INVITATION TO TREAT

ABSTRACT

There are various types of offers mentioned under the Indian Contract Act. An offer is the first step in forming a contract. It depicts the start of the legal commitment and intention of the parties involved. However, the invitation to treat/invitation to offer is not an offer but a person’s willingness. This article discusses the concept of an invitation to treat / invitation to offer and how it differs from an offer under contract law. The discussions of scenarios, including ads, exhibits, bids, and tenders, highlight the importance of the objective of creating a legally enforceable agreement.

Additionally, the article examines other kinds of offers, such as counter offers and general offers. It also presents case law examples and other elements to demonstrate how courts view proposals as offers or invitation to treat. A more profound comprehension of these legal ideas is made feasible by the detailed analyses of these situations in the actual world.

Keywords

Indian Contract Act, offers, invitation to treat, Offer, Invitation to Offer, Treat, Contract.

INTRODUCTION

The basis of the polite society is contract. The Indian Contract Act of 1872[1] includes the regulations regarding contracts in India. Simply put, a contract is an agreement between two people containing commitments or obligations that both parties must meet. If the agreement is legally enforceable, it becomes a contract. A common term included in contracts is legally enforceable, signifying that any infringement on the parties’ rights to the agreement will result in legal action and the end of the whole contract[2].

The agreement is defined in section 2(e) of the Act as the reciprocal consideration, just like any promise. A proposal is deemed accepted when it is offered to anyone, and they give their approval; it becomes a promise[3].

A contract is a legally binding agreement, while an agreement is an accepted promise. A promisor or anyone who commits to perform something in exchange for value, and a promise or anyone who is obliged to pay such consideration are the two parties involved in contract law. According to section 10[4] of the Act, all agreements are deemed contractual and will not be declared void if the parties have given their voluntary assent with a legitimate aspect and authorised intent. It is well-known that not all agreements are contracts, but all contracts are agreements.

Offer an acceptance is the fundamental component of a contract. One party must make the offer, and the other must accept it. In accordance with Section 2(b) of the Indian Contract Act of 1872, an acceptance of an offer shows that the person to whom the offer was made granted his or her approval. As long as the idea is accepted, there will ultimately be an agreement that turns into obligations. It is necessary to pass on acceptance in a specific or comprehensive manner. The offer can be expressed or implied, but the intention must have to be there to form the contract. Although the agreement is essential, there must exist” Consensus ad-idem, which means a meeting of minds.

DISTINCTION BETWEEN INVITATION TO TREAT AND OFFER[5]

The role of intention[6]

The significance of intention in an offer is that both parties intend to follow appropriate negotiation and engage in a legally binding agreement. However, an invitation to offer does not include such a purpose. On their way home from work, a person may, for instance, stop by a store and explore the books and clothing on display without planning to buy anything right away. Similarly, vendors have the choice to decline a sale to a specific buyer if they refuse to pay the agreed-upon price. An invitation to offer has no intention of creating a contract; contrastingly, an offer clearly intends to do so. Before coming to a final agreement, it permits greater flexibility and negotiation within the parties.

Offer or proposal

The term offer/proposal has been defined in sec 2 (a) of the Indian Contract Act[7]. According to the Act, “when one person signifies to another his willingness to do or abstain from doing something with a view to obtaining the assent of the other to such an act or abstinence, he is said to make a proposal”. It indicates that a person is considered to be making an offer to another when he or she notifies them of what they would or would not do for them.

For example, a person may offer to sell you his car for Rs 10000. This is an offer. A contract is created as soon as the person and seller reach a consensus about the sale and all the details are stated clearly. The contract is considered to have been” performed when you accept the offer, pay the payment (Rs 10000 0 and receive the car.

Specific and general offer

An offer can be either specific or general. A general offer is one that is extended to all the public. A general offer is a reward advertisement for someone who finds a lost cat and gives back it to its owner. On the other hand, a specific offer is presented on an individual basis. For instance, Shyam offers to sell her flat to Raju at Rs. 50.5 lakhs. This offer is made explicitly to Raju and not to the public at large.

Cross offer

When two parties make similar offers to one another without either of the party know about the other’s offer. As both sides are making proposals simultaneously and neither has had a chance to accept or reject the offer, there is no acceptance in this situation.

Standing offer

An offer that is made to the public as a whole as well as remains open for a specific period for acceptance is known as a standing offer.

Counter offer

This is another type of offer in which the offeree does not accept the original offer, but after modifying the terms and conditions to accept it, it is termed as a counter offer.

INVITATION TO OFFER

An invitation to offer is a communication given from one party to another with the intention of seeking an offer and initiating the process of negotiating a possible contract. In contrast to a legally binding offer, an invitation to treat is a preliminary declaration of willingness to look into offers without incurring any binding legal obligations immediately.

No particular party intends to engage in a contract when they respond to an invitation to offer. Anyone in the public who presents the best offer to the seller may obliged by the terms of the agreement. However, the fundamental element of an invitation to offer is that the seller is the person who makes the genuine offer. For example, a shop owner selling antique sculptures would prefer a buyer who wants to spend more on his goods. Similar to this, an advertisement that proclaims, Offer! 60 % Off on All trousers!” or display clothing at a store is an invitation to treat instead of an offer. Therefore, a contract “evolves” from an invitation to offer differently than an offer. Initially, it is an invitation to offer a display of goods and their prices. An offer becomes a contract when someone makes a good enough offer and the seller “accepts”. In contrast to this, the seller gives the buyer an offer.

EXAMPLES OF INVITATION TO TREAT[8]

Advertisements- These are usually invitations to treat because they lack important information that would make it an offer. These are usually invitations to treat as they don’t have essential information that would make it an offer. They do not sell their goods in the formal meaning of the contract, even though they make specific claims about them that require to be substantiated by evidence.

