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Management Essay

3986 words - 16 pages

Invitation to treat
The legal term ‘invitation to treat’ refers to an statement indicating that someone is interested in negotiating a business deal. It is not a binding obligation or offer, and all parties involved can choose not to take up the invitation to treat without suffering legal penalties. This allows people to make preliminary negotiations without having to commit, creating an opportunity for making business deals without obligations that might discourage parties from exploring the deal. For example, a price tag in a store window is considered an invitation to treat in many areas of the world. It is not a binding offer. A customer can approach and ask to bargain down the ...view middle of the document...

Even if serious terms are proposed, an offer is only made if the speaker confers on the addressee the power to bind the speaker on the addressee’s acceptance. Some kinds of transaction involve a preliminary stage in which one party invites the other to make an offer. In Gibson v Manchester City Council (1979) a council tenant was interested in buying their house. He completed an application form and received a letter from the Council stating that it ‘may be prepared to sell the house to you’ for $2,180. Mr Gibson initially queried the purchase price pointing out that the path to the house was in a bad condition. The Council refused to change the price, saying that the price had been fixed taking into account the condition of the property. Mr Gibson then wrote on 18 March 1971 asking the Council to ‘carry on with the purchase as per my application’. Following a change in political control of the Council in May 1971, it decided to stop selling Council houses to tenants, and Mr Gibson was informed that the Council would not proceed with the sale of the Gibson brought legal proceedings claiming that the letter he had received stating the purchase price was an offer which he had accepted on 18 March 1971. The house of Lords, however ruled that the Council had not made an offer, the letter giving the purchase price was merely one step in the negotiations for a contract and amounted only to an invitation to treat. Its purpose was simply to invite to making of a ‘formal application’, amounting to an offer, from the tenant.
The general approach to making the distinction between offers and invitations to treat is qualified by some relatively specific rules or conventions applicable to common situations in particular. These conventions have largely replaced the search for the parties’ intentions in many common contracting situations. Treitel has stated that ‘it may be possible to displace these rules by evidence they will determine the distinction between offer and invitation to treat, and they will do so without reference to the intention (actual or even objectively ascertained) of the maker of the statement.’ Confusing can sometimes arise when what would appear, in the everyday sense of the word, to be an offer, is held by the law to be only an invitation to treat. This issue arises particularly in the following areas.
Display and advertisements
When goods are displayed in stores or advertised in newspapers or catalogues with clearly marked prices, would the reasonable consumer or reader believe that the store keeper or advertiser intends to offer the item for sales and it might well be thought to be ‘yes’. However, the general rule is that display or advertisement of goods for sale are not offers to sell those goods, but only invitation to treat. This rule may prevail even when the word ‘offer’ is used because it may not have been used it its legal sense. Thus, the customer generally regarded as making the offer when...

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