Introduction
An invitation to offer is a statement or conduct inviting others to submit offers. It precedes the offer stage and therefore cannot be accepted to form a contract. Typical examples include shop displays, catalogues, and advertisements calling for tenders. The legal label turns on what a reasonable person would understand the maker to intend in context.
Invitation to Offer — Cheat Sheet
| Context | Invitation or Offer? | When it flips to an Offer | Typical Authority |
|---|---|---|---|
| Shop display/self-service | Invitation | Vending/ticket machines (display = offer; payment = acceptance) | Boots (1953) |
| Tenders | Invitation | “Lowest compliant tender will be accepted” (process/acceptance promises) | Spencer v Harding; Blackpool (1990) |
| Auctions | Call for bids = Invitation | “Without reserve” → duty to sell to highest bona fide bidder | Payne v Cave; Barry v Davies (2000) |
| Rewards | Offer (unilateral) | — | Carlill (1893) |
| Advertisements (general) | Invitation | Clear, definite, explicit terms to the world (e.g., “first come…”) | Partridge (1968); Lefkowitz (1957, US) |
| Published price lists | Invitation | Personalized, complete, promissory quote, “for immediate acceptance” | Grainger (1896); Fairmount (1899, US) |
| Catalogues | Invitation | Specific, complete terms directed to named offeree | Partridge; Boots |
| Quotations of price | Invitation | “I will sell you X @ Rs. Y, shipment Z” (complete terms) | Harvey v Facey (1893); Storer (1974) |
| Sales of shares | Prospectus = Invitation | Rights issue letter to existing holders = Offer | Company law practice |
Do not assume every advertisement or price quote is an invitation to offer. Some advertisements (e.g., rewards with clear terms) are unilateral offers that can be accepted by performance.
Legal essentials of a valid offer
- Intention: An objective intention to be immediately bound upon acceptance (not a joke, puff, or preliminary inquiry).
- Communication: The offer is communicated so a reasonable offeree would be aware of it.
- Definiteness: Essential terms are sufficiently certain (subject matter, price or pricing mechanism, quantity/identification, time for performance where material).
- No further assent needed: The maker’s language shows readiness to be bound without further negotiation.
Ask: “Would a reasonable person think the maker promised to be bound on acceptance—or merely invited proposals?” That single question solves most problems.
The 9 common contexts of Invitation to Offer (with case laws)
1) Display of goods in shops (including self-service)
General rule: The display of price-marked goods—on shelves, in a showcase, or in a shop window—is an invitation to offer (invitation to treat), not an offer. The customer makes the offer by presenting the goods for purchase (e.g., at the till); the retailer accepts by processing the sale. Until acceptance, the retailer may refuse the offer (e.g., out of stock, age-restricted items, obvious misprice).
Key authorities
- Pharmaceutical Society of Great Britain v Boots Cash Chemists (1953, UK): self-service display is an invitation; the customer’s act at the cashier is the offer; acceptance occurs at the till (allowing pharmacist oversight).
- Fisher v Bell (1961, UK): a knife displayed with a price in a window was not an “offer for sale” but an invitation to treat.
Analogies & related contexts
- Menus (restaurants): A menu is an invitation; the diner’s order is the offer; acceptance occurs when the restaurant accepts/serves the order.
- Supermarkets/self-service: Picking goods is not acceptance; contract forms at checkout when the retailer accepts the customer’s offer.
- Shop windows/showcases: A priced display invites customers to make offers; it is not itself an offer.
- Control & compliance: Retailer needs freedom to refuse (e.g., legal restrictions, stock limits, verification at point of sale).
- Prevent unlimited liability: Treating displays as offers could force sales to all responders despite limited stock.
- Negotiation/validation: Quantity, substitutions, or eligibility may need confirmation at checkout.
Important nuances & exceptions
- Automatic machines / turnstiles: For vending or ticket machines, the machine’s display is often treated as an offer; inserting money/confirming purchase is acceptance (cf. parking/ticket cases). This differs from staffed self-service checkout practice.
- Obvious mispricing: A displayed price that is clearly erroneous usually does not bind the retailer before acceptance. Consumer-protection laws may regulate misleading pricing, but they don’t automatically convert displays into binding offers.
