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:
| Invitation to Offer | Offer | |
| Definition | Act that invites others to make an offer or propose terms | Parties are obligated to fulfil the terms of the offer |
| Nature | Preliminary step in the negotiation process | Actual proposal for entering into a contract |
| Legally Binding | Does not create a legally binding obligation | Creates a power of acceptance in the offeree |
| Obligation | Party extending the invitation is not obligated to accept any offer | Tenders, advertisements, price catalogues |
| Examples | Tenders, advertisements, price catalogs | verbal/written proposals to sell a product |
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.
Note: Access complete CLAT Legal Reasoning notes here.
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