28 February, 2016

Offer and Invitation to Offer

An offer should be distinguished from an invitation to offer. An offer is definite and capable of converting an intention into a contract. Where as an invitation to an offer is only a circulation of an offer, it is an attempt to induce offers and precedes a definite offer. Acceptance of an invitation to an offer does not result contract and only an offer emerges in the process of negotiation.

When a person advertises that he has a stock of books to sell or houses to let, there is no offer to be bound by any contract. Such advertisements are offers to negotiate-offers to receive offers. In order to ascertain whether a particular statement amount to an 'offer' or an 'invitation to offer', the test would be intention with which such statement is made. Does the people who make the statement intend to be bound by it as soon as it is accepted by the other or he intends to do some further act, before he becomes bound by it? In the former case, it amounts to an offer and in the latter case, it is an invitation to offer.
Courtesy:- Legal Point Foundation

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