- “Subject to availability / while stocks last”: Such phrases reinforce the invitation-to-offer characterization.
| Scenario | Who makes the offer? | When is acceptance? |
|---|---|---|
| Self-service supermarket aisle | Customer (at the checkout) | Retailer accepts by processing payment |
| Shop window with priced item | Customer (on approaching to buy) | Retailer accepts at point of sale |
| Restaurant menu | Diner (by placing the order) | Restaurant accepts when it confirms/serves |
| Vending/parking ticket machine | Machine/Operator (display is the offer) | Customer accepts by paying/obtaining ticket |
Ask where the final gate of control sits. If a human checkout or staff decision is still needed, the display is an invitation. If the system dispenses automatically on payment, the display is more likely to be the offer.
Usually: Invitation to offer. The customer’s act of taking goods to the till is the offer; the retailer accepts at the till.
Key cases: Pharmaceutical Society v Boots (1953) — self-service display is not an offer; Fisher v Bell (1961) — flick-knife in window was an invitation, not an offer.
2) Tenders (Requests for Bids)
General rule: An invitation to submit tenders (bids) is an invitation to offer (invitation to treat), not an offer. Each tender submitted by a contractor or supplier is the offer. No contract exists until the inviting party accepts a particular tender in accordance with the stated terms.
- Selection discretion: The procuring entity typically wishes to evaluate capability, compliance, and price before being bound.
- Multiple responses: Treating the invitation as an offer could expose the inviter to unlimited acceptances.
- Complex terms: Specifications, delivery, warranties, performance security, and timelines often require assessment and clarification before acceptance.
Key authorities & principles
- Spencer v Harding (1870): a circular calling for tenders was an invitation, not an offer to sell to the highest/lowest bidder. But if the invitation promises to accept the highest/lowest compliant bid, that promise can be enforceable.
- Harvela Investments v Royal Trust (HL 1986): an invitation promising to accept the highest bid created a binding obligation to accept the highest fixed bid; “referential” bids were ineffective on the facts.
- Blackpool & Fylde Aero Club v Blackpool BC (1990): an invitation to tender can create a collateral “process” contract to consider conforming tenders submitted on time.
- Comparative notes: Many jurisdictions recognise “process contract” duties (fairness, consideration of compliant bids). Canada’s “Contract A / Contract B” line of cases is often cited in procurement contexts; similar themes appear in Australia, NZ, and elsewhere in the Commonwealth.
Acceptance, withdrawal, and validity periods
- Acceptance: The contract forms when the inviter issues a clear acceptance (e.g., letter of award) according to the tender terms.
- Withdrawal: A tender (being an offer) may generally be withdrawn any time before acceptance—unless the tender conditions create a binding option or “no-withdrawal” period (often supported by consideration, deed, bid bond, or earnest money).
- Validity period: If bidders agree their tenders will remain open for a stated period, that period can be enforceable where supported by consideration or incorporated into a process contract.
When the invitation itself can create enforceable obligations
- Promise to accept the best bid: Language such as “we will accept the lowest compliant tender” may amount to a unilateral promise, enforceable by the bidder who meets that term.
- Process duties: Clear tender rules (deadline, format, compliance criteria) can form a collateral contract obliging the inviter to consider conforming bids fairly and not arbitrarily exclude them.
- Evaluation criteria: Where criteria are stipulated, ignoring them can breach the process contract (remedies vary by jurisdiction—often reliance/loss-of-chance rather than full profits).
| Scenario | Legal characterisation | Result |
|---|---|---|
| Generic “please submit tenders by 30 Sept” | Invitation to offer | No contract until a specific tender is accepted |
| Invitation states “lowest compliant tender will be accepted” | Promise capable of binding | Obligation to accept the lowest compliant bid (subject to terms) |
| Tender rules require consideration of all conforming bids | Collateral/process contract | Duty to consider timely, compliant tenders (cf. Blackpool) |
| Bidder withdraws before award; no option/no bond | Offer withdrawn | No contract; inviter may proceed with other bids |
| Bidder agrees to 90-day irrevocability supported by bid bond | Option/process binding | Withdrawal may breach terms; bond/forfeiture may apply |
Separate the transaction contract (formed on acceptance of a particular bid) from the process obligations (fair consideration of conforming bids). Look for promissory wording in the invitation and enforceable “no-withdrawal” or validity clauses in the tender conditions.
Usually: Invitation to offer. Each tender submitted is an offer that the inviter may accept or reject.
Nuances: The invitation can create a collateral obligation to consider conforming tenders (Blackpool & Fylde Aero Club v Blackpool BC, 1990). If the invitation states “lowest bid will be accepted,” that may amount to an offer to accept the lowest compliant bid (Spencer v Harding is the classic starting point).
