.

E) In addition, statement of price is not necessarily an offer because offer only has a termination on proposal between invitations to treat; statement of price is necessarily in an invitation to treat. It referred to the case of:

HARVEY v. FACEY[1893] AC 552.

In the case that the plaintiff telegraphed to the defendant, 'Will you sell us Bumper Hall Pen?' 'Telegraph lowest cash price'. Defendant telegraphed in reply 'Lowest price for Bumper Hall Pen $900. The plaintiff then replied 'We agree to buy Bumper Hall Pen for $900 asked by you. Please send your title deeds. No reply from the defendant. Plaintiff claimed that there was a contract between himself and the defendant.

It was held that there was no contract. The second telegram was not an offer but in the nature of an invitation to treat. The final message could not be looked upon as an acceptance.

F) Offer involved one party (unilateral) or more parties (bilateral). Bilateral contract is an agreement in which each of the parties to the contract make a promise or promise to the specific person and public at large. On the invitation to treat it only involve to the one party (unilateral). It means that only one party, make an offer but it depends to a person to form a contract. It based on case of:

CARLILL v. CARBOLIC SMOKE BALL CO. LTD[1893] 1 QB 256.

Facts of the case that the defendant made an advertisement in the newspaper where the defendant willing to pay 100.00 Pounds to anyone who still suffering influenza after taking the medicine according to the prescription sold by the defendant. On top that the defendant has deposited 1000.00 Pounds in the special account in the Alliance Bank for the above-mentioned purposes. The plaintiff used the above-said medicine, unfortunately, she still suffering the influenza. Then, the plaintiff asked for the compensation that had been promised by the defendant in the newspaper.

It was held that the plaintiff was entitled for the promise that amount 100.00 Pounds made by the defendant since the defendant's advertisement being considered as proposal addressed to public at large and the plaintiff has accepted the proposal by purchased the medicine and used the medicine according to prescription. The defendant advertisement being considered as proposal because in the advertisement there was an element of willingness where the defendant has deposited money that amount 1000.00 Pounds in special account in the Alliance Bank for the above said purposes.

G) The offer must be communicated to the offeree if the offeror want to revoke his or her proposal before it can be accepted and the offeror will bind to a legal after the acceptance but invitation to treat there is does not communicated before the acceptance and the invitation to treat can revoke anytime without mention to another party. It based on cased:

BANQUE PARIBAS v. CITIBANK NA[1989] 1 M.L.J. 329, CA.

In this case, a company, Selco Salvage Ltd, wrote a letter dated 14 October 1985, offering to sell to the respondents the salvage claims in respect of nine vessels. By a letter dated 31 October 1985, Selco offered to sell to the appellants salvage claims in respects of five vessels which were also part of the nine salvage claims offered for a sale in their 14 October 1985 letter to the respondents. The appellants accepted the offer and purchased those five salvage claims. Subsequently, on 7 November 1985, Selco again wrote to the respondents offering to sell their salvage claims in respect of four vessels which were listed in the 14 October 1985 letter. They further stated in their letter that ' this letter will supersede our previous letter dated 14 October 1985'. The respondents accepted the offer and purchased the salvage claims regarding these four vessels. A dispute arose between the appellants and the respondents as to the ownership in respect of the five salvage claims and the respondents claimed that on 20 November 1985, they had purchased the five salvage claims without any notice of the appellant's prior purchase of them from Selco. The respondents agreed that although they purchased the salvage claims of four vessels on 7 November 1985, Selco's offer to sell the balance five salvage claims contained in the 14 October 1985 letter still remained open and available for acceptance by them, and that they finally accepted the offer on 20 November 1985.

It was held that the 7 November 1985 letter written by Selco to the respondents contained the vital paragraph namely, 'this letter will supersede our previous letter dated 14 October 1985'. The only meaning one can give to this paragraph is that the 14 October letter had been replaced or substituted by the 7 November letter. The effect of that is any offer contained in the 14 October letter which had not been accepted had been withdrawn. Selco had, on 7 November 1985, in clear and unequivocal terms, withdrawn or cancelled the offer contained in the 14 October letter and henceforth there was no offer which remained upon and available for acceptance by the respondents on 20 November 1985 or any other date. Where the communication of acceptance is made by the acceptor through a course of transmission such as post, telegraph, telegram, then the communication of the acceptance is deemed complete as against the proposer, when it is put into a course of transmission to him, so as to be out the power of the acceptor.

Answer 2

In short, according to Richard's Law of Contracts, an offer is an expression of a willingness to contract on certain terms made with the intention that a binding agreement will exist once the offer is accepted. If an individual is not willing to implement terms, but merely seeking to initiate negotiations, this is not an offer but an "invitation to treat". Additional information can be found at the Related Links below.

Answer 3

Please see the attached links. In sum, according to Richard's Law of Contracts, an offer is an expression of a willingness to contract on certain terms made with the intention that a binding agreement will exist once the offer is accepted. If an individual is not willing to implement terms, but merely seeking to initiate negotiations, this is not an offer but an ‘invitation to treat’.

Answer 4

As per the Halsbury's Laws of England. an offer is an expression by one person or group of persons, or by agents on his behalf, made to another, of his willingness to be bound to a contract with that other on terms either certain or capable of being rendered certain. [Halsbury's Laws of England- Para.632] An invitation to offer, on the other hand, may also be called an invitation to treat (as it is, under English Law) and merely indicates the interest of one party to enter into negotiations and is by no means supposed to form a binding contract. [Halsbury's Laws of England- Para.633]

Answer 5

an invitation to treat is a compulsory duty of care owed to individuals whom take part in offers disclosed upon business matters. An offer is when an individual offers to take part in disciplanitory activities.

Answer 6

Unilateral offer is a binding contract, while invitation to treat is an invitation to get response by the audience the response then is considered as an offer, they offer to buy the product, and then, the company which invited the audiences has the right to accept or reject the offer.

Answer 7

A proposal as an offer to deliver goods or a services and is subject to the negotiation of terms and conditions. An invitation to treat is an offer that if accepted requires delivery of what was proposed for the stated price.

Answer 8

Essential elements of a valid contrat

why is Invitation to treat important?

Answer 9

The distinction is important because accepting an offer creates a binding contract while "accepting" an invitation to treat is actually making an offer.