An invitation to treat is a common scenario that arises in everyday life and business. An invitation to treat is an invitation to a party or parties to make an offer. However, unlike a contractual offer, there is no intention for the invitation to treat to be legally binding. This is, of course, until the parties take steps to formalise the offer in a binding contract. This article will explore what an invitation to treat is, provide examples and explain how it differs from an offer.
What is an Invitation to Treat?
An invitation to treat is when you invite someone to make an offer.
Common Invitations to Treat
We witness invitations to treat in our everyday life more often than we might think. This can include when searching for a new home or at the shopping centre browsing for new clothes. However, the most common example of an invitation to treat is a shop that places price tags on their goods, in-store or online.
Example 1
Suppose you have a clothing store and mark sale prices on the jumper rack. You accidentally put ‘$10’ on the price tag when it should be ‘$100′. A customer picks up the jumper believing they have found a great bargain. So, they bring it over to your checkout to purchase. Here, you realise the mistake and advise the customer that the price is $100. The customer can then agree or decline to purchase the jumper at that price. However, you do not have to honour the marked price, as this was an ‘invitation to treat’. The customer made the offer to purchase when they brought the jumper to the counter.
Example 2
You are driving down the highway when you see a sign for a stall selling mangoes. The sign states, ‘MANGO TRAYS $10’ and you decide to pull over and purchase a tray of mangoes. You greet the stall owner and retrieve $10 from your wallet. Unfortunately, the stall owner says they are out of their usual $10 trays. However, they have premium mangoes available for $20 per tray. You feel upset because they advertised mangoes at $10 but want you to pay double now. However, the stall owner does not have to sell mangoes at $10 per tray since this was merely an invitation to treat.
Similarly, other examples of an invitation to treat include auction sales and tenders. In an auction, when the auctioneer calls for a bid, the law considers this to be an invitation to treat. Additionally, a request to tender is also an invitation to treat. An offer is made only when you submit the tender document.
Example 3
A tender can also be an example of an invitation to treat. For example, a new shopping centre opens, and the owner invites tenders from different restaurants to trade in the shopping centre. Various restaurants submit tenders, and only a few may succeed. The tender itself is not a contract and can generally be revoked at any time before a binding contract is agreed upon. Moreover, the shopping centre owner can accept or reject any of the tenders at their discretion.
Continue reading this article below the formHow is it Different to an Offer?
Two critical elements of a binding contract are offer and acceptance. You make an offer when you show a definite intention to be bound by a contract, whether for the sale of goods or services.
By contrast, you make an invitation to treat when you display information about a good or service to entice others to purchase. You invite the other party to make an offer, which you can then accept or decline. The key factor is whether the advertisement or statement was intended to be an offer.
What About Online Shopping?
With the online marketplace being a more frequent place for people to do their shopping, the offer and acceptance process online presents some different considerations when it comes to invitations to treat. While website product listings are generally invitations to treat like in-store pricing, there are differences to how the offer and acceptance unfolds online.
Suppose you are an online retailer of televisions. On your website, you have a new TV listed for $1,499, but one of your employees accidentally enters the wrong price of $149.99 when creating the listing. With this steeply discount price, customers quickly start adding the TV to their online shopping carts and checking out.
This means the customer will likely recognise if a mistake occurs during pricing rather than thinking that the vendor is being purposely misleading or deceptive. Therefore, your terms and conditions should clearly state that you do not accept the customer’s offer until you explicitly accept it. For example, you might only accept the customer’s offer after you send them an email confirming their order. By clearly outlining when an offer and acceptance occur in your terms and conditions, you can avoid costly mistakes.
Invitation to Treat and Consumer Law
As a vendor, it is crucial that you ensure full compliance with the ACL requirements. The ACL contains strict prohibitions against misleading or deceptive conduct, as well as false or misleading representations about the price of goods or services. These obligations will supersede any protections you may have around “invitation to treat” under common law principles.
For example, even if a sale price or discount is technically just an invitation for customers to treat, advertising 50% off for an item that you are not actually discounting from its regular price could violate the ACL’s misleading conduct provisions. You also can’t engage in drip pricing practices. There is where you list the price but do not adequately disclose additional or hidden fees and charges they must pay at the beginning of the purchase.
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Key Takeaways
When you list goods and services for sale online or in-store, you generally make an invitation to treat. The customer will make a formal offer when they reach the checkout in your physical store or process payment from the online store’s cart. Therefore, it is important to have clear terms and conditions that outline when an offer and acceptance occur. This approach will help avoid confusion and reduce the risk of costly mistakes when listing prices.
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Frequently Asked Questions
It is when you invite someone to make an offer. You can then accept or decline this offer. If you accept the offer, it will become a legally binding and enforceable contract.
The most common example is a shop that has price tags on its goods. This includes physical or online stores.
To avoid costly mistakes, make sure that your terms and conditions specify that you only accept the customer’s offer when you explicitly accept it. Clearly outline when an offer and acceptance occur.
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