3) Auctions
General rule: An auction is a public sale conducted by an authorized auctioneer. The auctioneer’s call for bids is an invitation to offer (invitation to treat). Each bid is an offer; a contract is formed when the auctioneer accepts a bid, usually signified by the fall of the hammer (or other customary signal).
- Acceptance moment: The sale completes when the hammer falls. Up to that moment, no contract exists.
- Bid withdrawal: The bidder may retract a bid any time before the hammer falls.
- Auctioneer’s discretion: The auctioneer may refuse bids and may withdraw the goods before acceptance, subject to any “without reserve” promise.
- Statutory codification: Many jurisdictions codify these rules (e.g., UK Sale of Goods Act 1979, s.57; India Sale of Goods Act 1930, s.64).
With reserve vs without reserve
- With reserve: The seller sets a minimum price. If the highest bid does not meet the reserve, the seller need not sell.
- Without reserve: The seller promises to sell to the highest bona fide bidder. A collateral obligation arises to knock down the lot to that bidder; withdrawing the lot after a valid highest bid can breach that promise.
Key authorities
- Payne v Cave (1789): a bid is an offer; it may be retracted before the hammer falls; acceptance occurs on the fall of the hammer.
- Barry v Davies [2000] (CA): in an auction without reserve, the auctioneer owes a collateral duty to sell to the highest bona fide bidder (damages awarded when the lot was wrongly withdrawn).
- Warlow v Harrison (1859): early statement of “without reserve” principles (later clarified by Barry v Davies).
- Sale of Goods statutes (e.g., UK s.57 / India s.64): codify completion at hammer fall; bidder’s right to retract before acceptance; rules on vendor bidding.
Vendor bidding & compliance
- Vendor bidding disclosed: If expressly reserved and disclosed, the seller (or agent) may bid to protect the reserve, within the law and house rules.
- Undisclosed vendor bidding: Often prohibited or renders the sale voidable at the buyer’s option (see local statute/terms).
- Compliance checks: Age limits, anti-money-laundering checks, and payment verification occur at or after acceptance; until acceptance, the auctioneer can refuse bids.
Online auction platforms (e.g., timed auctions)
- Platform terms govern: Listings are generally treated as invitations; the platform’s terms define when acceptance occurs (e.g., at auction close, automated “highest bid wins,” or on seller confirmation).
- Reserve/“buy now” features: Function similarly to in-person auctions; non-payment is typically a breach under the platform/seller terms rather than automatic specific enforcement.
| Scenario | Who makes the offer? | When is acceptance? | Notes |
|---|---|---|---|
| Standard auction (with reserve) | Bidder (each bid) | Hammer fall on reserve-meeting bid | Seller need not sell below reserve |
| Auction without reserve | Bidder | Hammer fall | Collateral obligation to sell to highest bona fide bidder |
| Bid retracted before hammer | — | No acceptance | Bidder may retract; next highest stands |
| Vendor bidding (disclosed) | Seller/agent | — | Permissible if expressly reserved; check statute/terms |
| Online timed auction ends | Bidder | As defined by platform (e.g., auction close/confirmation) | Terms may allow extensions/anti-sniping rules |
Locate the precise moment of acceptance. If acceptance hasn’t occurred (no hammer fall/closing event), bids can be retracted and lots withdrawn (subject to any “without reserve” promise and platform/house rules).
Calling for bids: Invitation to offer. Each bid is an offer. A bid can be withdrawn before acceptance (hammer fall).
Key cases: Payne v Cave (1789) — bid is an offer; Barry v Davies (2000) — auction “without reserve” creates a collateral contract obliging sale to the highest bona fide bidder.
4) Rewards (Unilateral Offers)
General rule: A reward is typically a unilateral offer to the world. It invites acceptance not by a return promise but by performance—e.g., finding lost property, giving information, or reporting a software bug. A contract forms when the act specified is completed in accordance with the offer’s terms.
- Acceptance by performance: No prior notice of acceptance is required unless expressly stipulated (Carlill v Carbolic Smoke Ball Co, 1893).
- Knowledge of the offer: The claimant must generally know of the reward when performing; mere coincidence is insufficient (Lalman Shukla v Gauri Dutt, 1913; R v Clarke, 1927). Motive is usually irrelevant if knowledge exists (Williams v Carwardine, 1833).
- Certainty of terms: The act required, the reward amount/benefit, any time limit, and the claimant’s identity/eligibility must be clear.
