An offer and invitation to offer are two different terms, which must not be confused with one another. An offer is a proposal while an invitation to offer (treat) is inviting someone to make a proposal. In an offer, there is an intention to enter into a contract, of the party, making it and thus it is certain. On the other hand, an invitation to offer is an act which leads to the offer, which is made with an aim of inducing or negotiating the terms.
So, in an invitation to offer, the offeror, does not make an offer, rather invites other parties to make an offer. Hence, before simply responding to an offer, one must know the difference between offer and invitation to offer, because that makes a difference in the rights of parties.
Content: Offer Vs Invitation to Offer (Treat)
|Basis for Comparison||Offer||Invitation to Offer|
|Meaning||When one person expresses his will to another person to do or not to do something, to take his approval, is known as an offer.||When a person expresses something to another person, to invite him to make an offer, it is known as invitation to offer.|
|Defined in||Section 2 (a) of the Indian Contract Act, 1872.||Not Defined|
|Objective||To enter into contract.||To receive offers from people and negotiate the terms on which the contract will be created.|
|Essential to make an agreement||Yes||No|
|Consequence||The Offer becomes an agreement when accepted.||An Invitation to offer, becomes an offer when responded by the party to whom it is made.|
Definition of Offer
An offer is an expression of a person showing his willingness to another person to do or not to do something, to obtain his consent on such expression. The acceptance of the offer by such person may result in a valid contract. An offer must be definite, certain and complete in all respects. It must be communicated to the party to whom it is made. The offer is legally binding on the parties. There are following types of offer:
- General offer: The type of offer which is made to the public at large.
- Specific offer: The type of offer made to a particular person.
- Cross offer: When the parties to the contract accept each other’s offer in ignorance of the original offer, it is known as the cross offer.
- Counter offer: This is an another type of offer in which the offeree does not accept the original offer, but after modifying the terms and conditions accept it, it is termed as a counter offer.
- Standing offer: An offer which is made to public as a whole as well as it remains open for a specific period for acceptance it is known as Standing offer.
- A tells to B,”I want to sell my motorcycle to you at Rs. 30,000, Will you purchase it?”
- X says to Y,”I want to purchase your car for Rs. 2,00,000, Will you sell it to me?”
Definition of Invitation to offer (treat)
An Invitation to Offer is an act before an offer, in which one person induces another person to make an offer to him, it is known as invitation to offer. When appropriately responded by the other party, an invitation to offer results in an offer. It is made to the general public with intent to receive offers and negotiate the terms on which the contract is created.
The invitation to offer is made to inform the public, the terms and conditions on which a person is interested in entering into a contract with the other party. Although the former party is not an offeror as he is not making an offer instead, he is stimulating people to offer him. Therefore, the acceptance does not amount to a contract, but an offer. When the former party accepts, the offer made by the other parties, it becomes a contract, which is binding on the parties.
- Menu card of a restaurant showing the prices of food items.
- Railway timetable on which the train timings and fares are shown.
- Government Tender
- A Company invites application from public to subscribe for its shares.
- Recruitment advertisement inviting application.
Key Differences Between Offer and Invitation to Offer (Treat)
The principal points of difference between offer and invitation to offer are as follows:
- An offer is the final willingness of the party to create legal relations. An invitation to offer is not the final willingness but the interest of the party to invite public to offer him.
- An offer is defined in section 2 (a) of the Indian Contract Act, 1872. Conversely, an invitation to offer is not defined in the Indian Contract Act, 1872.
- An offer is an essential element to make an agreement between the parties, but an invitation to offer is not an important element until it becomes an offer.
- An offer becomes an agreement when accepted. On the other hand, an invitation to offer becomes an offer when the public responds to it.
- The main objective of making an offer is to enter into the contract, whereas the main objective of an invitation to offer is to negotiate the terms on which the contract can be made.
Now, you are surely not confused between these two. It is also a characteristic of an offer that it must be distinct from an invitation to offer. An Invitation to offer is a very familiar term as we all have dined in a restaurant where menu cards show the price list of the concerned food items or booked a ticket by viewing the railway timetable. Two most famous examples are pamphlets of pizza’s showing their rates and an auction sale advertisement.
The Offer is quite specific term as it is meant to create legal relations as it is an essential element for making a contract. The ‘intention’ of the party making it, is the fundamental phenomenon that differentiates the two terms.