9 Examples of Invitation to Offer

Introduction:

Case Law Illustration:

Brief facts of the case are that the plaintiffs telegraphed to the defendants " Will you sell us Bumper Hall Pen? Telegraph lowest cash price." ( They were seeking information about the price) The defendants replied " Lowest cash price for Bumper Hall Pen is 900$." The Plaintiffs then telegraphed. "We agree to buy Bumper Hall pen for 900$ asked for by you". It was held that the defendant's telegram was not an offer but merely a statement (information) as to price. The plaintiffs second telegram was in fact an offer to buy, but as this had never been accepted by the defendants, there was no contract. [(1892 A.C.  552]

Legal Essential ingredients for valid offer:

• (a) The offeror has actually intended to make an offer. An offer made in Joke can't be valid like I'll buy your bike for million dollars while the bike really is not worth a million dollars.
• (b) It has to be communicated properly. Proper communication means that the offer has to be communicated to the offeree in such a way that they would reasonably know about it. One can't make an offer so quietly that the other can't hear it.
• (c) The offer must have all of the material terms of the contract for example Price, amount of things, time for delivery and anything that is fundamentally important to forming a contract must be included in the offer so the offeree knows whether it can or cannot be accepted.

Examples of invitation to Offer:

1) Display of goods for sale:

2) Tenders:

Contractors and traders may be invited to make tenders that are to state the lowest price at which they can supply goods, or do a specified piece of work. Such a request for tenders is not an offer unless it is coupled with a statement that the lowest tender will be accepted. When the contractors or Traders submit their tenders there will be no contract until the party who has invited them for tender, accepts one of them. These tenders are only offers and remain open for acceptance until accepted or withdrawn or rejected. They create no binding contract so long they are not accepted.

3) Auction:

Auction is a public sale of property to the highest bidder by one authorized for that purpose. Generally the seller who puts an item up for auction is required to sell to the highest bidder unless he put an auction with the reserve. If the bids don't meet the reserve price he is not required to sell but if they do he's required to sell it. For example on eBay People bid all sorts of ridiculous prices and never pay and we can't enforce it. At an auction sale the offers are made by the bidders and accepted by the auctioneer. Before acceptance the bidder may withdraw his bid and the auctioneer may withdraw his goods.

4) Rewards:

Reward is an offer that invites the offeree to accept the offer not by promising to do anything but by actually doing something i.e. by performing some duty. For example a software company announces that anybody who finds a bug in their software they'll give him Thousand Rupees. That is the reward. Reward is an offer to enter into a contract but the only way of its acceptance is by actually doing it by finding the bug and telling them about it. The unique thing about the reward is that one can generally collect the reward if he knew the reward existed when he performed the duty.

5) Advertisements:

It is information communicated to the public or to the individual concerned as by handbills newspaper, television, radio and web ads etc. An advertisement for bids or lenders is not itself an offer through a tender or bid. It is an offer which creates no rights until accepted. Where the advertisement is not addressed to any particular person nor does it express willingness to do or to abstain from doing anything with a view to obtaining anybody's assent thereto, there is no proposal and the party advertising can qualify its acceptance with certain conditions not embodied in the advertisement.

Case Law Gibson vs. Proctor [(1891) 64 L.T.594)]:

(6) Published Price Lists:

A published price list is not an offer to sell the goods listed at the published prices. Even when the parties are dealing exclusively with one another by private letters or telegrams, or by oral conversation, the same question may arise, and language, that at first sight may seem an offer, may be found merely preliminary in character.

(7) Catalogues:

Catalogues containing descriptions of goods held for sale at the price quoted are not proposal and acceptance of which will close a contract. A catalogue of goods for sale is not a series of offers, but only an invitation for offers. Therefore, a person ordering an article advertised is a proposer and when the order is complied with and the goods dispatched the proposal is accepted by the person issuing the catalogue.

(8) Quotation of prices:

A Price label denotes a statement of the current price of a stock so a buyer could prepare his mind to make an offer on its basis. Labels of prices are fall in the category of negotiations preliminary to offers. However, a price quotation made in the reply for a request asking for the lowest price on a stated quantity of specifically described goods constitutes an offer to sell if the price quoted in such circumstances fairly implying the required promise.

(9) Sales of shares:

A company making an offer to the world at large asking persons to subscribe for shares does not in law offer to sell its shares but invites members of the public to offer to buy them. The offer comes from the members of the public and company can accept or reject their offer at its discretion. But where a company resolves to make a right to issue of shares to its existing shareholders entitling each shareholder to buy a number of new shares in proportion to the shares he already holds the letter informing the shareholder of their rights is an offer.

Proposal and Cross offer:

When two parties make similar offers to each other in ignorance of each other's offers such offers are called cross offers. The acceptance of cross offers does not result in complete agreement.

Invitation to offer vs offer:

An offer is a definite promise made by one party (the offeror) to be bound by certain terms if accepted by another party (the offeree). An offer is an expression of willingness to enter into a contract on specific terms, and if accepted, it creates a binding contract.

An invitation to offer, on the other hand, is a request by one party for another party to make an offer. It is a preliminary step in the contract formation process and does not itself constitute an offer that can be accepted to form a binding contract.

Here are some key differences between an invitation to offer and an offer:

Purpose: The purpose of an offer is to create a binding contract, whereas the purpose of an invitation to offer is to invite another party to make an offer.

The language used: An offer typically uses language that indicates a definite promise, such as "I offer to sell you my car for $10,000," whereas an invitation to offer uses language that indicates a request for another party to make an offer, such as "What price would you be willing to pay for my car?"

Acceptance: An offer can be accepted by the offeree to create a binding contract, whereas an invitation to offer cannot be accepted to create a contract.

Revocation: An offer can be revoked by the offeror before it is accepted, but an invitation to offer cannot be revoked because it is not a definite promise.

Consideration: An offer requires consideration, which is something of value given by the offeree in exchange for the offeror's promise. An invitation to offer does not require consideration.

It is important to understand the difference between an invitation to offer and an offer, as this distinction can have significant legal consequences in the contract formation process.