- Revocation: A public reward may be revoked by a notice of similar notoriety before completion of performance (US: Shuey v United States, 1875). Once an offeree has begun performance, many courts limit the offeror’s right to revoke (e.g., Daulia v Four Millbank Nominees, 1978; US Restatement (Second) §45 treats part performance as creating an option contract).
Key authorities
- Carlill v Carbolic Smoke Ball Co (1893): advertisement with definite terms was a binding unilateral offer; acceptance by performance; no prior notice needed.
- Williams v Carwardine (1833): claimant’s improper motive didn’t matter; knowledge of the reward did.
- Lalman Shukla v Gauri Dutt (1913, India): no reward where the informant acted without knowledge of the offer.
- R v Clarke (1927, Australia): claim failed where the claimant had forgotten the reward at the time of performance.
- Gibbons v Proctor (1891, UK): often cited in discussions of knowledge/communication in reward claims (fact-sensitive).
- Daulia v Four Millbank Nominees (1978, UK): implied obligation not to revoke once offeree has embarked on performance.
- Shuey v United States (1875, US): effective revocation of a public reward requires notice of similar publicity.
Practical examples
- Lost property: “₹10,000 for return of my laptop, no questions asked.” Contract forms when the laptop is returned as required.
- Crime information: Reward for information leading to arrest/conviction. Claimant must know of the reward when providing qualifying information.
- Bug bounty: “Rs. 1,000 per critical bug reported with reproducible PoC.” Acceptance occurs by submitting a qualifying report in accordance with stated rules.
Common pitfalls & how courts resolve them
- No knowledge of reward: Claim fails (India: Lalman Shukla; Australia: R v Clarke).
- Ambiguous terms: Unclear conditions (e.g., what counts as “critical bug”) can defeat or limit claims; courts construe against the offeror if terms are drafted by them.
- Multiple claimants: If terms promise payment to the first performer, only the first who fully performs is entitled; otherwise, the wording controls (some offers allow multiple rewards).
- Illegality/public policy: Rewards for unlawful acts or for officials performing their existing public duty may be void or unenforceable (subject to local law and policy).
| Scenario | Entitlement? | Reason |
|---|---|---|
| Finder returns item after seeing reward notice | Yes (if terms met) | Acceptance by performance with knowledge of offer |
| Finder returns item unaware of reward; learns later | No (generally) | No knowledge at time of performance |
| Bug reported according to bounty rules; company tries to revoke after report submitted | Likely yes | Performance completed before revocation; many systems treat begun performance as protected |
| Public revocation published before claimant completes performance | No (post-revocation) | Effective revocation ends power of acceptance (Shuey) |
Check three things: (1) Knowledge of the reward at the time of acting; (2) Exact compliance with the stated conditions; (3) Timing—whether revocation occurred before completion. If all three align, a reward claim is usually strong.
A 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. A 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 one knew the reward existed when one performed the duty.
Generally: Unilateral offer, not an invitation. Acceptance occurs by performance.
Key cases: Carlill v Carbolic Smoke Ball Co (1893) — advertisement can be a binding unilateral offer; Gibbons v Proctor (1891) and Lalman Shukla v Gauri Dutt (1913, India) — knowledge of the offer is relevant to claiming the reward in many common-law jurisdictions.
5) Advertisements
Advertisements
Advertisements are public or targeted communications—via handbills, newspapers, television, radio, or web ads—that draw attention to goods, services, or opportunities. As a rule, an advertisement is an invitation to offer (invitation to treat), not an offer. It invites the audience to make proposals (e.g., place an order, submit a bid), and no contractual rights arise from the ad itself until a true offer is made and accepted.
Why are most advertisements not offers?
- Further negotiation is expected: Ads typically lead to bargaining over quantity, delivery, or price adjustments (e.g., a shop advertised for sale).
- Freedom to choose counterparties: The advertiser may wish to check the other party’s ability to perform before being bound, avoiding unlimited liability to all responders.
Effect: Where an advertisement is not addressed to a specific person and does not manifest an intention to be immediately bound, there is no offer. The advertiser can qualify any later acceptance with conditions not stated in the ad (subject to consumer-protection rules).
Two common categories
-
Advertisements of bilateral contracts (general
sales/admissions):
These are usually invitations, not offers.
Examples: “Car for sale,” “Scholarship exam will be held,” circulation of a price list.
Cases: Partridge v Crittenden [1968] (newspaper ad generally an invitation); Grainger & Son v Gough [1896] (price lists are invitations). -
Advertisements of unilateral contracts (rewards/clear promises to the
world):
These are often true offers that can be accepted by
performance.
