The Invitation to Treat in Contract Law

An invitation to treat is an invitation to negotiate or make an offer. Advertisements are usually an invitation to treat as it allows a seller to refuse sale of a product in the event it was fallaciously priced. This particular advertisement amounts to an invitation to treat as it is solely dependent on Mike accepting the order to supply the goods and subsequently take payment.

If Mike ran out of stock it would seem harsh to sue for breach of contract if such a possibility did occur. The Fisher v Bell case raised the issue as to whether the display of a knife in a shop window paired with a price tag constituted an offer or invitation to treat. It was held that the knife in the shop window was only an invitation to treat and therefore the knife was not ‘offered for sale’. The general law of the country is reflected in a statement made by Lord Parker. He insisted that ‘the display of an article with a price is merely an invitation to treat’.

Mike is displaying a good at a discounted price to entice customers into placing offers from which he can choose to accept or decline. 

Mike 

Mike circulated flyers to local businesses through the post. The issue to be looked at here is regarding revocation of the advertisement.

Mike found that the discounted price was too generous and therefore posted a letter to the same businesses to revoke the advertisement. This letter was received on February 2nd. It is now under discretion as to whether or not the advertisement is still valid. In Dickinson v Dodds a house was offered for sale to the claimant and was subsequently sold the following day to another client.

The original offer made by the claimant was revoked when the news of sale was passed on to him. It was made clear that revocation becomes effective once it has been communicated. Alongside the case, the postal rule can be partially used as guidance. The rule is confined to acceptance and does not apply to revocation. Taking guidance from Dickinson v Dodds, it is clear that revocation has to be communicated.

Mike had posted a letter on January 20th and it was later delivered on February 2nd. The postal rule would not apply in this situation as revocation is only effective once it has been acknowledged. Moreover, it is evident that revocation is only applicable to offers. For this reason, revocation is not required as Mike it not legally obliged to sell since he has not ‘offered for sale’ a computer.

Mike would not be obliged to sell the computer as the advertisement only constitutes to an invitation to treat. The letter sent would act as information to inform customers that the deal does not exist. 

Vanessa 

Vanessa posted a letter on the 30th of January which was received by Mike on 1st February. When was the exact moment Vanessa had placed an order? Communication was carried out via post but the argument still remains as to whether the order was placed on either 30th January or the beginning of February. In the Adam vs Lindsell case the defendants offered to sell wool to the claimants by post. By the time the letter was actually received, the wool was sold to a third party.

The claimants replied in acceptance to the offer promptly after receiving their letter. It was held that there was a binding and enforceable contract.

When considering communication made through the post the postal rule becomes effective. Acceptance is said to take place and become binding the moment a letter has been posted. The rule applies when it is reasonable to expect a reply through the post. In the Henthorn v Fraser case it was made clear that acceptance is complete even if the letter had been lost in the post.

A reply through post was reasonably expected in this case as the offeror also used the post by means of communication. 

However, it would seem that the application of the postal rule would cause ‘manifest inconvenience and absurdity’. It has been explicitly stated that the placement of an order is only effective once Mike himself has been ‘notified’. The letter was actually received on 1st February making the placement of the order invalid as the offer has elapsed the set date and therefore no longer exists. Mike would not be legally obliged to give Vanessa a computer simply because the postal rule is not applicable. The advertisement made it clear that communication had to be ‘notified’. 

Neil 

Neil communicates his order through fax. After an unsuccessful attempt on the phone, he decides to fax his order.

We know that Mike practices half-day closing on Wednesday. The phone call was made in the evening noticeably after the offices operating hours. The fax was subsequently received at 4pm which once again was after Mike had closed. Has Neil actually communicated his offer with respect to placing an order? Telephone and faxing are methods of instantaneous communication.

It is only acceptable to acknowledge the order as being effectively placed if the fax was received during office hours. In the Mondial Shipping and Chartering Ltd v Astarte Shipping Ltd case a fax was sent out of office hours and the recipients could only read the fax the following Monday. It was held that the acceptance became effective on Monday when the fax was actually acknowledged. The fax was sent during the weekend where the recipient practiced weekend closing.  Neil’s fax was received at 4pm on Wednesday, a day Mike where practised half-day closing.

If the fax was received during working hours then it would be the responsibility of Mike to sort and handling faxes in his own office. This fax would only be read and acknowledged by Mike the following day (February 1st).

