Almost every Contract paper opens with a formation problem, and every formation problem opens here. Before you can ask whether an acceptance was effective, communicated, or saved by the postal rule, you must identify which statement in the story was the offer. Pick the wrong one and the whole answer goes with it: when the contract formed, who the offeror was, whose terms govern and who could still change their mind all follow from that choice.
The distinction, and the test that decides it
An offer is a clear and unambiguous statement of the terms on which the offeror is willing to contract, intended to bind them the moment the offeree accepts. Its defining feature is that it is capable of acceptance: nothing further is needed from the offeror. An invitation to treat is its opposite: a statement made with no intention of being bound on acceptance, inviting the other party to make the offer, or simply opening negotiations.
The line between them is not drawn by what the maker privately meant. Agreement is judged objectively: the question is how a reasonable person in the other party's position would have understood the words and conduct (Smith v Hughes (1871) LR 6 QB 597 Persuasive (Eng)). The label a party attaches to their own statement therefore counts for little; what counts is whether the words commit its maker without more.
A statement that leaves its maker free to withdraw is not an offer, however encouraging. In Hoare v Allied Irish Banks plc [2014] IEHC 221 Binding (IE) a bank told defaulting customers it would show some forbearance. