Why is it important to distinguish between an offer and invitation to treat?
An offer / proposal are necessarily for the formation of an
agreement. Section 2(a) of Contracts Act 1950 said when person
signifies to another his willingness to do / to abstain from doing
anything, with a view to obtaining the assent of that other to act
/ abstinence, he is said to make a proposal and invitation to treat
means an invitation to make an offer.
A) There are many distinguishing between offer and invitation to
treat. The first distinguishing is from meanings. Offer is an
expression of willingness to contract on certain terms made with
the intention that it shall become binding as soon as it is
accepted by the person to whom it is addressed, the offeree.
Invitation to treat different with offer it means an invitation to
make an offer. An invitation to treat is not an offer, but an
indication of a person's willingness to negotiate a contract. Based
on the case:
COELHO v. THE PUBLIC SERVICES COMMISSION[1964] M.L.J.12
In this case, the applicant, a Health Inspector under the Town
Board, Tanjong Malim, applied for the post of Assistant Passport
Officer in the Federation of Malaya Government Oversea Missions
advertised in the Malay Mail dated 19 February 1957. Consequently,
the applicant was informed that he was accepted and, after
undergoing training, he was posted to the Immigration Office, Kuala
Lumpur, where he remained until December 1958 when he was
transferred to the Immigration Office at Johor Bahru.
On 5 November 1959, the Secretary to the Public Services
Commission in a letter addressed to the applicant as 'Assistant
Passport Officer on Probation' informed him that, following a
report from the Controller of Immigration concerning his conduct in
the irregular issue of certain passports, disciplinary action was
being taken against him with a view to his dismissal. The applicant
made representation as invited by the said letter and, on 24
December 1959, the applicant was informed that the respondent had
decided that he should not be dismissed but that his appointment on
probation be terminated forthwith by payment of one month's salary
in lieu of notice.
The applicant now moved the court for an order of certiorari to
quash the decision of the respondents on the grounds of error in
law, want of jurisdiction, and failure to observe the principles of
natural justice. (An order of certiorari is an order of the court
directing that something be done; in this case, the court order
applied for was one directing that the decision of the respondents
be overturned).
It was held that:
1. That the Malay Mail advertisement was an invitation to
qualified persons to apply and the resulting applications were
offers.
2. The information conveyed to the applicant was an unqualified
acceptance to join the overseas mission and he so understood
it.
B) Second distinction between offer and invitation to treat is
an offer maybe made orally in writing or by conduct such as example
of an offer made by conduct is where a customer in a supermarket
chooses goods and hands them to the cashier, who then accepts the
customer's offer to buy. Invitation to treat may made by displaying
goods in shop windows, on shelves, advertisement, tender / auction
or a statement of price. Based on the case of:
PHARMACEUTICAL SOCIETY OF GREAT BRITAIN v. BOOTS CASH CHEMIST
LTD[1953] 1 A11 ER 482.
In this case the Defendant was being charged for failing to
comply with one of the Great Britain Laws, i.e. The Pharmacy and
Poisons Act, 1933 which stated that it was illegal to sell
specified poisons without under supervision by registered
pharmacist. The Defendant operated self-service shop where a
customer may select any goods, which were being display in the
shop. When the customer has picked the goods, after that, the
payment was to be made at the cashier's desk. At the cashier's
desk, the operator of the shop can't stop the transaction since the
display of goods as regarded as proposal and when the customer
picked the goods as regarded as acceptance, therefore, the
self-service shop failed to comply the above-said law.
The self-service shop operated according to the above-said law
display of goods only be regarded as invitation to treat and the
customer was the one who made the proposal. Later on, at the
cashier's desk a registered pharmacist supervised the transaction
and was given authority to refuse the contract of sale, if violated
any provisions in the above-said law.
It was held that the Defendant was not made an illegal sale
since display of goods only be regarded as invitation to treat and
the customer was the one who made the proposal. Later on, at the
cashier's desk a registered pharmacist supervised the transaction
and was given authority to refuse the contract of sale, if violated
any provisions in the above-said law.
C) Another is an offer have a termination. There is based on
counter-proposal, by using notice of revocation, lapse of time, by
failure of acceptor to fulfill a condition precedent to acceptance
and by the death of mental disorder of the proposer. For an
invitation to treat there is no circumstances or conditions to
termination a proposal. The termination of proposal is based on
cased:
MACON WORKS AND TRADING SDN BHD v. PHANG HON CHIN &
ANOR[1976] 2 M.L.J. 177.
In this case, the defendants gave an option to A her nominees to
purchase a piece of land. The option was exercisable only after one
LK showed no more interest in the land. The plaintiff's, A's
nominee, exercised the option and claimed specific performance. The
defendant resisted, contending inter alia, that the offer had
already lapsed.
It was held that where no time was fixed, an offer would lapse
after the expiration of a reasonable time (section 47 of the
Contracts Act 1950). What is reasonable is a question of fact
depending on the actual circumstances of each case and the nature
of the business. Failure to accept within a reasonable time implies
rejection by the offeree.
D) Otherwise, an invitation to treat is an action inviting other
parties to make an offer to form a contract and it just a first
step to negotiate, or indication of a person's willingness to
negotiate a contract but an offer is a creates a binding contract,
subject to compliance with the terms of the offer. It refers to the
case:
M & J FROZEN FOOD SDN. BHD & ANOR v. SILAND SDN BHD
& ANOR[1994] 1 M.L.J. 303.
