Distinguish an offer from an invitation to treat and critically comment from case-laws if the distinction is useful and realistic in our modern commercial world.
Answer:
An offer is an indication by one person to another of their willingness to contract on certain terms without further negotiations. It is an expression of willingness to contract on specified terms, made with the intention that it shall become binding as soon as it is being accepted by the person to whom it is addressed. (An intention to be legally bound).
An offer is required as a component towards an agreement(the other being acceptance which is the ascent to the offer) But acceptance can only occur when there is a valid offer in the beginning.
Whereas in an invitation to treat, there is still room for further negotiations.
Offers are made up of bilateral offers and unilateral offers. A bilateral offer is a promise in exchange for another promise(s). And a unilateral offer is a promise in exchange for an act.
The line between an offer and invitation to treat is a thin one as example in cases like Gibson v Manchester City COuncil, the courts have not been wholly consistent in their approach. In the United States, invitation to treat or invitation to bargain is an action by one party which may appear to be a contractual offer but which is actually inviting others to make an offer of their own. Example the advertisement of the fish filet in McDonald’s is an invitation to treat, thus when we pay the three dollars, we are offering to buy the filet-o-fish for three dollars and the cashier becomes the offeree that accepts the money.
Statement of price alone is not enough to constitute an offer(Harvey v Facey). And The use of the word “offer” does not necessarily constitutes to an offer(Clifton v Palumbo) “i am prepared to offer you…”
But for cases of a quick sale, it is implied that an offer is present/involved because of the concept of “no more negotiations” since there is an urgency to close the deal as soon as possible(Bigg v Boyd Gibbins Ltd)
As for the invitations to treat(ITT), we have the stereotyped situations that display of goods, ads, tenders and auctions are prima facie ITT.
First we shall go into the display of goods. There are particularly two distinguish cases: Pharmaceutical Society of Great Britain v Boots Cash Chemist(Southern) Ltd and Fisher v Bell.
In Pharmaceutical Society of Great Britain v Boots Cash Chemist(Southern) Ltd, the defendants were charged with an offence under s 18 of the Pharmacy and Poison Act 1933, which requires sales of poisons in Part 1 of the Poisons List to take place under the supervision of a registered phramacist. The defendants operated a self-service system but near the cash desk there is actually a pharmacist who was authorized to stop a customer from removing drugs from the store. But the crucial point is “the time” when the sale took place….is it an offer or ITT? if it is an offer, Boots Cash Chemist will lose the case. The judge eventually rule that the display is just an ITT, thus Boots Cash Chemist won the case and is able to defend itself since it is not making an offer after all.
Same goes for the case of Fisher v Bell whereby the defandant displayed flick knives in shop window and being charged with offering the knife for sale. (special note is taken: the charge is about OFFERING knive for sale) but if we can prove that there is no offer at all, the charge will be dropped. Therefore in Fisher v Bell, what actually happen is that the judge ruled that no offence was committed as the display is just an ITT, thus no offer at all. The defendant is not guilty of the charge.
This actually protects business owners, so that people will have the courage to set up and own businesses. It encourages entrepreneurship, thus the law is fair with this respect. “a shop is a pace for bargaining and not compulsory sales”(Winfield’s argument).
This upholds business efficacy in two ways
1. it preserves the freedom of the shopkeeper to decide whether or not to deal with a particular customer and retain the right to conclude the contract
2.protects the shopkeeper from the exposure to many actions of damages if more customers purported to accept than his limited stock could fulfill.
However the only “injustice” is that the opening of big sales like H and M, Abercrombie and Fitch here etc is customers might wait for long queues because they are induced by ads that sells goods at low prices, and wait at a long time outside the shop in reliance of that belief. What if the stores run out of stock? But in actual fact, it is not the stores fault as stores usually will put “while stocks last” and the inducing effects are also part of ITT.
Advertisements are prima facie ITT unless the advertisement is so specific that it is made to the world at large and states the completion of the stipulated act(s) satisfies the contract such as the case of Carlill v Carbolic Smoke Ball Company purchasing or merely using the smokeball constituted to good consideration.
The case of Leifkowitz v Great Minneapolis Surplus Stores further proven this whereby “the stipulated act” and “world at large” concept is further elaborated.
Take not that Carlill’s case and Leifkowitz case are unilateral ads. But in bilateral ads such as Partridge v Crittenden, the charges were quashed because bilateral contracts are likely not to be held as offers. Because of “business sense” the advertiser might find that he is contractually under an obligation to sell more goods that he in fact owned if such advertisements were to be treated as offers.
In Acutions, a mere advertisement of an auction is not an offer to hold it (Harris v Nickerson). The claimant sued for travel and time expenses incurred on being “lured” by an attractive ad of an auction for furniture, only to come and find out it has been withdrawn.
However care must be taken to drawn distinctions between an auction with a reserved price and one without.
When property is put up for auction subject to a reserve price(McManus v Fortescue), the court held that there is no contract if the auctioneer mistakenly purported to accept a bid that is below the reserve price.
In Warlow v Harrison, the protection for the bidder’s expectation that goods will be sold to the highest bidder came in.
As for tenders, it is prima facie ITT(Spencer v Harding). However in certain cases, a court may hold an ITT to include a binding-undertaking to accept an offer as in the case of Harvela Investments v Royal Trust Co. Of Canada.
Concepts of
1. referential bids are invalid
2. two-contract approach(synallagmatic)
-offer of a unilateral contract to accept the highest bid and this would in turn become a bilateral contract with the highest bidder.
This two-contract approach is also present in Blackpool v Blackpool.
In our modern commercial world, the distinction between an ITT and an offer is useful and realistic. This is because whoever that makes an ITT is usually more protected from being legally bound as to whoever who makes the offer.
Example in my previous post about the postal rule, one can only be susceptible to the postal rule if one makes the offer. But if one makes an ITT, one will be protected and immune to the postal rule. An ITT protects an individual in a way that the other party will most likely be the one making an offer, and if no counter-offer is made, he party making the ITT have the chance to become the offeree and post the acceptance, or the chance to accept.
Whichever party becomes the offeror or offeree will in turn be affected by the “battle of forms”, counter offers etc etc.
I personally think that the distinction is useful in our modern world of commence as it will help business partners to know how to protect themselves and apply rules to achieve maximum protection.
But on the other hand only the offeror has the power to revoke the offer (eg. in the same channel Shuey v USA) and many other powers as well. In our modern commercial world, it is of peak importance that ITT is distinguished from an offer as an ITT allows more room for negotiations while an offer does not(Storer v Manchester City Council).
In Routledge v Grant, the offeror could withdraw at any moment before acceptance, even though the time limit has not expired, unless the promise to keep an offer open for a stated period is supported by consideration.
Therefore a skilled business owner will know when to use an offer and itt to give herself the best protection.
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