What is offer and acceptance?
The traditional view of the law in determining whether a contract has been legally created is to establish the creation of offer and acceptance.
One person makes an offer to the other person and then they accept or decline this offer.
Determining whether an offer to create a contract has been made is not quite as straight forward as it sounds. Difficulty arises where advertisements are concerned and also in situations where someone offers a reward for usually the return of a lost item or pet for example.
The ‘offer’ of a contract
One of the main concepts in establishing the offer of a contract is to distinguish the offer from a part of the negotiation process.
Whether there has been an offer will be established by the communication of the parties, and whether there is an offer or an invitation to treat.
What is an ‘invitation to treat’?
An offer is distinguished from an invitation to treat by the intention to be bound.
When a person makes an offer to form a contract they will usually have every intention to be bound by that offer if the other party accepts.
If a person advertises an invitation to treat then their only intention is to begin the negotiation process. This is most common in relation to shop keepers. Where they place an advertisement in their shop window they want to maintain the ability to negotiate on price/quantity etc if need be.
By a person using the word ‘offer’ in their negotiations, this does by no means mean that an offer has been made. It is not determinative. It will depend on all the other rules regarding offers.
Are advertisements offers or invitations to treat?
The general rule is that advertisements are not offers of contract. There is no general intention for the person advertising to be bound by their advertisement but more like they are opening the flood gates of negotiation.
There is an exception to this rule, and that is the kind of advertisements that offer a reward, Also known as a unilateral contract. (Created when only one person has any duty to perform in the contract).
Automatic vending machines, such as the ones you see in everyday venues, offering chocolate, crisps, coffee, tea etc, normally make offers. It is clear that the owners of the machine intend to be bound by the terms they present the consumer with. If a customer inserts money then it is obvious that their intention is to provide the good selected.