Basics of Contract Law

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Invitation to Treat Invitation to treat is a contract law term. However, it is not an offer. It is merely an invitation to others to make offers. It is a sort of preliminary negotiation to buy something and it follows that an invitation to treat cannot be accepted and there is no commitment to sell or offer which could be accepted. The court will always look at the language used or the inferred intention of the parties when deciding between an invitation to treat. Invitation to treat often appears in the shops display, tenders, advertisements, auctions, price list and catalogues, preliminary enquiries and supply of information. It is important that an offer must be distinguished from invitation to treat. Next, we will discuss about the cases which involves in invitation to treat.

  • Auctions

The display of goods at an auctioneer’s table and auctioneers calls for bids is an invitation to treat. The bids made by persons at the auction are offers, which the auctioneer can accept or reject as he chooses. The fall of hammer is the acceptance. Similarity, the bidder may retract his bid before the hammer falls and the bid is accepted. It becomes a contract when the hammer falls or the auctioneer bang the gable down.

  • Case 1 from UK

Auctioneer’s request for bids is an invitation to treat. The bid itself is an offer which the vendor can accept or reject. However, when the hammer falls, it became contract. Payne v Cave (1789) Fact: Mr.Cave made the highest bid for Mr.Payne’s goods at an auction. However, Mr.Cave changed his mind and he withdrew his bid before the auctioneer brought down his hammer. The auction was under standard conditions. Held: According to [Section 2 of the Contract Act], it was held that the defendant was not bound to purchase the goods. His bid amounted to an offer which he was entitled to withdraw at any time before the auctioneer signified acceptance by knocking down the hammer. In an auction, the auctioneer’s call for bids is an invitation to treat, a request for offers. The bidder may retract his bid up until the “fall of the hammer”.

  • Case 2 from UK

Advertisement stating a sale by auction “without reserve” is an offer. Warlow v Harrison (1859) Fact: In this case, a public auction of a horse, without reserve, was advertised by the defendant Harrison, an auctioneer. The Plaintiff, Warlow attended the sale and bid 60 guineas and the horse’s owner attended too and bid 61 guineas. The Plaintiff knew that it was the horse owner who bid 61 guineas, so he did not make any further bud. The auctioneer, Harrision, knocked down the hammer 3 times to the horse owner. The Plaintiff claimed that the horse was his since he was the highest bona fide purchaser at an unreserved sale.

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