offer in contract

OFFER IN CONTRACT and Invitation to Treat (Definitions & More)

OFFER

An offer may be defined as a definite undertaking or promise made by one party with the intention that it shall become binding on him (the maker) as soon as it is accepted by the party to whom it is addressed.

The person making the offer is known as the offeror while the person it is addressed to is known as the offeree.

See also: Contract in Law: Definition and Classification

In Sparkling Brewries Ltd & 5 Ors v Union Bank of Nigeria Ltd), the Supreme Court defined offer thus:
“An expression of readiness to contract on the terms specified by the offeror which when it is accepted by the offeree will give rise to a binding contract….”

An offer is meant to be definite and unambiguous, full and final. The offeror must place at the doorstep of the offeree an intention to enter into contract on clearly defined terms.

In (Neka BB Manufacturing C. Ltd v African Continental Bank Ltd), the court held:
“An offer capable of being converted into an agreement by acceptance must consist of a definite promise by the offeror to be bound , provided that certain specified terms are accepted.’’

An offer can be made to specific person or persons or to the whole would (Carlill v Carbolic Smoke Ball Co.)

An offer can be made expressly or impliedly by conduct (Buses at the bus stop with designated routes indicate invitation to treat, passengers makes the offer).

INVITATION TO TREAT

An invitation to treat is a preliminary move in negotiation which may produce a valid offer and thereafter lead to a contract. An invitation to treat is not an offer, it is a solicitation for an offer i.e. offers to receive offers.

Bowen L. J. Opined in (Carlill v Carbolic Smoke Ball Company) thus:
“In invitation to treat, … you offer to Negotiate, or you issue advertisement that you have a stock books to sell, or house to let in which case, this is no offer to be bound by any contract. Such advertisement are offers to negotiate. Offer to receive offers – offeres to chaffer …”

Invitation to treat is not capable of an acceptance which will result to a contract.

In (Olaopa v OAU), the defendant had discussions with the plaintiff as to the prospects of putting some landed property of the defendant in Ibadan to commercial use. On that basis the plaintiff prepared designs and sketch drawing, which he sent to the defendant. He followed this with a claim for damages for what he has done as the first stage of the project. The university did not pay and he sued.

The Supreme Court held that on the evidence adduced, what had taken place was a discussion preparing to the formation of a contract.
Invitation to Treat exists in different forms including:

1. DISPLAY OF GOODS IN A SUPERMARKET

It has been held that the display of goods in supermarket and shops is not an offer but in Invitation to Treat. A customer makes the offer when he picks up the goods and presents to the representation of the store, and contract occurs when the shopkeeper accepts the offer.

In (Lasky v. Economy Grocery Stores), the plaintiff picked a bottle labeled “tonic” in the store owned by the defendant. Whilst placing it in the carrier basket provided, it exploded and severely injured the plaintiff.
The court dismissed the case, holding that there was neither a sale nor an agreement to sell at the time the bottle exploded.

2. ADVERTISEMENT OF GOODS FOR SALE IN NEWSPAPER, TRADE CATALOGUE ETC

This is another instance of an invitation to treat. In Granger & Son v Gough), The defendant circulated a catalogue which contained price list for its product. The plaintiff ordered some bottles of wine from the catalogue and where the defendant refused to deliver those at stated price, the plaintiff alleged that a contract had been formed.

It was decided that the price list was an invitation to treat.

Also, in (Harri v Nickerson), the defendant advertised in a Newspaper about a public auction. The plaintiff went there not knowing that the auction has been cancelled. He then sued for everything he has expanded on the journey.

The court held that there was no binding contract because in the same way, a shop owner who closes her shop without notice will not be liable to an action by anyone who feels disappointed.

3. AUCTION

An auctioneer’s request for a bid is not an offer but an invitation to treat. The bid itself is the offer, and acceptance occurs where the auctioneer’s hammer falls – Payne v Cave

The auctioneer is bound to sell to the highest bidder if he has not indicated at the beginning that there is a reserved price attached to the goods.

Thus, in the case of Adebaje v Crude, The court held that an auctioneer did not indicate that the auction was subject to a reserved price, he is bound to sell to the highest bidder.

Also, what is known to be “referential bid have been held to be invalid bids. A referential bid as made when a bider makes a bid of a specified amount of money in addition to a bid of specified sum over another bid than his own. Thus, in Harvela Investments v Royal Trust Co. of Canada, The court invalidated the referential bid placed by one Sir Loenard and the court awarded the auction to Harvela, the original highest bidder.

4. BUSES, TAXES, TRAINS, ETC

The Bus at the park make an invitation to treat, by entering into the bus, one impliedly make an offer. Acceptance is made and a contract is concluded at the part when it is impracticable for the parties to withdraw from the transaction.

5. INVITATION TO TENDER

This is an invitation soliciting offers from interested parties. Therefore the highest bid for any goods on tender, or the lowest tender may be rejected without any legal consequences. The tender (bid) is only an offer which may be accepted or rejected.

See also: Termination of Offer in Contract

 

Contributor: Adedokun Samuel

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OFFER IN CONTRACT and Invitation to Treat (Definitions & More)
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OFFER IN CONTRACT and Invitation to Treat (Definitions & More)
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An offer may be defined as a definite undertaking or promise made by one party with the intention that it shall become binding on him (the maker) as soon as it is accepted by the party to whom it is addressed ... An invitation to treat is a preliminary move in negotiation which may produce a valid offer and thereafter lead to a contract.
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