Examples: Rewards for lost property or information leading to an arrest; “If you do X, we will pay Y.”
Cases: Carlill v Carbolic Smoke Ball Co [1893] (reward-style ad with definite terms was an offer); Gibbons v Proctor (1891) (reward claim allowed on the facts); Lalman Shukla v Gauri Dutt (1913, All HC) (knowledge of the reward is generally required). In the US, see Lefkowitz v Great Minneapolis Surplus Store (1957) (clear, definite, explicit terms can make an ad an offer).
Special note on tender/bid advertisements
Ads inviting tenders or bids are typically invitations to offer; each submitted tender is an offer the inviter may accept or reject. Exception: if the invitation clearly promises to accept, for example, “the lowest compliant bid,” it may create enforceable obligations regarding acceptance or consideration of bids (subject to the precise wording and jurisdiction).
Usually: Invitation to offer (to avoid limitless liability and allow selection of counterparties).
Key cases: Partridge v Crittenden (1968) — newspaper advert generally an invitation; Carlill — a clearly worded reward-type advert can be an offer.
(6) Published Price Lists
Published price lists—catalogues, tariffs, circulars, or website pricing pages—are generally treated as an invitation to offer (invitation to treat), not as binding offers. They publicize current prices and product descriptions to invite customers to place orders (i.e., make offers). No contractual rights arise merely from the listing itself.
- Risk of unlimited acceptances: A true “offer” to the public could be accepted by unlimited customers even if stock is limited.
- Further terms often needed: Quantity, delivery, timing, payment, and other essentials may still need agreement.
- Freedom to choose counterparties: The seller may wish to assess the buyer (credit/eligibility) before being bound.
Key authorities
- Grainger & Son v Gough [1896] AC 325 (HL) — circulating a price list was not an offer capable of acceptance; it was an invitation to treat.
- Partridge v Crittenden [1968] — newspaper listings generally invitations, not offers (analogous reasoning).
- Pharmaceutical Society v Boots [1953] — by analogy, display/listing invites customers to make offers at checkout, rather than constituting offers.
- Moulton v Kershaw (1884, US) — a circular quoting prices was an invitation, not an offer.
- Fairmount Glass Works v Crunden-Martin (1899, US) — a “price quotation” saying “for immediate acceptance” with definite terms was treated as an offer on the facts.
E-commerce note: Most retail websites treat the online price page as an invitation; the customer’s checkout submission is the offer. The retailer typically states in its terms that acceptance occurs on dispatch/confirmation, not when the order is placed.
When a price list can amount to an offer
- Clear promissory language: Words of commitment (e.g., “I will sell to you at Rs. X”) rather than mere information (“price is Rs. X”).
- Definite and complete terms: Identified goods/quantity, price or pricing mechanism, delivery/time, and no further assent needed.
- Targeted to a named offeree: A personalized price sheet sent to a specific buyer with commitment language is more likely to be an offer than a general catalogue to the public.
- “For immediate acceptance”/time-limited language: Courts (especially in US cases) have treated some such communications as offers when terms are otherwise complete.
| Scenario | Likely characterization | Reason |
|---|---|---|
| General catalogue emailed to many customers with a price schedule | Invitation to offer | Risk of multiple acceptances; selection & stock limits |
| Website “Pricing” page for a laptop model | Invitation to offer | Customer’s order is the offer; seller accepts on dispatch |
| Letter to a named buyer: “I will sell you 500 units at Rs. 900 each, shipment 7 days, CIF, for immediate acceptance” | Offer (on many facts) | Promissory language + complete essential terms |
| Reply to query: “Lowest price is Rs. 900” | Invitation / information | Mere information, not a promise (Harvey v Facey) |
Ask whether a reasonable person would think the seller intended to be immediately bound on a simple “yes.” If further assent or selection is expected, it’s a price list as invitation—not an offer.
Usually: Invitation to offer. Price lists are typically invitations to negotiate.
Key case: Grainger & Son v Gough (1896) — price list was not an offer capable of acceptance.
(7) Catalogues
Catalogues—printed brochures, mailers, PDFs, or website product listings—generally do not constitute offers. They are treated as an invitation to offer (invitation to treat): the seller invites customers to place orders, and each order is the customer’s offer. A contract is formed only when the seller accepts that offer (often by an explicit acceptance message or by dispatch of the goods, depending on the seller’s terms).
- Stock & capacity limits: If a catalogue were an offer, unlimited “acceptances” could outstrip available stock.
