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contract_laws:offer_and_invitation_to_treat_112417102019

Offer and Invitation to Treat

An 'offer' is the final expression of willingness by the offerer to be bound by his offer. Sometimes a person may not offer to sell his goods, but make some statement or give some information with a view to inviting others to make offers on that basis. Where a party, without expressing his final willingness proposes certain terms on which he is willing to negotiate, he does not make an offer but merely 'invites' the other party to make an offer on those terms. For example, a book-seller sends catalogue of books indicating price of various books to many persons. This is an 'invitation to treat'. The interested part may make an offer and the book- seller may accept or reject the offer.

Similarly, advertisements for bids/ tenders are only 'invitation to offer the bid/tender constitutes the offer which can be accepted or rejected. A auctioneer is not bound to accept even the highest bid (offer). Where an auctioned sale was cancelled, the plaintiff cannot recover travel expenses as there was no contract. An offer can be withdrawn before it is accepted [Harris Verses Nickerson].

Likewise, an inducement of special discount by a shopkeeper is a “commercial puff' or an invitation to treat and not an offer. A banker’s catalogue of charges or a prospectus of a company inviting applications for job is also not an offer. A quotation of prices is not an offer. In Grainger & Sons Verses Gough, it was held that, “The transmission of a price list does not amount to an offer to supply an unlimited quantity of the wine described at the price named.”

In Bank of India Verses O. P. Swarankar, it has been held that a contract of employment is governed by the Contract Act. Announcement of Voluntary Retirement Scheme by a nationalized bank is not an offer. The employee offering to retire makes an offer and the same becomes effective when the written request of retirement is accepted. An employee who has offered to retire under the scheme can withdraw before his request is accepted.

In Ghaziabad Dev. Authority Verses UOI, the court observed that when a development authority announces a scheme for allotment of plots, the brochure issued by it for public information is an invitation to offer. Several members of public may make applications for availing benefit of the scheme. Such applications are offers. Some of the offers having been accepted subject to the rules of priority/preference laid down by the authority result into a contract between the applicant and the authority.

In McPherson Verses Appana, it was held that mere statement of the lowest price at which the offerer would sell contains no implied contract to sell at that price to the person making the inquiry. The plaintiff offered to purchase the lodge owned by the defendant for Rupees 6,000. He wrote the defendant's agent asking whether his offer had been accepted and saying that he was prepared to accept any higher price if found reasonable. The agent replied, “Won't accept less than Rupees 10,000.” The plaintiff accepted this and brought a suit for specific performance. Held that the defendant did not make any offer or counteir offer but was merely inviting offers. There was no assent to the plaintiff's offer to buy at Rupees and, therefore, no concluded contract.

The Supreme Court relied on the principle enunciated in Harvey Verses Facey,In that case the plaintiffs telegraphed to the defendants, writing, “Will you sell us Bumper Hall Pen? Telegraph lowest cash price”. The defendants replied, also by a telegram, “Lowest price for Pen, £ 900”.

The plaintiffs immediately sent their last telegram stating, “We agreeto buy Pen for £ 900 asked by you”. The defendants, however, refused to sell the plot of land at that price. The court observed that the defendants gave only the lowest price and did not expressed their willingness to sell. Thus they had made no offer. The plaintiffs' last telegram was an offer to buy, but that was never accepted by the defendants.

Where a proposer, in response to a proposal to purchase his land, asked for a higher price and also some advance with acceptance, it was held that the proposer accepting the same along with an advance payment amounted to a contract, although the letter of acceptance came back being refused [Byomkesh Verses Nani Gopal].


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Created on 2020/10/19 23:13 by • Last modified on 2020/11/07 18:32 (external edit)