Invitation to Treat
In contract law, an invitation to treat (invitation to bargain in the US) is an action by one party which may appear to be a contractual offer but which is actually inviting others to make an offer of their own. The distinction is important because if a legitimate contractual offer is accepted by another, a binding contract is immediately formed and the terms of the original offer cannot be further negotiated without both parties’ consent. An invitation to treat may be seen as a request for expressions of interest.
The clearest example of an invitation to treat is a tender process. The party tendering out services is not obliged to sign a contract with the first party who submits a tender proposal. An auction may be more ambiguous. Generally an auction may be seen be an invitation to treat, with the property owner asking for offers of a certain amount and then selecting which to accept. However, if it is stated by the owner that there is no reserve price or that there is a reserve price beyond which offers will be accepted then the auction is most likely a contractual offer which is accepted by the highest bidder (Spencer v Harding (1870) LR 5 CP 561) .
A shop owner displaying their goods for sale is generally making an invitation to treat. They are not obliged to sell the good to anyone who is willing to pay for them, even if additional signage such as “special offer” accompanies the display of the good. This distinction was legally relevant in Fisher v Bell 1961 1 QB 394 where it was held that displaying a flicknife for sale in a shop did not contravene legislation which prohibited offering for sale such a weapon. The distinction also means that if a shop mistakenly displays a good for sale at a very low price it is not obliged to sell it for that amount.