These two terms are ubiquitous but yet misunderstood and are used interchangeably. The two terms are very significantly used and are usually used in context with the law of contracts and are very common in the law fraternity. It’s very important to note that they are two very different terms but come under the umbrella of the law of contracts to begin with.
This article certainly aims on clarifying the difference between offer and invitation to offer the structure that will be followed throughout the article would be first looking at the definition given under the legislation and moving on to relating it to case laws and other general contexts and examples that will be needed in order to understand the difference between both the terms more significantly so to start off with let's look at the definitions of both the terms and then go on to differentiating the same . In India it is specially covered under the Indian Contract Act of 1872, offer is defined under the act as under section 2(a) of the Indian Contract Act “when one person will signify to another person his willingness to do or not do something (abstain) with a view to obtain the assent of such person to such an act or abstinence, he is said to make a proposal or an offer.”
On the other hand, Invitation to offer is not certainly defined under the Indian Contract Act so let’s take a general understanding, an invitation, which is slightly different from offer and invitation, is regular and is an invitation to offer. invitation is the more preceding state to an offer. Where an offer is going to be more direct and helps an individual to directly put oneself into a state of contract with the other person on the contrary invitation is a more preceding state wherein a person is asked to negotiate and is said to have put forth his ability and willingness to be open for proposals. That can be best understood with examples.
Let consider A, a person wants to sell his car to be he directly goes to another person supposing ‘B’ and ask him to buy his car for the sum of 5 lakh rupees in furtherance to that B agrees to do so and buys the same from A, here is a clear contract between A and B and they have directly entered into a contract wherein A made the proposal and B accepted the same and A sold it to him. Whereas in an invitation to offer, the same has a little different approach for example. A goes to a restaurant, herein the restaurant by providing a menu card is providing an invitation to offer and when A orders for a certain item from the menu card, A is said to have made an offer to the restaurant to pay for the certain food item when it is served to him and the restaurant has accepted the same. This is a clear denotation of an invitation to offer.
Where an offer has legal consequences attached to it on the other hand invitation to offer does not have legal consequences that are attached to the person who is making an invitation to offer may accept or deny any offer that is created by the offeror. This does not create any legal obligation on the part of the person making an invitation to offer to necessarily accept any offer that is provided to him or her. And where on one hand there are different types of offers that are made and on the other side an invitation to offer is very specific and is only of one kind.
Hence, we can easily conclude that an offer is irreparable as it is the clear statement of will to enter into an agreement. When an offeror makes an offer, he pours his will with the intention of getting approval or assent from the offeree for the particular proposal that person has said to have made and an invitation to offer is merely a formal proposal made with the intention of engaging and negotiating with the other party in general before entering in to a contract. An invitation to offer can be made generally to a whole lot of the public but an offer cannot subsist in vacuity only; there must be a legal backing of establishing a lawful relationship to stand in the court of law, making contracts enforceable. this sort of similar issues were faced when the law of contract was made for the very first time so the difference was explained by the Privy council in a landmark case of ‘Harvey v Facey’, where it clearly enumerated that a salesman’s catalogue demonstrating the pricing of its products cannot be called as an offer.
Likewise, auction sales, advertisements, restaurant’s menu card, government tenders, IPOs from the companies only constitute an invitation. It is completely the prerogative of the public whether they want to go for it or not. This works as yet various other examples of invitation to offer.
First introduced by the English law and later brought down to the Indian legislative tables cum Parliament is this miniscule difference that has indeed facilitated and supplemented a lot of Suits that were filed in the initial times.In the case of ‘GHAZIABAD development Authority v Union of India’, it was concluded that a development authority publicising of proposing their housing schemes is just an invitation to offer. And not completely and offer because the general public had mistaken it for it being a direct offer that was made to an individual and there were multiple suits that were filed in the court of law due to the slight confusion that was made.
These kinds of menial distinctions are usually problematic for public in general because they are not very educated which makes them a little hindered in understanding the difference of such a miniscule level so the legislature and the Judiciary makes a very thoughtful effort to explain the differences to the individual so that there is not a lot of multiplicity of Suits.
This article is written by Ujjwal Mishra of Symbiosis law school, Nagpur.