- Further terms needed: Quantity, delivery, payment method, timing, and eligibility often remain to be agreed.
- Seller’s discretion: The trader may wish to vet orders (credit checks, shipping eligibility) before being bound.
- Errors/misprints: Treating listings as invitations lets traders correct obvious mistakes before acceptance.
Key authorities & illustrations
- Partridge v Crittenden (1968, UK): newspaper product listings were invitations, not offers (principle applied to catalogues).
- Grainger & Son v Gough (1896, HL): circulating a price list was an invitation to treat, not an offer.
- Pharmaceutical Society v Boots (1953, UK): display/listing invites customers to make the offer at checkout; acceptance occurs at the till.
- Lefkowitz v Great Minneapolis Surplus Store (1957, US): a catalogue/advert with clear, definite, explicit terms (e.g., “first come, first served”) was held to be an offer—an important exception.
- Chwee Kin Keong v Digilandmall.com (2004, Singapore): website listing errors; online product pages typically invitations, with acceptance occurring later under site terms.
When a catalogue can amount to an offer
- Clear promissory language: The listing states commitment (“We will sell to you on these terms”), not mere information.
- Complete, definite terms: Specific product, quantity, price/pricing mechanism, delivery/time—nothing material left to agree.
- Targeted to a named offeree: A personalised catalogue/quotation to one buyer with commitment language is more likely to be an offer than a mass-distributed brochure.
- Unilateral wording: “First 3 customers at 9 a.m., $1 each, no further conditions” may be treated as an offer (as in Lefkowitz), whereas “while stocks last / subject to availability” pushes it back to invitation.
| Scenario | Likely characterization | Reason |
|---|---|---|
| General mail-order catalogue with products and prices | Invitation to offer | Mass audience; stock/eligibility limits; further terms needed |
| Website product page with “Order subject to acceptance” in terms | Invitation to offer | Customer’s checkout submission is the offer; seller accepts later |
| Personalised covering letter: “We will sell you 1,000 units at Rs. X, shipment in 7 days, for immediate acceptance” | Offer (on many facts) | Promissory language + complete essential terms + named offeree |
| Catalogue advertisement: “Saturday 9 a.m., first come, first served, $1 each, no conditions” | Offer (exception) | Clear, definite, explicit terms (Lefkowitz) |
| Email reply: “Lowest price is Rs. 900” | Information / invitation | Mere statement of price; not a promise to sell |
Look for a commitment signal. If the catalogue still leaves choice or screening to the seller—or points you to “place an order” subject to later confirmation—it’s an invitation, not an offer.
Usually: Invitation to offer; placing an order is the offer.
Related authority: General advertising/circular principles as in Partridge v Crittenden.
(8) Quotation of Prices
Price quotations—labels, shelf tags, emailed quotes, or replies to “best price?”—are usually treated as an invitation to offer (invitation to treat). They provide pricing information to help a buyer decide whether to make an offer; standing alone, they typically do not show an intention to be immediately bound.
- Objective intention: A reasonable person would read a bare price as information, not a promise to sell to anyone who says “yes.”
- Essential terms missing: Quantity, delivery, payment, timing, and other material terms often aren’t fixed.
- Stock/eligibility limits: The seller may need to check availability or the buyer’s credit before being bound.
Key authorities
- Harvey v Facey (1893): stating the “lowest price” in response to an inquiry was information, not an offer.
- Clifton v Palumbo [1944]: broad price statement without complete terms was not an offer.
- Partridge v Crittenden [1968]; Grainger & Son v Gough [1896]: general listings/price lists are invitations.
- Fairmount Glass Works v Crunden-Martin (1899, US): a definite quotation “for immediate acceptance” with complete terms was treated as an offer on its facts.
- Storer v Manchester CC [1974] vs Gibson v Manchester CC [1979]: language of commitment (“I will sell”) vs tentative (“may be prepared to sell”) distinguishes offers from invitations.
When a quotation can amount to an offer
- Promissory language: “I will sell to you 500 units at Rs. X” (not merely “lowest price is Rs. X”).
- Complete and certain terms: Identified goods/quantity, price (or pricing mechanism), delivery/time, payment—nothing material left open.
- Directed to a named offeree: A personalized, definite quote to a specific buyer is more likely to be an offer than a public label.
