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.

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