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2.a) Offer and Invitation To Offer

The document explains the concepts of offer and invitation to offer as defined in the Indian Contract Act of 1872, highlighting their differences and types of offers. It provides examples and case law to illustrate how invitations to offer function in practice, emphasizing that an invitation does not create legal obligations, while an offer does. The conclusion stresses the importance of understanding these distinctions in negotiations to avoid confusion between making an offer and accepting one.

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75 views3 pages

2.a) Offer and Invitation To Offer

The document explains the concepts of offer and invitation to offer as defined in the Indian Contract Act of 1872, highlighting their differences and types of offers. It provides examples and case law to illustrate how invitations to offer function in practice, emphasizing that an invitation does not create legal obligations, while an offer does. The conclusion stresses the importance of understanding these distinctions in negotiations to avoid confusion between making an offer and accepting one.

Uploaded by

adreejabagchilaw99
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Offer and Invitation to offer

Section 2(a) of the Indian Contract Act, of 1872 defines proposal. When one
person signifies his willingness to do or to abstain from doing anything, with a
view to obtaining the assent of that other to such act or abstinence, he is said to
make a proposal;
The person who makes an offer is called the Offeror and the person to whom
the offer is made is called the Offeree.
When this proposal or offer is accepted by the offeree, it becomes a promise.

There are following types of offer:

- General offer: The type of offer which is made to the public at large.
- Specific offer: The type of offer made to a particular person.
- Cross offer: When the parties to the contract accept each other’s offer in
ignorance of the original offer, it is known as the cross offer.
- Standing offer: An offer which is made to public as a whole as well as it
remains open for a specific period for acceptance it is known
as Standing offer.
- Open offer: An open offer is a public invitation by a company to its existing
shareholders to purchase additional shares at a predetermined
price during a specified period.

Differences
1. Definition
Invitation to offer: An invitation to offer is not an offer, but an indication of a
person’s willingness to negotiate a contract.
Offer: When one person signifies his willingness to do or to abstain from doing
something with a view to obtain the assent of another person is called an offer.
2. Purpose
Invitation to offer: Invitation to Offer is made to get an offer.
Offer: Offer is made with an objective to get accepted.
3. Defined In
Invitation to offer: It is not defined in the Indian Contract Act, 1872.
Offer: It is defined in section 2(a) of the Indian Contract Act, 1872.
4. Acceptance
Invitation to offer: An Invitation to Offer becomes an offer.
Offer: Offer becomes an agreement when accepted.
5. Legal Consequences
Invitation to offer: Invitation to Offer does not give rise to legal consequences.
Offer: Offer gives rise to legal consequences.
6. Made To
Invitation to offer: Invitation to offer can be made to a group of people.
Offer: Offer is made to a particular party.
7. Example
Invitation to offer: Bookseller sending catalogue of books indicating prices of
various books.
Offer: If any person interested in any book from that catalogue makes an offer
to the seller.

Cases: Invitation to Offer


A. Pharmaceutical Society of Great Britain vs Boots Cash Chemists Ltd
(1953): In the case, the court determined that the display of goods in a self-
service store constitutes an invitation to treat rather than a direct offer. An
invitation to treat is an indication of willingness to negotiate or receive offers,
allowing customers to make an offer at the point of purchase. In this context, the
court reasoned that the offer is made by the customer when presenting items for
payment, and the store can accept or reject that offer, establishing a clear
distinction in the formation of contracts in a retail setting.

B. Harvey vs Facey (1893): In this case, the defendant was the owner of a plot
of land known as Bumper Hall Pen.
Harvey sent a Telegram to Facey which stated: “Will you sell us Bumper Hall
Pen? Telegraph lowest cash price.”
Facey replied by telegram: “Lowest price for Bumper Hall Pen £900.”
Harvey then replied: “We agree to buy Bumper Hall Pen for the sum of £900
asked by you. Please send us your title deed so that we may get an early
possession.”
Facey then stated that he did not want to sell.
In this case, the price quotation was held not to be an offer.
The House of Lords held that the telegram was an invitation to offer, not a valid
offer. Therefore no valid contract existed. The telegram only advised of the
price, it did not explain other terms or conditions and therefore could not create
any legal obligation.
Harvey’s telegram “accepting” £900 was an offer that Facey could accept or
reject. He rejected it, so there was no contract created.
Conclusion
To conclude, it is necessary to differentiate between an offer and an invitation to
offer, because a party while making negotiations may come to believe that it is
accepting the seller’s offer while in fact, the party may be making an offer
themselves. In invitation to offer there is a chance for both the parties to
negotiate and discuss the terms they would like to come to, in case they decide
to enter into a contract. An invitation to offer becomes a contract only when the
seller extends an offer to the buyer. The key distinction lies in the term
“invitation.” It signifies an invitation to any potential buyer to make an offer for
the goods or services sold.

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