OFFERS & INVITATIONS TO TREAT

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OFFERS AND INVITATIONS TO TREAT

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.’
Edwin Peel, Treitel on the The Law of Contract (15th ed, Sweet & Maxwell, 2020)

BILATERAL AND UNILATERAL OFFERS

All contractual offers are either bilateral or unilateral.

BILATERAL OFFERS UNILATERAL OFFERS

Most contractual offers are bilateral. The In a unilateral offer the offeror promises
offeror promises something in return for a something to the offeree in return for the
promise of something from the offeree. performance of an act by the offeree.

For example, the offeror offers a coat to the For example, a Wanted Poster is a good
offeree for £5. In exchange the offeree example of a unilateral offer, a reward is
promises to pay £5 to the offeror. offered in return for the completion of an
act (bringing in the criminal).
A bilateral offer is made by one party to
one other party. A unilateral offer can either be made to
one party or multiple parties, even ‘to the
entire world’.

Another key distinction between a bilateral and unilateral contract is that in a bilateral
contract the exchange of promises takes place simultaneously whereas in a unilateral
contract the making of the promise and the performance of the act usually occur at
different points.

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An example of a unilateral offer made to one party is Errington v Errington & Woods
(1952) (CoA).

Mr. Errington paid the deposit on a house and offered to give it to his son and daughter-
in-law if they paid the mortgage instalments. Once the act of paying all of the instalments
had been completed then the house would belong to them. The couple split up but the
daughter-in-law continued to make the repayments. Mr. Errington died and his widow
tried to claim the house as her own but the court held that it would be unfair to revoke the
offer. If the daughter-in-law finished making repayments she would own the house as
originally offered. This case also arises in Revocation.

An example of a unilateral offer made to multiple parties is Carlill v Carbolic Smokeball

Company (1893) (CoA).

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An advert for an anti-influenza smokeball offered £100 to anyone who used the ball
according to the instructions but still caught the flu. Mrs Carlill, having read the advert,
bought and used a smokeball but it didn’t work and she became ill. When she claimed the
£100 the company refused to pay. The court held that the defendant had made a
unilateral offer ‘to all the world’; their advert had offered £100 in return for a specified an
act, buying and using a smokeball that didn’t work. They had also shown intention to be
bound by stating that £1,000 was put aside in an account ready for any claimants who
may use the ball and still fall ill. Mrs Carlill had fulfilled the act and therefore they were
bound to their offer and must pay Mrs Carlill £100.

See ‘Case Summary…the background to Carlill v Carbolic’ for more detail on this seminal
case.

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INVITATIONS TO TREAT
Sometimes what seems like an offer is in fact an invitation to treat.

An invitation to treat, instead of being an offer, is an invitation to the other party to make
an offer. Unlike a party making an offer, a party communicating an invitation to treat does
not intend to be bound by their statement.

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There are 5 specific scenarios where we must distinguish between offers and
invitations to treat…

UNCERTAIN OFFERS
If the wording of an offer is not CLEAR and CERTAIN then it cannot be a valid offer.
Words such as ‘might’, ‘may’ or ‘perhaps’ could indicate that this is an invitation to treat
and that the party did not intend to be bound.

Compare the two cases below…

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 In Gibson v Manchester City In Storer v Manchester City Council (1974)
Council (1979) (HoL) Mr. Gibson (CoA) the council had offered Mr. Storer the
was sent a letter by the Council opportunity to buy his council house. He had
stating that they ‘may be prepared’ to agreed and all details had been arranged apart
sell him his council house at the from the date upon which his lease would end
purchase price. When the newly and mortgage payments would begin. The
elected council refused to sell Mr. newly elected council tried to reverse the offer
Gibson his house he sued for breach of their predecessor but the Court of Appeal
of contract. The House of Lords held held that there was a binding contract; there
that the letter did not constitute a firm had been a valid, clear and certain offer made
offer and did not state a specific by the previous council which had been
price, it was therefore an invitation to accepted by Mr. Storer.
treat.

To read an in-depth case summary and comparison of Gibson v MCC and Storer v MCC
click here.

