Invitation to Offer v. Offer

Invitation to Offer

An invitation to offer is an act that invites others to make an offer or propose terms. It is not an actual offer itself, but rather a preliminary step in the negotiation process. 

The party extending the invitation is seeking offers from others, and they have the freedom to accept or reject any offer that may be made. The key point to remember is that an invitation to offer does not create a legally binding obligation.

Example: Tenders

A common example of an invitation to offer is the process of tenders. When a company or government entity invites suppliers or contractors to submit their bids or proposals, it is an invitation to offer. 

The tenderer is seeking offers from interested parties, but they are not obligated to accept any specific offer. The tenderer has the discretion to evaluate and choose the most favourable offer.

Offer

An offer, on the other hand, is a definite proposal made by one party to another, indicating a willingness to enter into a legally binding contract. It must contain specific terms and conditions that, if accepted, would result in a contract. 

An offer creates a power of acceptance in the offeree (the person receiving the offer) and sets the stage for the formation of a contract.

Example: Buying a Product

Seller quoting a price to a potential buyer, an individual offering to perform a service for a specific fee.

By accepting the offer, such as by taking the item to the counter and offering to pay, a legally binding contract is formed, and both parties are obligated to fulfil their respective obligations.

Here’s a table summarizing the differences between an Invitation to Offer and an Offer:

Summary

In summary, an invitation to offer is a preliminary step in the negotiation process, where one party invites others to make offers. It does not create a binding obligation. An offer, on the other hand, is a definite proposal made by one party to another, expressing a willingness to enter into a legally binding contract.