What is an 'invitation to treat' in contract law?
An ‘invitation to treat’ can be the first stage of forming a contract. Importantly, it is not the same as an ‘offer’ and it is crucial to distinguish between the two concepts.
You can learn more about the background to this subject by visiting our contract law pages.
In order for a legally binding contract to be formed, there must be an offer, an acceptance, an intention to create legal relations and consideration.
An invitation to treat forms a stage immediately before the offer but there can be some ambiguity due to the similarities between the two actions.
A good way of looking at the difference between the two terms is that an offer is a definite promise to be bound on specific terms, whereas an invitation to treat is only an indication that someone is prepared to receive offers with the view of forming a binding contract.
Thus, the distinction turns on the specificity of the offer and the degree of vagueness or conditionality attached to it.
Examples of invitations to treat
The main situation in which an invitation is mistaken for an offer is in advertising. Advertising is not an offer, but rather an attempt to induce offers. Advertising is therefore classed under contract law as an invitation to treat.
Only when the customer indicates that they will pay for the goods at the advertised price has an offer been made.
Similarly, the ‘exhibition of goods for sale’ can be confused as an offer when really it is an invitation to treat. When goods are displayed in a store this constitutes an invitation to customers to make offers to purchase the items.
In commercial dealings, matters can be more complicated. There may be lengthy negotiations between the parties during which more than one invitation to treat and several offers and counter-offers are made.
This is one reason why commercial contracts should always be reduced to writing, in order to ensure that there is no ambiguity about what was agreed and by whom.
There are many similarities between an invitation to treat and offer, so making the distinction can be difficult. Whilst these principles are generally a matter of theory only, they do sometimes become relevant in consumer and commercial disputes.
If the validity of your contract turns on this distinction you should consult an experienced contract lawyer. A contract lawyer can refer to relevant case law on the matter to determine whether an offer was in fact made, or if it was the lesser form of an invitation to treat.
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- Last Updated on 31/03/2014