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  1. 1. Offer: When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make an offer. Example: A offer to sell his watch to B for 100 rupees. A makes an offer to B. Offeror & Offeree: The person making the offer is called the offeror while the person to whom the offer is made is called the offeree. Essentials of a valid offer: Offer may be expressed or implied: An offer may be made by words or by conduct. An offer which is made by words spoken or written is called an express offer. The implied offer appears from the actions, conduct of parties, course of dealings or circumstances of the case. It must create legal relations: The offer must be made to create legal relations otherwise there will be no agreement. If an offer does not give rise to legal obligations between the parties, it is not a valid offer. In business transactions there is a presumption that the parties intend to create legal relations. It must be definite & clear: An offer must be definite and clear. If the terms of an offer are not definite and clear it can not be called a valid offer. If such offer is accepted it cannot create a binding contract. An agreement to agree in future is not a contract because the terms of an agreement are not clear. It is different from invitation to offer: An offer is different from an invitation to offer.
  2. 2. It may be specific or general: When an offer is made to a specific person or group of persons t is called specific offer. Such an offer can be accepted only by the person or persons to whom it is made. A general offer is one which is made to public in general and it may be accepted by any person who fulfils the conditions mentioned in it. It must be communicated to the offeree: An offer is effective only when it is communicated to the offeree. If an offer is not communicated to the offeree it can not be accepted. It should not contain negative condition: An offer can not specify the condition that if acceptance is not communicated up to a certain date the offer would be considered as accepted. If the offeree does not reply there is no contract because no obligation to reply can be imposed on him on the grounds of justice. It may be subject to any conditions: An offer may include any condition in his offer. There is no contract unless all the conditions of the offer are accepted It must not contain cross offers: When two parties make similar offers to each other in ignorance of each other’s offer, the offers are called cross-offers. The acceptance of cross-offers does not result in complete agreement. Invitation to offer/ treat: Invitation to treat is a contract law term. It comes from the Latin phrase invitatio ad offerendum and means an "inviting an offer". As Andy Burrows writes, an invitaton to treat is "An expression of willingness to negotiate. A person making an invitation to treat does not intend to be bound as soon as it is accepted by the person to whom the statement is addressed." Invitation to offer is an inducement or attraction to the other party to make an offer against such attraction or inducement.
  3. 3. In an invitation to offer the person making the invitation does not make an offer but only invites the other party to make an offer. His object is o inform that he is willing to deal with anybody who is willing to deal with him. Types of invitation to treat:  Advertisement  Exhibition  Auction  Tender Difference between offer and invitation to offer/treat: The distinction between an offer and invitation to treat is best understood through the categories that the courts create. Invitations to treat include the display of goods; the advertisement of a price or an auction; and an invitation for tenders. There may however be statutory or complementary obligations, so consumer protection laws prohibit misleading advertising and at auctions without reserve there is always a duty to sell to the highest bona fide bidder. But the general rule is that unlike an actual offer, an invitation to treat is not binding. The "inviter" can change his or her mind. Case laws: Case law relating to tender: The clearest example of an invitation to treat is a tender process. This was illustrated in the case of Spencer v Harding (1870) LR 5 CP 561, where the defendants offered to sell by tender their stock and the court held that they had not undertaken to sell to the person who made the highest tender, but were inviting offers which they could then accept or reject as they saw appropriate. In certain circumstances though, an invitation for tenders may be an offer. The clearest example of this was seen in Harvela Investments Ltd v Royal Trust of Canada (CI) Ltd [1986] AC 207, where the defendants had made it clear that they were going to accept the highest tender; the court held that this was an offer which was accepted by the person who made the highest tender and that the defendants were in breach of contract by not doing so.
  4. 4. Case law relating to auction An auction may be more ambiguous. Generally an auction may be seen as an invitation to treat, with the property owner asking for offers of a certain amount and then selecting which to accept as illustrated in Payne v Cave (1789) 3 TR 148. In this case the defendant made the highest bid for the plaintiff’s good at an auction sale, but he withdrew his bid before the fall of the auctioneer’s hammer. It was held that the defendant was not bound to purchase the goods. His bid amount to an offer which he was entitled to withdraw at any time before the auctioneer signified acceptance by knocking down his hammer. However, if it is stated by the owner that there is no reserve price or that there is a reserve price beyond which offers will be accepted then the auction is most likely a contractual offer which is accepted by the highest bidder; this was affirmed in the Appellate court in Barry v. Davies [2000] 1 WLR 1962. Barry v Davies [2000] 1 WLR 1962 is an English contract law case concerning an auction. The auctioneer withdrew goods from an auction (the goods had no reserve price) when a bona fide bid of £200 was effective. The court held that an auctioneer is bound to sell to the highest bidder where there is no reserve price, and can't withdraw the sale simply because the price is too low. A bid in an auction, the possibility of acceptance of the bid, unless the bid is withdrawn, and the benefit to the auctioneer of driving ups the price bid is sufficient consideration. The contract in an auction is between the buyer and the seller, not the buyer and the auctioneer, although the buyer has a collateral agreement with the auctioneer. Case law relating to exhibition: A shop owner displaying their goods for sale is generally making an invitation to treat (Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401). They are not obliged to sell the goods to anyone who is willing to pay for them, even if additional signage such as "special offer" accompanies the display of the goods. This distinction was legally relevant in Fisher v Bell [1961] 1 QB 394, where it was held that displaying a flicknife for sale in a shop did not contravene legislation which prohibited offering for sale such a weapon. The distinction also means that if a shop mistakenly displays an item for sale at a very low price it is not obliged to sell it for that amount
  5. 5. Case law relating to advertisement: Generally, advertisements are invitations to treat, so the person advertising is not compelled to sell to every customer. In Partridge v Crittenden [1968] 1 WLR 1204, it was held that where the appellant advertised to sell wild birds, was not offering to sell them. Lord Parker CJ commented that it did not make "business sense" for advertisements to be offers, as the person making the advertisement may find himself in a situation where he would be contractually obliged to sell more goods than he actually owned. In certain circumstances however, an advertisement can be an offer, a well known example being the case of Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256, where it was held that the defendants, who advertised that they would pay anyone who used their product in the prescribed manner and caught influenza £100 and said that they had deposited £1,000 in the bank to show their good faith, has made an offer to the whole world and were contractually obliged to pay £100 to whoever accepted it by performing the requested acts.