8/18/2019 ‘offers’ and ‘invitations to treat’

1/2

In contract law we talk about ‘ofers’ and ‘invitations totreat’

Normally it is airly easy to distinguish between an ‘ofer’and in ‘invitation to treat’, but sometimes it can be bevery dicult to distinguish between them.Basically it deends rimarily on the intention with whicha statement is made.

It is imortant to understand that it is not the sub!ectiveintentions o the arties that determine the legal efect o

their words or actions but the ob!ective inerence romthem "#mith v $ughes "%&'%((. )hat is to say, the ofer isinterreted according to an ob!ective intention * theinterretation the reasonable erson in the osition o theoferee would lace uon the statement or action o theoferor. )his is crucial in answering the basic +uestion‘what is an ofer’ #ee -entrovincial states v /erchantInvestors 0ssurance -omany "%1&2( regarding theob!ective re+uirement. 0n ofer is an e3ression o

willingness to contract on certain terms. It must be madewith the intention that it will become binding uonaccetance. )here must be no urther negotiations ordiscussions re+uired. )he nature o an ofer is illustratedand encasulated by two cases involving the samedeendant, /anchester -ity -ouncil. )he -ouncil decidedto sell houses that it owned to sitting tenants. In twocases, the claimants entered into agreements with the-ouncil. )he -ouncil then resolved not to sell housingunless it was contractually bound to do so. In these twocases the +uestion arose as to whether or not the -ouncilhad entered into a contract. In one case, #torer v/anchester -ity -ouncil "%1'4(, the -ourt o 0eal oundthat there was a binding contract. )he -ouncil had sent#torer a communication that they intended would bebinding uon his accetance. 0ll #torer had to do to bindhimsel to the later sale was to sign the document andreturn it. In contrast, however, in 5ibson v /anchester -ity-ouncil "%1'1(, the -ouncil sent 5ibson a document whichasked him to make a ormal invitation to buy and stated

8/18/2019 ‘offers’ and ‘invitations to treat’

2/2

that the -ouncil ‘may be reared to sell’ the house tohim. 5ibson signed the document and returned it. )he$ouse o 6ords held that a contract had not beenconcluded because the -ouncil had not made an ofer

caable o being acceted. 6ord 7ilock stated8 0nimortant distinction between the two cases is that in#torer’s case there was an agreement as to rice, but in5ibson’s case there was not. In 5ibson’s case, imortantterms still needed to be determined. It is very imortant torealise rom the outset that not all communications will beofers. )hey will lack the re+uisite intention to be bounduon accetance. I they are not ofers, what are they 0tthis oint, we will distinguish an ofer rom other stes in

the negotiation rocess. 9ther stes in the negotiationrocess might include a statement o intention, a suly o inormation or an invitation to treat. :e will e3amine thesein turn

 )he words’ may be reared to sell’ are etal; so is theinvitation, not, be it noted, to accet the ofer, but ‘tomake ormal alication to buy’ on the enclosedalication orm. It is; a letter setting out the