A fax sent outside the operating office hours would act as non-instantaneous communication. [13] He would not be obliged to trade with Neil as the order was placed on February 1st. (The day the fax was acknowledged.) 

Bev 

An e-mail was sent on the 31st January and was subsequently received at 23:30 on the same day. It is difficult to judge the exact moment the order was placed.

Once the email has been sent, the point at which the order was made needs to be judged objectively with regards to business practice and the intentions of both parties. With regard to emails, the sender is generally notified through an error report if the message has not been delivered. In this case the email was actually delivered successfully. With respect to Lord Wilberforce in Brinkibon it is said that recipients may not receive an email immediately as emails may be sent out of office hours and there could also be several problems encountered along the way e.g. crashed servers. Furthermore, Lord Fraser in Brinkibon mentions that once a message has been received it is fair to acknowledge it as delivered to the recipient.

It is the recipients duty to manage the sorting of any emails swiftly in an office. With guidance from the statement by Lord Wilberforce in Brinkibon it would be sensible to judge this matter by looking at what was actually intended. 

Consideration has to be given with respect to office operating hours. It is known that the email was sent and was later on received at 23:30. This delivery of the email was after office hours and therefore could only be acknowledged once it had been read which would most likely be the following day.

It is highly unlikely that Mike could be held responsible for breach in contract if the case was judged upon sound business practice. Looking at the statement made by Lord Fraser in Brinkinon it would be unfair to acknowledge the email as delivered as it was sent out of operating hours. Mike is only held accountable to sort and manage emails once the office is opened the following day. By taking into consideration the statements made by both Lord Wilberforce in Brinkibon and Lord Fraser in Brinkinon it is justified that the email would act as consent for placing an order once Mike opened the office. 

By this time the offer would not exist and therefore Mike would not be obliged to trade with Bev. It could be argued that an email can be accessed through many devices however it is highly unlikely Mike would check an email late at night and there would only be a time frame of 30 minutes before the termination of the original advertisement sets in.

Overall; It is easy for a reasonable person to recognise what is being intended by both parties should Mike be sued for breach of contract. Looking at the situations, Mike would most certainly not be obliged to supply a computer at a discount price.

Even though the revocation of his offer was unsuccessfully acknowledge by his customers, the advertisement became non-existent as it elapsed its set time due to the orders being acknowledged after January. It is solely dependent upon Mike to accept offers placed and in this case none of the offers were notified before the end of January. 

Bibliography 

1. Table of cases Adams v Lindsell (1818) 106 ER 250 Brinkibon Ltd v Stahag Stahl und Stahlwarenhandelsgesellschaft m.b.H [1983] 2 AC 34, House of Lords Byrne v Van Tienhoven [1880] 5 CPD 344.
2.  Fisher v Bell [1961] 1 QB 394 Henthorn v Fraser [1892] 2 Ch. 27 (C.A. 1892) Holwell Securities v Hughes [1974] 1 WLR 155 Mondial Shipping and Chartering BV v Astarte Shipping Ltd [1995] CLC 1011 Partridge v Crittenden [1968] 1 WLR 1204 Stover v Manchester City Council [1974] 1 WLR 1403. 
3. Secondary sources Book in fourth edition Macintyre E, Essentials Of Business Law (4th edn, Pearson Education Limited 2013). 
4. Journal article Jalil M, ‘Clarification Of Rules Of Acceptance In Making Business Contracts’ (2011) 4 JPL Websites Anon,
5.  ‘How To Get Notified When An E-Mail Has Been Read/Delivered?’ (Sendmail.org, 2006) <https://www.sendmail.org/~ca/email/dsn.html> accessed 9 January 2015 LaMance K, ‘Invitation To Treat Lawyers | Legalmatch Law Library’ (Legalmatch.com, 2014) <https://www.legalmatch.com/law-library/article/invitation-to-treat.html> accessed 7 January 2015
6. Ken LaMance, ‘Invitation To Treat Lawyers | Legalmatch Law Library’ (Legalmatch.com, 2014) <https://www.legalmatch.com/law-library/article/invitation-to-treat.html> accessed 7 January 2015. 
7. Partridge v Crittenden [1968] 1 WLR 1204 
8. Fisher v Bell [1961] 1 QB 394 
9. Ewan Macintyre, Essentials Of Business Law (4th edn, Pearson Education Limited 2013).

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• Dickinson v Dodds (1876) 2 Ch D 463 
• Macintyre (n 2) 49.

 

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