DISTINGUISHBETWEEN AN OFFER AND INVITATION TO TREATAn offer can be defined as willingness tocontract made with the intention that it shall become binding on the offeror assoon as it is accepted by the offeree. An offer may be made to a person, agroup of people or to the world at large. To qualify as an offer, the statementor conduct must indicate in the offer what the offeror requires of the offereeby way of acceptance in return for the promise.
In the case of NTHC Ltd v. Antwi, Antwi worked for the company.During the period of her employment, the Board of Directors of the companydecided to sell the company’s houses being occupied by their staff, by givingtheir staff the first option of purchase. Antwi received a letter dated 17January 2005 signed by the board secretary.
The letter stated that the sheshould reply in writing if she was interested in the house at the price stated.She wrote back to them by 31 January indicating her interest in buying the propertyat the price stated and requested that the company provide her with the bankaccount into which payment is to made. She did not receive any letter from thecompany. Antwi receives a letter dated 7 November 2005, stating that the Boardof Directors had decided to withdraw their earlier decision of selling thehouse to her. She instituted an action in the High Court which was dismissed.An appeal was made to the Court of Appeal where the judgment of the trial courtwas reversed. The company then brought an action to the Supreme Court. TheSupreme Court per Date-Bah JSC, did state that … “an offer is an indication inwords or by conduct by an offeror that he or she is prepared to be bound by acontract in terms expressed in the offer, if the offeree communicates to theofferor his or her acceptance of those terms… the offer has to be definite andfinal and must not leave significant terms open for further negotiations”.
TheCourt further stated that if a communication during negotiations is not a finalexpression of an alleged offeror’s willingness to be bound, it may beinterpreted as an invitation to the other party to use it as a basis. It was heldthat there was an intention to create legal relations and the respondent’sundertaking to pay the price was consideration enough to result in theformation a contract. This case was contrasted with the case of Gibsonv.
Manchester City Council. In this case there was a policy by the councilto sell council houses to tenants. The council then wrote to the tenantsincluding the plaintiff in this case that the council “may be prepared to sell”the houses to each tenant at a specified price under some specific terms.
Theplaintiff was invited to make a formal application if he was interested inbuying the property which the plaintiff did. The Council later rescinded itsdecision to sell the house to the plaintiff and the plaintiff sued for a breachof contract. The plaintiff contended that the ‘formal application’ he madeconstituted an acceptance which brought the contract into existence. The Houseof Lords rejected that argument that the council’s letter was not an offer butan invitation to the plaintiff to make an offer. An invitation to treat is an indication ofwillingness to conduct business. It is an invitation to make an offer or simplyput it is an offer to make an offer. A seller of goods and services willusually have to first solicit offer for possible bargains through the displayof goods, circulation of brochures or catalogues. Such statements of intentionor conduct are merely invitation to the public to make offers and attempts toinitiate the bargaining process.
The distinction between an offer and aninvitation to treat can be explained on the basis of the following;ADVERTISMENTGenerally, advertisements are invitationto treat. In the case of Partridge v. Crittenden, the plaintiffadvertised in a periodical which read Bamblefinch cocks, Bamblefinch hens 25seach. The plaintiff was charged with unlawfully offering for sale wild livebird contrary to the protection of Birds Act 1954, the court held that theadvertisement was an invitation to treat and therefore the plaintiff could notbe guilty of the offence charged.In the case of Carlill v.
CarbolicSmokeball Co., where the defendant manufactured smokeballs. A largeadvertising campaign stated that if anyone used the smokeball correctly, butstill caught flu, they would be paid £100 reward. The advertisement also statedthat the defendants had deposited £1000 in the bank to show they meant whatthey said. The claimant, Mrs.
Carlill despite using the smokeball properly,still caught flu. When she claimed the £100 reward, the defendant refused to pay,arguing that their advertisement was not an offer. The court held that the defendant’sadvertisement constituted an offer.
