Contracts: Invitation to Treat

Contract law defines offering an item for sale at a ticketed price as an invitation to treat: i.e. for a prospective buyer to make an offer.

Offer and Invitations to Treat

A valid contract can only come into being if a buyer's purchase order (the offer) is accepted by a seller.

A retail store or e-commerce website might imagine that by displaying or advertising an item for sale at a ticketed price, it is the one making the offer but in contract law this this is instead regarded as an "invitation to treat:" In other words; an invitation to a prospective buyer to do business.

Making an Offer

Take for example a potential buyer of an item that is on sale in a store at a ticketed price which they know is available at a cheaper price from an online seller.

If the buyer then makes this known to the store and goes on to say that they will purchase the item from the store if they match the internet price, that in law becomes an "offer". The seller, by agreeing to the lower price will be notifying acceptance of that offer at which point a contract comes into being. The seller cannot then subsequently rely on the price quoted in the original invitation to treat.

Acceptance of an Invitation to Treat

If a seller's invitation to treat is in the form of a document stating prices, terms and conditions the buyer's assent; for example by counter-signing the form; qualifies as an offer.

A seller should take care to ensure that a returned form of assent has not been modified however. If assent is qualified with further conditions added by the buyer, that becomes a new offer. Acceptance will follow if the seller nevertheless undertakes delivery as they will then be bound by the buyer's added conditions.

This can be avoided by the seller stating in their written invitation to treat that its terms will "prevail over any terms and conditions in the buyer's order" - (Butler Machine Tool Co. v. Ex-Cell-O Corp) but that might mean running the risk of dispute or expensive litigation. It is always advisable to obtain an unqualified offer from a buyer before proceeding with supply.

FAQs
The Truth about Monarch Airlines Labour's Spending over 10 years from 2000 Business Planning and Forecasting: What to Look For. Credit Checking - How to Read Micro or Short Form Accounts Amortisation of Arrangement Fees for Long Term Loans BHS Profits Performance 2010 - 2014 BHS profits, liquidity and cash flows 2009 - 2014 How to Calculate a Free Cash Flow Forecast Campari: How to apply for a bank business loan What are Current Liabilities What are Current Assets Late Payers and Cash Flow What is Operating Cash Flow What is Working Capital How to Read a Balance Sheet Business Planning Cash Flow Calculator Short Term Liquidity Business Liquidity Corporation Tax is not Calculated on Net Profit Small Business Corporation Tax Cash Flow Calculator Using Figurewizard - VAT Using Figurewizard - Sales by Month Using Figurewizard - HP or Instalment Plan Budgets Using Figurewizard - How the budgeted cash flow forecast is calculated Using Figurewizard - Fixed Asset Budgets Using Figurewizard - Calculate Purchase of Goods Using Figurewizard - Forecasting Payments to Suppliers Using Figurewizard - How to Forecast Cash Collection Solvency and the Balance Sheet Property in the Balance Sheet Why Equity is a Liability Asset Management and Liquidity Selling Fixed Assets Contracts: Invitation to Treat What is Deferred Income Loss on the Sale of Fixed Assets Calculating Gross Profit Margin Profit and Loss Statement What is Operating Profit What is Net Operating Revenue What is Equity Profit on the Sale of Fixed Assets How Taxable Profit is Calculated What are Operating Overheads Overheads - Provisions Depreciation What is Business Operating Activity What are Fixed Assets