Exhibition – the exhibition of any goods for sale. A retailer of books sends a price list and catalogue of books to a large number of people. This is not an offer; rather, it is an invitation to treat. Any individual interested in buying a book or books indicated in the catalogue may send an offer that the individual disseminating the catalogue is free to accept or reject.

Bids: – An invitation to participate in an auction or bid while products available for auction are on display is not a sales offer. The potential buyers make an offer in the form of a bid. An offer bid of this kind creates a contract when it is approved by the fall of the hammer or in any other usual manner.

Tenders: Similarly, an advertisement inviting tenders only invites contractors to make an offer or proposal. An offer is only made be created if the tender is accepted. Being the top bidder does not ensure a contract. The contract will be created if the appropriate authorities approve the highest bid and the tenderer is informed of this approval.

CASE LAWS

Carlill v. Carbolic case[9]

The defendants in this case ran an advertisement asserting that their product. The Carbolic Smoke Ball,” would prevent colds and the flu if used three times a day for two weeks. They also offered to pay a reward of 100£ to anyone who might catch the flu instead taking the product as stated. In order to show their genuineness, the corporation places a deposit of Rs 1,000£ in a public bank. Carlill, the plaintiff, purchased the product and took it as prescribed, yet he still had the flu. The plaintiff filed a suit against the corporation for a recovery of 100£. It was decided that a legally enforceable contract was created between the corporation and the plaintiff as soon as the plaintiff bought the product.

State Bank of Patiala v. Romesh Chander Kanoji

The respondent employee made an offer to apply for a voluntary retirement scheme (VRS), which the appellant court created. Employees have 15 days to choose whether to participate in the scheme. Also, it was held that once an application was submitted, it could not be withdrawn. However, withdrawals made after the plan’s closing date were not permitted. The Supreme Court noted that the scheme was an “invitation to offer” and not an “offer”, and under such schemes, employees are free to withdraw their applications at any time, even after the scheme has closed. As a consequence, all of the bank’s management’s calculations would be invalid in this instance.

HOW DO THE COURT INTERPRET THE PROPOSAL – IS IT AN INVITATION TO TREAT OR AN OFFER?[10]

In the legal procedure, various factors are looked.

Sentence structure and wording

Usually speaking, Judges consider the language employed in the exchange to ascertain if it conveys a genuine desire to be legally bound by particular terms. Passive or conditional language may indicate an invitation to treat, but unambiguous language would reflect the availability of an offer.

Term specificity

The communication’s basic terms may be identified by looking for apparently defined terms. An invitation to treat is sometimes broader and less particular, whereas an offer usually contains specific conditions and constraints.

Context and surrounding circumstances

Whether a message is an offer or an invitation to treat might depend on the context and surrounding circumstances. The courts may consider elements including the parties, connection, industry customs, and the fact’s overall context.

Past dealings Courts may also look into the party’s prior interactions and contacts to understand the nature of the party’s communications. This can assist in determining if a particular communication follows the structure of an invitation to treat or an offer.

CONCLUSION

All the important aspects related to invitation to treat/ invitation to offer are clear. also, the distinction between an offer and an invitation to offer is evident from the explanation above, and it is well recognised, and the consequences of both are well known. The invitation to treat is just aimed at expressing the intention of to receive the prelude to offer, after which the offeree has the freedom to accept or reject the offer. While the concept of offer bestows upon the offeree the capacity to accept or reject the offer and, therefore, the contract ends. Unlike a contract, an invitation to treat is non-binding on the parties. Nevertheless, easy as it may seem, there are situations when determining whether to accept an offer or accept an invitation to accept oneself is challenging.

REFERENCES

https://www.legallore.info/post/invitation-to-offer, visited on 10-01-2024
https://lawpath.com.au/blog/what-is-an-invitation-to-treat-in-contract-law#:~:text=An%20invitation%20to%20treat%20is%20not%20an%20offer%20until%20you,sells%20the%20item%20to%20you. ,visited on 09-01-2024
Difference Between Offer and Invitation to Offer (lawbhoomi.com), visited on 11-01-2024
https://legalpaathshala.com/invitation-to-treat/, visited on 09-01-2024
https://www.studysmarter.co.uk/explanations/law/contract-law/invitation-to-treat-vs-offer/#:~:text=An%20offer%20is%20a%20clearly,to%20form%20a%20binding%20agreement., visited on 12-01-2024

[1] Indian Contract Act, 1872

[2] Invitation to offer, LEGALLORE (Jan. 10, 2024), https://www.legallore.info/post/invitation-to-offer

[3] Indian Contract Act, 1872, § 2

[4] Indian Contract Act, 1872, § 10

[5] Angela Omari, What is an invitation to treat in contract law, LAWPATH (Jan.09, 2024), https://lawpath.com.au/blog/what-is-an-invitation-to-treat-in-contract-law#:~:text=An%20invitation%20to%20treat%20is%20not%20an%20offer%20until%20you,sells%20the%20item%20to%20you.

[6] Difference between offer and invitation to offer, LAWBHOOMI (Jan, 11, 2024), Difference Between Offer and Invitation to Offer (lawbhoomi.com)

[7] Indian Contract Act, 1872, § 2(a)

[8] Invitation to treat, LEGALPATHSHALA, (Jan. 09, 2024), https://legalpaathshala.com/invitation-to-treat/

[9] Carlill v. Carbolic, 1892 EWCA, Civ 1

[10]Invitation to treat v. offer, STUDY SMARTER, (Jan.12.2024),

https://www.studysmarter.co.uk/explanations/law/contract-law/invitation-to-treat-vs-offer/#:~:text=An%20offer%20is%20a%20clearly,to%20form%20a%20binding%20agreement.

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