The case of Harvey v Facey (1893) (PC) is another good example. Facey owned a piece
of land called Bumper Hall Pen in Jamaica. Harvey asked Facey to send him a telegraph
stating whether he was willing to sell Bumper Hall Pen and what the lowest price was that
he would accept for the property. Facey replied stating £900. Harvey took this as an offer
and accepted. When Harvey discovered that Facey was trying to sell the property to the
city of Kingston he sued for breach of contract. However, the Privy Council found that
Facey had made no clear offer to sell, only an invitation to treat. Facey’s telegram had not

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stated any clear intention to be bound, he was simply responding to a request for
information. Harvey’s telegram stating that he would buy for £900 was an offer that Facey
rejected.

ADVERTS

Most adverts are invitations to treat and not offers (Partridge v Crittenden (1968) (HC)).

The defendant had placed an advert for ‘live birds’ in a specialist journal. He was charged
with ‘offering for sale’ live birds in contravention of s.6(1) Protection of Birds Act 1954.
However, the court ruled that he was not guilty because his advert was not an offer.
Rather he had made an invitation to treat, the general public was being invited to make
an offer.

In Grainger v Gough (1896) (HoL) this rule was explained. The defendant was a wine
merchant who had sent out a wine catalogue and price list. When Grainger ordered some
wine Gough refused to sell at the stated price. Grainger sued for breach of contract. The
House of Lords found that the catalogue was an invitation to treat and not an offer. If all
adverts, or catalogues, were offers then the seller would be legally bound to sell to
anyone who had seen the advert. Bearing in mind that most sellers have limited stock this
would be unreasonable. However, in obiter dicta it was proposed that if the offeror was a
manufacturer (who could make an unlimited amount) then this principle may not apply
and their advert may constitute an offer.

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 EXCEPTION TO THE RULE
An advert that constitutes a unilateral offer is not an
invitation to treat but an offer and the offeror will be
bound by the terms of the agreement if someone
performs the required act (Carlill v Carbolic Smoke
Company (1893) (CoA)).

An advert for an anti-influenza smokeball offered

£100 to anyone who used the ball but still caught the
flu. This was held by the court to be a binding offer
‘to all the world’.

This principle was also applied in Bowerman v Association of British Travel Agents
Ltd (1996) (CoA). Bowerman booked a holiday that was advertised as being covered by
ABTA (insurance coverage from the travel association) in case of cancellation. When the
holiday was cancelled ABTA claimed that this was an advert and therefore not a binding
offer. The Court of Appeal disagreed; the advert was making a unilateral offer…buy this
holiday and we will cover you if it is cancelled. Any ordinary person on the street would
have read the advert in this way, therefore ABTA were bound by their offer.

Also consider the American case, Lefkowitz v Great Minneapolis Surplus Store
(1957). A store placed an advert in a newspaper stating that a coat worth $139.50 would
be available for sale at 9am on Saturday for only $1.00, ‘first come, first served’. The
claimant was first to arrive on Saturday but the store told him that it was a house rule that
such offers are intended for women only. The Supreme Court of Minnesota held that the
advert was clear enough to be an offer requiring acceptance by performance. The
claimant arrived first and should be entitled to buy the coat. The store could not
subsequently add terms or ‘house rules’ to the offer.

GOODS ON DISPLAY
The general rule is that goods on display in shops are invitations to treat (Fisher v Bell
(1961) (HC)).

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A shopkeeper was charged with the offence of offering to sell knives under the
Restriction of Offensive Weapons Act 1959. However, he was not found guilty because
the knives in the shop window were an invitation to treat and not an offer. The customer
would have to make an offer to the shopkeeper if they wanted to buy one.

After this case the statute was amended by the Restriction of Offensive Weapons Act
1961 to close this loop hole. The wording was amended to include weapons that a seller
exposes or has in his possession for the purpose of sale or hire. Under this law Bell
would have been found guilty.

This is still the case if the goods are available in a self-service shop (Pharmaceutical
Society of Great Britain v Boots Cash Chemists (1953) (CoA)). The customer makes
the offer to buy when they take the goods to the counter. It will then be for the shopkeeper
to accept or decline the offer.

