Invitation to treat

The first stage in which one party invites the other to make an offer.

An invitation to treat is the initial stage in a transaction in which one party invites the other to make an offer.

In Gibson v Manchester City Council (1979) Mr Gibson, a council tenant, applied to purchase his council house from the council. He received a letter from Manchester City Council saying they 'may be prepared to sell the house to you' for £2180.00.  Mr Gibson said that the path to the house was in a bad state and queried the price they had stated.  The council said the price had been fixed allowing for the condition of the property and would not amend the price.

On 18th March 1971 Mr Gibson wrote to the council again and requested that they 'carry on with the purchase as per my application'. In May 1971 the political control of the council changed and the policy to sell council houses ended, Mr Gibson was informed of this and he was told the sale of the house would not proceed.

Mr Gibson claimed that the letter he received with the purchase price in was an offer and his letter of the 18th March was an acceptance of the offer and he took legal proceedings.

It was ruled by the House of Lords that the council had not made an offer, the letter was only one step in the negotiations for a contract and was an invitation to treat, inviting the tenant to make a 'formal application' amounting to an offer.

Items in a shop marked with a price are generally treated as invitations to treat rather than an offer to sell at that price. The bargain TV incorrectly priced £62.99 instead of £629.90 does not have to be sold for the marked price.  Nor can you insist that the shop sells you the last dress in the shop window even if there are no others like it in the shop, as the fact that it is on display is not an offer, and a customer cannot accept it and therefore no binding contract can be made.

Other examples of invitations to treat include auctions and self-service shops or supermarkets.  In the case of an auction, the lot to be sold is the invitation to treat and individual bids constitute offers.  Acceptance? Acceptance is signified by the fall of the auctioneers hammer. 

The display of goods in a supermarket is an invitation to treat.  An offer is made when the customer selects the items and takes them to the checkout.  The checkout assistant then accepts the offer when the payment is tendered and accepted.

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