The essence of an offer is that it is made with the intention that it will be binding when the person to whom it is made accepts the offer terms. The offer is made by the offeror and accepted by the offeree.
Intention is determined objectively by asking: what would the reasonable person have made of the situation, particularly what the parties said and did in the particular circumstances? In other words, a person cannot defeat a finding of intent by merely saying that ‘I did not intend my words to be binding in law’.
Invitations to treat
An invitation to treat is not an offer. It arises when a person uses words and conduct that fall short, on an objective assessment, of an offer. An invitation to treat merely invites interest or negotiation which may, or may not, result in an offer. For example:
- ‘I am thinking of selling my bicycle for £100’ is not an offer because the word ‘thinking’ denies the person the required intent to sell, it is an invitation to treat.
- ‘I will sell you my bicycle for £100’ is an offer because, in the absence of factors to suggest otherwise, the person has used words that show he intended (on an objective assessment) to be bound.
Courts have tended to draw the line between offers and invitations to treat by asking: who should have control over the agreement process, i.e. which party should be able to conclude the contract (with an acceptance)? Case law has resolved the following situations in favour of them being invitations to treat:
- Goods on display: whether in shop windows or on supermarket shelves are invitations to treat. When the customer takes the good to the cashier he offers to buy it. The shopkeeper is then in a position to accept the offer so as to create a binding contract or decline it. With this approach there are no contractual impediments to the:
- shopkeeper declining the sale of alcohol to the drunk,
- customer changing his mind on buying an item before tendering it for payment.
- Advertisements and brochures: are invitations to treat. As above, this approach is grounded in common sense by allowing the advertiser to decline an offer, which he may readily need to do if, for example, the advertised stock is no longer available.
- Requests for bids or tenders: are invitations to treat. This follows from the word ‘request’ which implies that the bid or tender will merely be considered. Furthermore, the nature of the process would be undermined if the bidder was not actually bidding for a contract but was concluding it.
- A bid at an auction: is an invitation to treat, which the auctioneer may accept or reject.
Termination
Prior to acceptance, an offer may be terminated in one of four ways (the first two of which are within the gift of the offeror):
- Withdrawal: the offeror may withdraw or revoke his offer, unless the offeree has given or promised something in exchanged for the offer being kept open. Thus, ordinarily, an offer expressed to remain open until 5pm on Friday, could be withdrawn or revoked before then.
- Lapse of time: with the example above the offer will lapse at 5pm on Friday.
- Rejection: once rejected an offer ends.
- With a counter-offer (see below).
As with acceptances (below), the termination of an offer takes effect when it is effectively communicated.