What is an Invitation to Treat in Contract Law?

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What is an Invitation to Treat in Contract Law?

June 23, 2021         Liv Chum

An invitation to treat refers to an invitation to a party to make an offer to enter into a contractual agreement.  Whilst an invitation to treat provides information that may attract an individual to make an offer, invitations to treat are not binding.  

Examples

We come across invitations to treat on a daily basis. Common examples include:

Advertisements 

This could include items on display in a store, window displays, catalogues, and so on.

Eg. You see a pair of shoes advertised for $60 (an invitation to treat) and you bring it to the checkout to make an offer and purchase the shoe. Nonetheless, the shop assistant tells you the shoes are actually $150. As this was an invitation to treat, you cannot dispute the fact that the shoes were advertised as $300 as this is only an ‘invitation to treat’, meaning it is your decision to accept or reject the invitation to treat to ultimately make an offer. 

Auction sales

When an auctioneer is calling for a bid, this is considered to be an invitation to treat

It is only where a bid is made that the invitations to treat turns into an offer as the bidder is to buy at the price offered 

Tenders 

If you receive a request to tender, this will be considered as an invitation to treat 

An offer is not made until the tender document is submitted in response to the request

Difference between an invitation to treat and an offer 

Invitation to treat 

  • An invitation to treat exists just to lure you in to make an offer. In the context of the sales of goods and services, an invitation to treat ultimately leads to consumers making a purchase as they invite people to make an offer. 
  • Invitations to treat are not legally binding 
  • The acceptance of an invitation to treat means you have made an offer to the other party

Offer

  • An offer is one of the crucial elements of a binding contract. When you create an offer, this indicates that you are willing to enter into a contract with another party 
  • The other elements of a contract are:
    • Acceptance
    • Consideration
    • Intention
    • capacity
  • The acceptance of an offer creates a legally binding agreement between you and another party 
    • Eg. In a store, you make an offer by taking an item to the register

In Summary 

A lot of the advertisements, listings and items on display that we come across on a day to day basis are interpreted as an invitation to treat. It isn’t until a consumer reaches a checkout in a physical store or the checkout cart online that an offer is made. If you need help ensuring that you are only inviting offers and not creating offers for your physical or online store, contact us at 1300 337 997.

About Liv Chum

Liv is one of OpenLegal's paralegals. Liv is a passionate student of the law, with a real interest in the way that business and legal requirements intersect.