4. Offer and invitation to treat

An offer is an indication that the maker is prepared to contract on terms that are fixed, or capable of being fixed, when the offer is made. "I will sell you 5,000 pens for Le 10,000" is an offer. So is an offer to buy shares at next Friday's closing price: the price is not stated today, but it can be fixed on Friday.

An offer can be made to one person, a group, or the world. It can be made by words, conduct, or both. It need not repeat every term if it clearly points back to terms already discussed. The person who offers is the offeror. The person who receives it is the offeree.

The test is objective. If your words would make a reasonable person think you meant to be bound, you may be bound even if you did not.

An invitation to treat is earlier than that. It is a step in negotiation: stating a price you might accept for a house, or asking whether goods can be supplied. You invite the other side to offer. You do not offer yourself. If the words negative any intention to be bound, there is no offer.

Gibson v Manchester City Council

Mr Gibson, a council tenant, was told the corporation "may be prepared to sell" the house at a stated price if he filled in a form. He did. After an election the new council dropped the sales policy. Lord Denning in the Court of Appeal would have looked at the whole correspondence and asked whether everything material was agreed. The House of Lords disagreed. The letter was not definite enough to be an offer. It was an invitation to treat. Mr Gibson had offered. The council had not accepted.

Auctions

The bidder offers. The auctioneer accepts by the fall of the hammer. Until then the auctioneer may withdraw the lot, and each bid lapses when a higher bid is made. The auctioneer need not sell to the highest bidder.

"Without reserve" is different. In Warlow v Harrison the court said an auctioneer who puts property up without reserve promises the highest bona fide bidder that it will be sold that way. Barry v Heathcote Ball confirmed it. Two machines worth about £14,000 each were put up without reserve. The only bid was £200 each. The auctioneer was in breach of a collateral contract with the highest bidder.

Shops and advertisements

A price ticket in a window, or goods on a supermarket shelf, is an invitation to treat. The customer offers at the till. The shop may accept or refuse. Pharmaceutical Society v Boots held that the sale of listed medicines was made at the cashier, where a pharmacist could still intervene, not when the customer put the item in the basket. Fisher v Bell held that a flick-knife in a window with a price was not an "offer for sale" under the 1959 Act.

An advertisement of goods or of an auction is normally the same. In Harris v Nickerson a man travelled to an auction and found the lots withdrawn. He could not recover his expenses. Partridge v Crittenden is the same idea: an advert of bramblefinches at 25 shillings was an invitation to treat, not an offer to sell a wild bird.

A reward, or any other unilateral offer, can be different. Carlill v Carbolic Smoke Ball Co is the case. The company advertised £100 to anyone who used the smoke ball as directed and still caught influenza, and said £1,000 had been deposited to show sincerity. Mrs Carlill did what was asked and became ill. The advertisement was an offer to the world. No one was expected to write and "accept" before using the ball. Performance was enough. Williams v Carwardine is the reward comparison: an offer of reward can be accepted by the person who does what is asked.

Tenders

Asking for tenders is normally an invitation to treat. Spencer v Harding: the person who invites tenders is ready to negotiate, not bound to accept the highest or any tender. The offer comes from the person who submits the tender.

If the invitation promises to accept the highest or lowest bid, that promise can itself be a unilateral contract. Blackpool and Fylde Aero Club v Blackpool Borough Council goes a step further. The club put its tender in the box before the deadline. A council employee did not clear the box in time, so the tender was treated as late and ignored. The Court of Appeal held there was an implied promise that a tender lodged in time would be considered.

An offer has no effect until it is communicated. You cannot accept an offer you do not know about.