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There is a good public policy reason behind this rule. Were goods on display to amount to
‘offers’ customers might be regarded as accepting them by merely selecting goods
around the shop. If this were the case a valid contract would be formed and the customer
would technically be in breach of contract if they changed their mind and wanted to return
the items before arriving at the checkout.

Automatic machines represent a standing offer, acceptance is activation of the machine

(i.e. issuing a ticket). This principle was established in Thornton v Shoe Lane Parking
(1971) (CoA) which involved a ticket machine at a car park barrier. For more on this case
see the page on Exemption Clauses.

CALL FOR TENDERS

A call for tenders is not an offer but an invitation to treat. Instead, the submitted tender
constitutes an offer (Spencer v Harding (1870) (Court of Common Pleas)).

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Harding distributed a circular stating; ‘we are instructed to offer…for sale by tender the
stock in trade of Messrs G Eilbreck and Co’. Spencer submitted the highest tender but it
was refused. He was unable to sue for breach of contract because the call for tenders
was only an invitation to treat and not an offer. It invited other parties to make an offer by
submitting a tender, and as the court stated, ‘there was a total absence of any words to
intimate that the highest bidder is to be the purchaser’. Therefore Spencer had not
entered into a contract but had merely made an offer which was not accepted.

EXCEPTIONS TO THE RULE – SPECIFIC BIDS

If a call for tenders states that a specific bid (e.g. the highest) will be chosen then it does
constitute an offer (Harvela Investments Ltd v Royal Trust Co of Canada (1986)
(HoL)).

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This is because the offeror has made a unilateral offer – a specific act (be the highest
bidder) with intention to be bound – and the offeree has fulfilled the request.

In this case the defendant invited interested parties to buy shares in a competitive tender,
stating that they would accept the highest ‘offer’ received by them which complied with
the terms of their invitation. The claimants submitted the highest bid and the defendant
was bound to accept it.

EXCEPTION TO THE RULE – COLLATERAL OFFERS

A call for tenders is accompanied by a collateral offer to at least consider all tenders
which are submitted correctly (Blackpool and Fylde Aero Club Ltd v Blackpool
Borough Council (1990)(CoA)).

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A call for tenders was made by Blackpool BC. The deadline was 12pm on 17th March.
BFAC submitted on 11am but their tender was never reviewed. The court said that while
the Council was not obliged to accept BAFC’s specific tender they were duty bound to
consider it.

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AUCTIONS

ITEMS WITH RESERVE

PRICE
If an auction item has a
reserve price then the
auctioneer’s call for bids is an
invitation to treat. The bidder
makes the offer which the
auctioneer can either reject or
accept. The fall of the gavel is
indication of acceptance
(Payne v Cave (1789) (HC)).

This is now codified in s.52(2)

Sale of Goods Act 1975.

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 ITEMS WITHOUT RESERVE PRICE
If an auction item does not have a reserve price then
the auctioneer’s call for bids is an offer and the item
must be sold to the highest, legitimate bidder. In
Barry v Davies (2001) (CoA) the auctioneer refused
to accept a bid of £200 from Davies for an item
without reserve because the item was worth over
£30,000. The auctioneer had made a unilateral offer
to the highest bidder and therefore Davies’ bid had to
be accepted.

This is now codified in s.57 Sale of Goods Act 1975.

Like other adverts, an advert for an auction is an invitation to treat, there is no offer to sell
particular goods or to hold the auction at all (Harris v Nickerson (1873) (HC)).

COMMUNICATING AN OFFER
A valid offer must be communicated to the offeree. They can then decide whether to
accept or reject it (Taylor v Laird (1856 (Court of Exchequer)).

The captain of a ship voluntarily demoted himself to crew member. When the ship
returned home the owner refused to pay him any salary at all, not as the captain nor crew
member. Even though he had demoted himself his offer to change position had not been

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communicated to the ship’s owners and they had therefore not been given the opportunity
to accept or reject his offer.

Communication can be done in writing, orally or implied from conduct, or a combination of

these. A unilateral offer (e.g. Carlill v Carbolic Smoke Company (1893)) that is made to
more than one person is instantly communicated to the whole world when it is made.

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