Difference between Offer and Invitation to Offer: Meaning, Examples & Key Case Laws

Last Updated on Feb 07, 2025
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An offer is the initial step in the formation of a contract in establishing a legal relationship between the parties involved. According to Section 2(a) of Indian Contract Act 1872, “When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal.”

For Example: If D offers to B - “I will sell you my fridge for Rs. 20,000.”

In this case

  • D is the person making the offer i.e., the promisor/offerer
  • B is the person to whom the offer is made i.e., the promisee/offeree

Here, B has the option to either accept the proposal by accepting to buy the fridge for Rs. 20,000 or reject it. If B accepts the proposal then a contract is formed between D and B.

Difference Between Offer and Invitation to Offer

The main distinction between an offer and an invitation to offer lies in the intention of the parties. An offer, once accepted, immediately establishes a legal binding contract. On the contrary, an invitation to offer only invites the other party to negotiate and present an offer to them. The following are the key differences between offer and invitation to offer -

Basis

Invitation to Offer

Offer

Meaning

An indication of a person’s readiness to negotiate a contract. It is not an offer itself.

An offer made by a person showing willingness to do or refrain from doing something to obtain the assent of another person.

Objective

Intended to invite offers from others.

It is made with an aim to obtain acceptance from another party.

Provision

Invitation to offer is not defined under the Indian Contract Act, 1872

The term offer is defined under Section 2(a) of the Indian Contract Act, 1872

Acceptance

An Invitation to offer becomes an offer when a party responds.

An offer transitioned into an agreement upon acceptance.

Legal Consequences

An invitation to offer does not create legal obligations.

An offer creates legal consequences upon acceptance.

Addressed to

An invitation to offer can be addressed to the group of people.

An offer is made to a particular individual.

For Example

A bookseller sharing a catalogue with book prices

A person expressing interest and making an offer to purchase a book from the catalogue

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Key Case Laws highlighting the Difference between Offer and Invitation to Offer

In Pharmaceutical Society of Great Britain vs Boots Cash Chemists (1953) the Court ruled that displaying goods in a self-service store is an invitation to offer. When a customer selects an item and presents it at the cash desk such an act amounts to an offer which the shopkeeper may accept by processing the payment.

Harvey vs Facey (1893) is a landmark case in which the difference between offer and invitation to offer was discussed. In this case Harvey inquired about purchasing Facey’s property, Bumper Hall Pen and received a response quoting £900. The Court held that it was merely an invitation to offer and not a binding offer. The response by Harvey constituted a new offer which Facey rejected which resulted in no contract.

In McPherson vs Appana (1951) the Supreme Court held that mere statement of the lowest price at which the offeror would sell contains no implied contract to sell at that price. The Court in this case referred to the case of Harvey vs Facey.

Conclusion

The difference between offer and invitation to offer plays a key role in contract law as it examines when a legally enforceable agreement is formed. An offer, when accepted becomes a binding contract whereas an invitation to offer merely invites negotiations or proposals. This distinction was highlighted through landmark cases like Pharmaceutical Society of Great Britain vs Boots Cash Chemists (1953) and Harvey vs Facey (1893) etc.

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FAQs about Difference between Offer and Invitation to Offer

According to Section 2(a) of the Indian Contract Act, 1872, an Offer means when a person signifies their willingness to do or abstain from doing something with the intention of obtaining the assent of the other party.

An invitation to offer is a communication which reflects the readiness of a person to negotiate or receive offers but does not constitute an offer itself.

No, a mere price quotation is generally an invitation to offer and not a binding offer.

Displaying goods in a store with price tags is an invitation to offer.

Yes, when the other party responds to an invitation by making a proposal, it becomes an offer that the inviter can accept or reject.

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