The wording converted the advertisementinto a unilateral offer requiring the performance of an act. Therefore, aunilateral advertisement (requesting performance of an act as acceptance) is anofferDISPLAY OF GOODS In the case of Pharmaceutical Society ofGreat Britain v. Boots Cash Chemists Ltd (1953), the defendant operated a self-servicesystem and had a pharmacist at cash desk. The plaintiff alleged that defendantshad infringed the provisions of the Act which made it unlawful to sell anylisted poison “unless it was under the supervision of a Registered Pharmacist”.It was held that Boots had not committed any offence.
The display of goods onshelves was merely an invitation to customers to make an offer. The customermakes an offer to buy when he picks up the item (medicine). Until the buyer’soffer is accepted by the seller by the acceptance of the price, there will beno sale. Also, in the case of Fisher v.
Bell, it was held that thedisplay of a flick knife by the shopkeeper in his shop with a price tag did notconstitute an offer, it was an invitation to treat. The reason being that theseller can decide not to sell to a prospective buyer. The buyer on the otherhand can return the item before payment is made or after examining it.TENDERA request for tenders is an invitationtreat. The requestor is free to accept or reject any tender to purchase goods,even if it is the highest bidder.
In Spencer v. Harding, the defendant issueda circular for the sale of a stock by tender. The plaintiff turned out to bethe highest bidder but was not accepted. It was decided that the circular ortender notice was not an offer.However, in the case of HarvelaInvestment Ltd v. Royal Trust Co. of Canada ltd.
(1985), the plaintiff and the second defendant were rivalsfor some shares belonging to the first defendant. They both submitted theiroffer. It was stated that the highest bidder will be accepted. The plaintifftendered a bid of £2,170,000 and the second defendant’s bid was £2,100,000 or£101,000 in excess of any offer. The first defendant accepted the seconddefendants offer.
The court held that the plaintiff’s bid was the only validbid.AUCTIONSThe auctioneers request for bids is aninvitation to treat. The bid is the offer which the auctioneer can accept orreject. In Harris v.Nickerson,the defendants auctioneer advertised that lots including certain officefurniture would be sold on a particular date and place. The plaintiff travelledfrom London for the sale.
However, the said furniture was withdrawn from thesale. A court action was brought to the defendant, the court held that it wasonly an invitation to treat and did not promise that all the articles would beput up for sale.Where the sale is subject to a reserveprice, the auctioneer is not bound to sell the goods to the highest bona fidebidder where the highest bid is lesser than the reserved price. This principlewas applied in McManus v. Fortescue Where the auction sale is without reserveprice; In Warlow v.
Harrison, the defendant, advertised the sale of ahorse by public auction, without a reserve price. The plaintiff bid 60 guineas.The horse owner bid 61 guineas. No further bids were made and the defendantknocked down the horse to its owner since he was the highest bona fidepurchaser.
The court held the in an auction without reserve, the auctioneermakes a contract with the highest bona fide bidder to sell the item at thehighest bid. Under such circumstances, neither the vendor or his authorisedagent shall bid at the auction. However, according to section 4(1)(d) of theSale of goods 1962 (Act 137), where the sale is expressed to be withoutreserve, the higher bona fide bidder is entitled to buy the goods at the pricebid although the auctioneer refuses to accept the bid or complete the sale.Paragraph (e) and (f) provides that the seller or any one person on behalf ofthe seller may bid if a right to bid is expressly reserved, but, subject toparagraph (f), not otherwise; where the sale is notified to be subject to areserve price, the seller may make one bid and no more; and that bid shall beopenly declared at the auction before any other bid is received. In sum an offer is an expression ofwillingness to contract on certain terms. It must be made with the intention tocontract on certain terms.
It must be made with the intention that it willbecome binding upon acceptance. There must be no further negotiation ordiscussions whereas an invitation to treat is an indication of willingness toconduct business. It is simply an invitation to make an offer.