In this case that Siland Sdn. Bhd (the first respondent) was the
registered owner of a piece of land which it charged to the second
appellant, Eu Finance Bhd. Due to a default on the part of the
first respondent, the second appellant applied to the senior
assistant registrar (the SAR) and obtained an order for sale of the
property by public auction. M & J Frozen Food (the first
appellant) was the highest bidder and was pronounced the purchaser
of the property. The first appellant paid a 25% deposit of the
total purchase price as provided under the conditions of sale,
while the balance of purchase money was to be paid into court
within 30 days from the date of sale. However, this was not
done.
It was held that the provisions of the National Land Code 1965
showed that the sale at this juncture (at the fall of hammer) had
only be concluded in the sense that the goods would no longer be
offered for a sale to prospective buyers and the successful bidder
could not be permitted to retract his acceptance. Thereafter, each
party to the contract of sale must perform his part of the
obligation and until then no executed or actual sale had been
concluded. Therefore a reference to a sale being concluded at the
fall of the auctioneer's hammer could only refer to that stage of
the transaction of sale when there was concluded an agreement
between the vendor and the highest bidder, the former to sell and
the latter to purchase the goods.
E) In addition, statement of price is not necessarily an offer
because offer only has a termination on proposal between
invitations to treat; statement of price is necessarily in an
invitation to treat. It referred to the case of:
HARVEY v. FACEY[1893] AC 552.
In the case that the plaintiff telegraphed to the defendant,
'Will you sell us Bumper Hall Pen?' 'Telegraph lowest cash price'.
Defendant telegraphed in reply 'Lowest price for Bumper Hall Pen
$900. The plaintiff then replied 'We agree to buy Bumper Hall Pen
for $900 asked by you. Please send your title deeds. No reply from
the defendant. Plaintiff claimed that there was a contract between
himself and the defendant.
It was held that there was no contract. The second telegram was
not an offer but in the nature of an invitation to treat. The final
message could not be looked upon as an acceptance.
F) Offer involved one party (unilateral) or more parties
(bilateral). Bilateral contract is an agreement in which each of
the parties to the contract make a promise or promise to the
specific person and public at large. On the invitation to treat it
only involve to the one party (unilateral). It means that only one
party, make an offer but it depends to a person to form a contract.
It based on case of:
CARLILL v. CARBOLIC SMOKE BALL CO. LTD[1893] 1 QB 256.
Facts of the case that the defendant made an advertisement in
the newspaper where the defendant willing to pay 100.00 Pounds to
anyone who still suffering influenza after taking the medicine
according to the prescription sold by the defendant. On top that
the defendant has deposited 1000.00 Pounds in the special account
in the Alliance Bank for the above-mentioned purposes. The
plaintiff used the above-said medicine, unfortunately, she still
suffering the influenza. Then, the plaintiff asked for the
compensation that had been promised by the defendant in the
newspaper.
It was held that the plaintiff was entitled for the promise that
amount 100.00 Pounds made by the defendant since the defendant's
advertisement being considered as proposal addressed to public at
large and the plaintiff has accepted the proposal by purchased the
medicine and used the medicine according to prescription. The
defendant advertisement being considered as proposal because in the
advertisement there was an element of willingness where the
defendant has deposited money that amount 1000.00 Pounds in special
account in the Alliance Bank for the above said purposes.
G) The offer must be communicated to the offeree if the offeror
want to revoke his or her proposal before it can be accepted and
the offeror will bind to a legal after the acceptance but
invitation to treat there is does not communicated before the
acceptance and the invitation to treat can revoke anytime without
mention to another party. It based on cased:
BANQUE PARIBAS v. CITIBANK NA[1989] 1 M.L.J. 329, CA.
In this case, a company, Selco Salvage Ltd, wrote a letter dated
14 October 1985, offering to sell to the respondents the salvage
claims in respect of nine vessels. By a letter dated 31 October
1985, Selco offered to sell to the appellants salvage claims in
respects of five vessels which were also part of the nine salvage
claims offered for a sale in their 14 October 1985 letter to the
respondents. The appellants accepted the offer and purchased those
five salvage claims. Subsequently, on 7 November 1985, Selco again
wrote to the respondents offering to sell their salvage claims in
respect of four vessels which were listed in the 14 October 1985
letter. They further stated in their letter that ' this letter will
supersede our previous letter dated 14 October 1985'. The
respondents accepted the offer and purchased the salvage claims
regarding these four vessels. A dispute arose between the
appellants and the respondents as to the ownership in respect of
the five salvage claims and the respondents claimed that on 20
November 1985, they had purchased the five salvage claims without
any notice of the appellant's prior purchase of them from Selco.
The respondents agreed that although they purchased the salvage
claims of four vessels on 7 November 1985, Selco's offer to sell
the balance five salvage claims contained in the 14 October 1985
letter still remained open and available for acceptance by them,
and that they finally accepted the offer on 20 November 1985.
It was held that the 7 November 1985 letter written by Selco to
the respondents contained the vital paragraph namely, 'this letter
will supersede our previous letter dated 14 October 1985'. The only
meaning one can give to this paragraph is that the 14 October
letter had been replaced or substituted by the 7 November letter.
The effect of that is any offer contained in the 14 October letter
which had not been accepted had been withdrawn. Selco had, on 7
November 1985, in clear and unequivocal terms, withdrawn or
cancelled the offer contained in the 14 October letter and
henceforth there was no offer which remained upon and available for
acceptance by the respondents on 20 November 1985 or any other
date. Where the communication of acceptance is made by the acceptor
through a course of transmission such as post, telegraph, telegram,
then the communication of the acceptance is deemed complete as
against the proposer, when it is put into a course of transmission
to him, so as to be out the power of the acceptor.