What is an Offer?
“An 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.” - Treitel
Generally speaking, an offer must be definite (Loftus v Roberts, Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256). It can be made to a particular person, to a group of people or to the world at large.
Contracts are usually formed after a certain amount of negotiation. Often, many statements are made prior to the contract being formed. It can be difficult distinguishing the offer from other statements made during the negotiation.
The main difficulty for a lawyer is identifying which statements are offers and which are merely invitations to treat.
It is a vitally important distinction to make. Unlike an offer, an invitation to treat is not legally binding.
How to distinguish between offers and invitations to treat
This is an important area. Real life scenarios often hinge on this distinction.
The general difference between an offer and an invitation to treat is that an offer is a statement by which a person is willing to contract, whereas if a person is merely seeking to start negotiations, then that is deemed to be an invitation to treat.
The most important factor is whether the court decides that one party “intended” to make a legally binding offer. To assess whether there is intention – the courts will use the objective approach (Smith v Hughes). In practice it can sometimes be very difficult to determine whether it is an offer.
The courts employ a number of presumptions to assist their interpretation.
Advertisements
As a general rule, advertisements are invitations to treat (Partridge v Crittenden [1968] 2 All ER 421).
This is possibly the most logical option. Imagine a situation where a shop advertises the sale of coats at £12.00 each. At some point he may run out of coats to sell. If a customer then arrives and asks to buy a coat, the shop will be unable to supply it. If the advertisement were an offer, the customer would be accepting the offer and a contract would have been formed. Because the shop could no longer supply the coat, it would be in breach of contract.
Construing the advertisement as an invitation to treat solves this problem. Under normal conditions, the customer makes the offer when he asks for the coat. In our situation, the shop owner is perfectly at liberty to accept or reject the offer. He has not yet entered into a legally binding agreement.
Although this is the general presumption, it can be rebutted.
It is however, possible for an advert to be an offer. In Carlill v Carbolic Smoke Ball the advertisement was held to be a unilateral offer which was accepted by Mrs Carlill’s conduct.
A unilateral offer is a promise made in exchange for an act. The most obvious example of a unilateral offer is a reward poster.
Carlill is a memorable case mainly due to its unusual facts. It is also a very important case in contract law. It can be cited as an authority for various different principles: An offer must be on definite terms, there must be an intention to create legal relations and also that an advertisement can be an offer.
“An 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.” - Treitel
Generally speaking, an offer must be definite (Loftus v Roberts, Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256). It can be made to a particular person, to a group of people or to the world at large.
Contracts are usually formed after a certain amount of negotiation. Often, many statements are made prior to the contract being formed. It can be difficult distinguishing the offer from other statements made during the negotiation.
The main difficulty for a lawyer is identifying which statements are offers and which are merely invitations to treat.
It is a vitally important distinction to make. Unlike an offer, an invitation to treat is not legally binding.
How to distinguish between offers and invitations to treat
This is an important area. Real life scenarios often hinge on this distinction.
The general difference between an offer and an invitation to treat is that an offer is a statement by which a person is willing to contract, whereas if a person is merely seeking to start negotiations, then that is deemed to be an invitation to treat.
The most important factor is whether the court decides that one party “intended” to make a legally binding offer. To assess whether there is intention – the courts will use the objective approach (Smith v Hughes). In practice it can sometimes be very difficult to determine whether it is an offer.
The courts employ a number of presumptions to assist their interpretation.
Advertisements
As a general rule, advertisements are invitations to treat (Partridge v Crittenden [1968] 2 All ER 421).
This is possibly the most logical option. Imagine a situation where a shop advertises the sale of coats at £12.00 each. At some point he may run out of coats to sell. If a customer then arrives and asks to buy a coat, the shop will be unable to supply it. If the advertisement were an offer, the customer would be accepting the offer and a contract would have been formed. Because the shop could no longer supply the coat, it would be in breach of contract.
Construing the advertisement as an invitation to treat solves this problem. Under normal conditions, the customer makes the offer when he asks for the coat. In our situation, the shop owner is perfectly at liberty to accept or reject the offer. He has not yet entered into a legally binding agreement.
Although this is the general presumption, it can be rebutted.
A unilateral offer is a promise made in exchange for an act. The most obvious example of a unilateral offer is a reward poster.
Carlill is a memorable case mainly due to its unusual facts. It is also a very important case in contract law. It can be cited as an authority for various different principles: An offer must be on definite terms, there must be an intention to create legal relations and also that an advertisement can be an offer.