- Time-limited acceptance: “For immediate acceptance by 5 p.m. today” plus complete terms often signals an offer.
| Scenario | Likely characterization | Reason |
|---|---|---|
| Price label/shelf tag in a store | Invitation to offer | Display invites you to make an offer at checkout (cf. Boots) |
| Email reply: “Lowest price is Rs. 900” | Information / invitation | Mere statement of price (Harvey v Facey) |
| Signed quote to a named buyer: “I will sell you 1,000 units @ Rs. 900, shipment in 7 days, for immediate acceptance” | Offer (on many facts) | Promissory language + complete terms (Fairmount) |
| Website product page with “orders subject to acceptance” in T&Cs | Invitation to offer | Customer’s checkout submission is the offer; seller accepts later |
Replace “Is there a price?” with “Has the seller promised to be bound on a simple ‘yes’?” If not, it’s a quotation as an invitation—not an offer.
Usually: Invitation to offer (a response to a request for “best price” often remains preliminary).
But: Where language and context show commitment, a quote can amount to an offer (compare Harvey v Facey, 1893 — mere information vs. Storer v Manchester City Council, 1974 — clear commitment).
(9) Sales of Shares
Public share offerings follow the classic invitation/offer structure. A prospectus or public offer document is generally an invitation to offer, not an offer to sell shares to everyone who applies. Each application to subscribe is the investor’s offer; a binding contract arises only on allotment (acceptance) by the company in accordance with company law and the offer terms.
- Prospectus = invitation: It invites applications and sets terms, risk factors, and procedures; the company may accept, partially allot, or reject applications (e.g., on oversubscription).
- Application = offer: Submitting the subscription form or online application is the investor’s offer to take shares on stated terms.
- Allotment = acceptance: The contract forms when the company/allotting authority allocates shares (often evidenced by allotment notice/credit of securities). Until allotment, there is no contract for the company to issue shares to that applicant.
- Partial allotment: On oversubscription, partial acceptance creates a contract only to the allotted extent; the remainder is unaccepted.
Practice illustrations
- IPO/Listing: The published prospectus invites applications. Investors apply (offer). The company/underwriters allot (acceptance). Refunds are made where applications are not accepted or only partly accepted.
- Private placement: An information memorandum to selected investors commonly functions as an invitation; subscription agreements signed by investors are offers that the issuer countersigns to accept.
- Rights issue to existing shareholders: A rights letter (or letter of offer) typically constitutes an offer to existing shareholders, giving them a right to subscribe pro-rata on stated terms within a time window. Acceptance occurs when the shareholder takes up the rights and pays (or renounces in favor of another, where permitted).
| Context | Document/Action | Legal effect |
|---|---|---|
| Public issue (IPO/FPO) | Prospectus | Invitation to offer |
| Public issue (investor) | Application/ASBA/online form | Offer by applicant |
| Public issue (company) | Allotment/credit of shares | Acceptance → contract formed |
| Rights issue to existing holders | Letter of offer / Rights entitlement | Offer to the shareholder; acceptance by take-up |
| Private placement | Information memo → Subscription agreement | Invitation → investor’s offer → issuer’s acceptance |
With securities, always separate the invitation (prospectus/offer document) from the offer (application/subscription) and the acceptance (allotment). Rights issues flip the script: the issuer’s letter to existing shareholders is commonly the offer.
Public prospectus: Invitation to offer. Applications from the public are offers; allotment is acceptance.
Exception: A rights issue letter to existing shareholders commonly constitutes an offer to them on stated terms (accept by application/payment).
Invitation to offer vs offer — quick comparison
| Feature | Invitation to Offer (Invitation to Treat) | Offer |
|---|---|---|
| Purpose | Invite proposals; start negotiations | Create power of acceptance in offeree |
| Language | Indicative / exploratory (“Please submit quote”) | Commitment on acceptance (“I will sell for Rs. X”) |
| Acceptance | Not capable of acceptance | Acceptance forms a binding contract |
| Revocation | Not needed (no offer exists) | Possible until effective acceptance |
| Typical examples | Shop display, tender invitation, prospectus, catalogue | Reward notice with clear terms, signed offer letter, click “Buy” terms |
Simultaneous identical offers made in ignorance of each other are not a contract (classic illustration: Tinn v Hoffman, 1873). A separate acceptance is still required.
Leading case law illustrations
Harvey v Facey (1893, Privy Council)
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 the 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 plaintiff's 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]
Point: A mere statement of the “lowest price” in response to an inquiry is information, not an offer. The buyer’s “we agree to buy at that price” was an offer requiring acceptance.
Pharmaceutical Society v Boots (1953, UK)
Point: In a self-service store, the display is an invitation. The customer’s act of presenting goods at the cashier is the offer; the pharmacist/retailer accepts at the till.
