NOTES


CA-Foundation > Business Laws > The Indian Contract Act, 1872 - Offer and Acceptance (Old & New)

State the points of distinction between Offer and Invitation to offer.



Ans.
Offer must be distinguished from an invitation to offer
Invitation to offer or invitation to treat means supply of information so that the negotiations can start and the other person can be moved to make an offer. It is an indication that the inviter is willing to enter into negotiations but is not yet prepared to be bound. A response to invitation to treat does not lead to an agreement. In fact it generates an offer.
Preliminary negotiations, or expressions of interest will be regarded as invitations to treat, rather than as offers. Thus, a sales person issuing a catalogue or price list informs the customers about the available products and their prices, makes an invitation to offer. Any person desiring to buy any of those products will be making an offer, which may or may not be accepted.
The distinction between an offer and an invitation to offer depends upon the intention of the parties and this must be judged objectively.

OFFER

INVITATION TO OFFER

An offer is an indication by one person that he is prepared to enter into contract on certain terms.

An invitation to offer is a statement made by a person with a view to elicit response and to negotiate a deal, without expressing final willingness to contract.

When an offer is accepted it becomes a promise.

An invitation to offer, when responded generates an offer.
Examples:
1) Catalogue of goods is not offer, but only an invitation for offer; so also statement of lowest price in answer to enquiry.
2) Display of goods with price tags in a self-service shop is merely an invitation to offer, and when a customer picks up those goods and intends to buy them that amounts to an offer. The shop-keeper is free not to accept that offer.
3) A letter from a prospective buyer asking for quotations from a merchant is an invitation for an offer.
4) A tender notice does not amount to an offer; it is merely an invitation to contractors for making offers. An advertisement calling for tenders, therefore, is not a proposal with in the meaning of the Contract Act. It only invites a proposal It is the submission of a I tender which is in the nature of a proposal or an offer.
5) A prospectus issued by a company to purchase its shares or debentures is an invitation to offer. Application for the shares amounts to offer to the company. Allotment of shares by the company amounts to acceptance of the offer.
6) A menu card in a hotel is an invitation to offer. When the order for eatables is placed it amounts to offer.
7) Newspaper advertisements are generally not offers. Thus a newspaper advertisement inviting applications for jobs is not an offer but an invitation to offer. However the newspaper advertisement may be drafted in such a way that they may constitute offer. For example an offer for reward published in a newspaper may constitute an offer and any person who performs the required act accepts the offer and creates an agreement.
8) An advertisement inviting intending buyers of goods to come and make bids at the auction is merely invitation to offer. Each bid is an offer, and when a bid is accepted that amounts to acceptance of the offer and results in an agreement.
9) A Railway time table is not an offer. The Railway time table usually contains a notice “Railways gives notice that they do not undertake that the trains will arrive at the time specified in the time tables nor will they be accountable for any loss, inconvenience or injury that may arise from the delays or detentions".

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Notes of The Indian Contract Act, 1872 - Offer and Acceptance (Old & New)



  1. What are the different types of offers? Explain.
    see in detail

  2. Aadarsh Dayal started 'self service’ system in his shop. Smt. Pavan entered in the shop, took a basket and after taking articles of her choice into the basket reached the cashier for payments. The cashier refuses to accept the price. Can Aadarsh Dayal be compelled to sell the said articles to Smt. Pavan? Decide.
    see in detail

  3. State the points of distinction between Offer and Invitation to offer.
    see in detail

  4. "Snow White" Soap Co. advertised that it would give a reward of ₹ 1,000 who developed skin disease after using, "Snow White" soap of the company for a certain period according to the printed directions. Miss Ruhi purchased the advertised "Snow White" and developed skin disease in spite of using this soap according to the printed instructions. She claimed reward of ₹ 1,000. The company refused the reward on the ground that offer was not made to her and that in any case she had not communicated her acceptance of the offer. Decide whether Miss Ruhi can claim the reward or not. Refer the relevant case law, if any.
    see in detail

  5. Daamodar proposed to sell his house to Kaashinaath . Kaashinaath sent his acceptance by post. Next day, Kaashinaath sends a telegram withdrawing his acceptance. Examine the validity of the acceptance in the light of the following:
    1) The telegram of revocation of acceptance was received by Daamodar before the letter of acceptance.
    2) The telegram of revocation and letter of acceptance both reached together.

    see in detail


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