Offer and Invitation to Offer

An offer and invitation to offer are two different terms, which must not be confused with one
another. An offer is a proposal while an invitation to offer (treat) is inviting someone to
make a proposal. In an offer, there is an intention to enter into a contract, of the party,
making it and thus it is certain. On the other hand, an invitation to offer is an act which leads
to the offer, which is made with an aim of inducing or negotiating the terms.
So, in an invitation to offer, the offeror, does not make an offer, rather invites other parties to
make an offer. Hence, before simply responding to an offer, one must know the difference
between offer and invitation to offer, because that makes a difference in the rights of parties.

Comparison Chart

BASIS FOR
OFFER INVITATION TO OFFER
COMPARISON

Meaning When one person expresses his When a person expresses something
will to another person to do or not to another person, to invite him to
to do something, to take his make an offer, it is known as
approval, is known as an offer. invitation to offer.

Defined in Section 2 (a) of the Indian Not Defined

Contract Act, 1872.

Objective To enter into contract. To receive offers from people and

negotiate the terms on which the
contract will be created.

Essential to make Yes No

an agreement

Consequence The Offer becomes an agreement An Invitation to offer, becomes an

when accepted. offer when responded by the party
to whom it is made.

Definition of Offer

An offer is an expression of a person showing his willingness to another person to do or not

to do something, to obtain his consent on such expression. The acceptance of the offer by
such person may result in a valid contract. An offer must be definite, certain and complete in
all respects. It must be communicated to the party to whom it is made. The offer is legally
binding on the parties. There are following types of offer:

 General offer: The type of offer which is made to the public at large.
 Specific offer: The type of offer made to a particular person.
 Cross offer: When the parties to the contract accept each other’s offer in ignorance of
the original offer, it is known as the cross offer.
  Counter offer: This is an another type of offer in which the offeree does not accept the
original offer, but after modifying the terms and conditions accept it, it is termed as a
counter offer.
 Standing offer: An offer which is made to public as a whole as well as it remains open
for a specific period for acceptance it is known as Standing offer.

Example:

 A tells to B,”I want to sell my motorcycle to you at Rs. 30,000, Will you purchase it?”
 X says to Y,”I want to purchase your car for Rs. 2,00,000, Will you sell it to me?”

Definition of Invitation to offer (treat)

An Invitation to Offer is an act before an offer, in which one person induces another person
to make an offer to him, it is known as invitation to offer. When appropriately responded by
the other party, an invitation to offer results in an offer. It is made to the general public with
intent to receive offers and negotiate the terms on which the contract is created.

The invitation to offer is made to inform the public, the terms and conditions on which a
person is interested in entering into a contract with the other party. Although the former
party is not an offeror as he is not making an offer instead, he is stimulating people to offer
him. Therefore, the acceptance does not amount to a contract, but an offer. When the former
party accepts, the offer made by the other parties, it becomes a contract, which is binding on
the parties.

Example:

 Menu card of a restaurant showing the prices of food items.

 Railway timetable on which the train timings and fares are shown.
 Government Tender
 A Company invites application from public to subscribe for its shares.
 Recruitment advertisement inviting application.

Key Differences Between Offer and Invitation to Offer (Treat)

The principal points of difference between offer and invitation to offer are as follows:

1. An offer is the final willingness of the party to create legal relations. An invitation to
offer is not the final willingness but the interest of the party to invite public to offer
him.
2. An offer is defined in section 2 (a) of the Indian Contract Act, 1872. Conversely, an
invitation to offer is not defined in the Indian Contract Act, 1872.
3. An offer is an essential element to make an agreement between the parties, but an
invitation to offer is not an important element until it becomes an offer.
4. An offer becomes an agreement when accepted. On the other hand, an invitation to
offer becomes an offer when the public responds to it.
5. The main objective of making an offer is to enter into the contract, whereas the main
objective of an invitation to offer is to negotiate the terms on which the contract can
be made.
Conclusion

Now, you are surely not confused between these two. It is also a characteristic of an offer that
it must be distinct from an invitation to offer. An Invitation to offer is a very familiar term as
we all have dined in a restaurant where menu cards show the price list of the concerned food
items or booked a ticket by viewing the railway timetable. Two most famous examples are
pamphlets of pizza’s showing their rates and an auction sale advertisement.

The Offer is quite specific term as it is meant to create legal relations as it is an essential
element for making a contract. The ‘intention’ of the party making it, is the fundamental
phenomenon that differentiates the two terms.