Fisher v Bell (1961, UK)
Point: Display of a knife with a price in a shop window was not an “offer for sale” in the statutory sense; legally it was an invitation to treat.
Partridge v Crittenden (1968, UK)
Point: Newspaper adverts are generally invitations, not offers—absent clear words of commitment.
Carlill v Carbolic Smoke Ball Co (1893, UK)
Point: Reward-style advert with definite terms and deposit of money signalled intent to be bound; it was a unilateral offer accepted by performance.
Blackpool & Fylde Aero Club v Blackpool BC (1990, UK)
Point: An invitation to tender can create a collateral duty to consider conforming tenders submitted on time.
Barry v Davies (2000, UK)
Point: Auction “without reserve” gives the highest bona fide bidder a right to the goods (collateral contract with the auctioneer).
Gibbons v Proctor (1891, UK) & Lalman Shukla v Gauri Dutt (1913, India)
Point: Reward claims turn on communication/knowledge of the offer and the role of motive in different jurisdictions.
Proposal (Offer) and Cross Offers
Proposal/Offer: In contract law, a proposal (offer) is a clear manifestation of willingness to be immediately bound upon acceptance, leaving nothing material to be agreed.
Cross offers: When two parties, unaware of each other’s communications, send identical or substantially similar offers to one another at the same time, these are called cross offers. No contract arises from cross offers alone because neither communication functions as an acceptance of the other.
- Lack of acceptance: Each letter/message is an offer; neither is an acceptance of the other.
- No “meeting of minds” at that moment: The parties have not yet assented to the other’s terms; they acted in ignorance of them.
- Mirror-image rule: A contract requires an unqualified acceptance of an outstanding offer, not a separate, simultaneous offer.
Key authorities
- Tinn v Hoffman & Co (1873): identical cross offers do not constitute a contract; an acceptance is still required.
- Felthouse v Bindley (1862): silence is not acceptance; acceptance must be communicated (subject to limited unilateral-offer exceptions).
- Hyde v Wrench (1840): a counter-offer rejects and terminates the original offer—distinct from cross offers, but reinforces the need for a clear acceptance.
How a contract can still form after cross offers
-
Subsequent acceptance: Once a
party receives the other’s offer, they may send a
clear acceptance. Depending on the medium and jurisdiction, the postal
rule or receipt rules may determine the exact moment of formation.
-
Acceptance by conduct: If, after
learning of the other’s offer, one party performs in a manner
objectively referable to acceptance (e.g., ships the specified goods), a
contract may be inferred (ensure the conduct is unequivocally referable
to acceptance).
| Scenario | Contract formed? | Reasoning |
|---|---|---|
| Party A and Party B post identical offers that cross in the mail | No | Both are offers; neither is an acceptance (Tinn v Hoffman) |
| After receiving B’s offer, A replies “I accept your offer on those terms” | Yes (on receipt/effective posting) | There is now a clear acceptance of a subsisting offer |
| After learning of B’s offer, A ships the goods as specified | Likely yes | Acceptance by conduct if performance is unequivocal |
| A responds to B’s offer with different terms (price/quantity) | No (new offer) | Counter-offer terminates the original (Hyde v Wrench) |
Ask: “Did one party accept the other’s outstanding offer, or did both merely send offers?” If both messages are offers, there’s no contract—look for a later, unqualified acceptance (by words or conduct).
Glossary
- Invitation to offer (treat): Preliminary communication inviting offers; not itself an offer.
- Offer (proposal): A manifestation of willingness to be bound upon acceptance.
- Unilateral offer: Offer accepted by performance (e.g., rewards).
- Tender: A supplier’s offer submitted in response to an invitation.
- Without reserve: Auction where the auctioneer promises to sell to the highest bidder.
- Cross offers: Identical offers exchanged without knowledge of each other; not a contract.
Scenario: A restaurant menu shows prices; a customer orders at the counter. Menu = invitation; order = offer; acceptance = cashier confirms and takes payment.
Quick FAQ
Can a price quotation ever be an offer?
Is every advertisement an invitation?
Who makes the offer in a self-service shop?
Are catalogues and price lists offers?
Do I need to know about a reward before I claim it?
When is a contract formed online?
Are invitations to tender offers?
Auctions: what’s “with reserve” vs “without reserve”?
Is a prospectus an offer to sell shares?
This guide is for general information and learning. For jurisdiction-specific advice (Pakistan, India, UK, US), consult the relevant statutes and local case law.