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Is an invitation to treat an offer? Discuss? Essay

Section 2(a), Contracts Act 1950 provides that ‘when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to the act or abstinence, he is said to make a proposal’.

Case: M N Guha Majumder v R E Donough [1974] 2 MLJ 114
Facts: Property owned by the defendant was advertised for sale, and written offers to purchase were invited. The plaintiff viewed the property on two occasions. During the interval between the two occasions the plaintiff was in communication with the defendant’s agent, and it was alleged that the defendant had accepted the plaintiff’s offer to purchase the property for RM70,000. There had been on the occasion of the second visit to the property some discussion on the mode of payment. There was also no clear agreement on the sale of orchid plants which the defendant wished to sell separately, although the matter was discussed between the parties. The defendant denied that he had decided to go on with the sale. The defendant was anxious, however, to effect a quick sale as he was desirous of leaving Kuching permanently for Johor bharu.

Issue: Whether there was a contract inexistence between the plaintiff and the defendant at the material time.

Held: 1. The law does not impute an intention to enter  into such a legal relationship as that of vendor and purchaser where the circumstances and the conduct of the parties negative any intention of the kind. 2. The evidence indicated that the parties did not intend to be immediately bound. They had not the necessary animus contrahendi (means intention to contract). What passed was only a negotiation from beginning to end.

Whether an advertisement is an offer or an invitation to treat depends on the intention of the parties in each case. The courts have held that advertisements of bilateral contracts are not offers whereas advertisements of unilateral contracts are construed to be offers.

In the case of Majumder v Attorney-General of Sarawak, the Federal Court held that an advertisement in the newspaper for the post of a doctor was an invitation to treat. When an auctioneer invites bids, he is merely making an ‘invitation to treat’, and when a bidder makes a bid, he is making an offer. The contract, i.e. the sale, is only made when the auctioneer announces its completion by the fall of the hammer. Similarly, a display of goods in a shop is an invitation to treat. An offer to buy is made when the customer puts the articles in a basket provided by the shop or takes the item off the shelf. The contract is only made at the cashier’s desk when the customer pays for the items.

However, if it is clear in the circumstances that a party intends their words or conduct to constitute an offer, then the courts will be prepare to construe it as such. For example, in Carlill v Carbolic Smoke Ball Co. Ltd [1893] 1 QB 256, the advertisement of a unilateral contract was held to be an offer. Case: Carlill v Carbolic Smoke Ball Co. Ltd [1893] 1 QB 256

Facts: Carbolic Smoke Ball Co. Ltd. Advertised that they would offer £1,000 to anyone who still succumbed to influenza after using a certain remedy for a fixed period. The plaintiff duly used it but, nevertheless, contracted influenza. The plaintiff then sued for the money.

Held: The plaintiff was entitled to the £1,000 as she had accepted the offer made to the world at large.

To summarize, an invitation to treat is not an offer, but rather is an offer to consider offers. Instances which are generally regarded as invitations to treat include:
-Advertisement of tenders;
-Price lists; and
-Goods displayed in shop windows and shelves.

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