In what scenarios might a proposal be considered an invitation to offer rather than a valid offer?
A proposal (or statement) may be considered an invitation to offer rather than a valid offer in scenarios where the intention is not to be immediately bound by acceptance, but rather to invite others to make offers or initiate negotiations. The distinction lies in the intention behind the communication and how it is understood in commercial practice and law.
Common Scenarios Where a Proposal Is an Invitation to Offer:
Display of Goods in Shops:
When goods are displayed with price tags in a shop or online store, it is not an offer to sell at that price but merely an invitation for customers to make an offer to buy. The shopkeeper may accept or reject the customer’s offer.
Advertisements:
General advertisements, catalogues, and price lists are typically invitations to offer. They invite interested parties to make offers to purchase the goods or services at the advertised terms, which the advertiser can then accept or reject.
Auction Sales:
An auction notice or the act of putting goods up for auction is an invitation to offer. Each bid made by participants is an offer, and the auctioneer may accept or reject any bid.
Tenders:
When a government or company invites tenders for work or supply of goods, the invitation is not an offer. Each submitted tender is an offer, which the inviting party may accept or reject.
Menu Cards in Restaurants:
A menu card showing available dishes and prices is an invitation to offer. The customer makes an offer by placing an order, which the restaurant may accept or decline.
Request for Proposals or Quotations:
When a party requests proposals or quotations, they are inviting offers. The responses received are offers, which the requester may accept or reject.
In Harvey v. Facey (1893), the defendant’s reply stating the lowest price for a property was held to be an invitation to offer, not an actual offer. The plaintiff’s subsequent acceptance did not create a binding contract because the defendant had not made a definite offer.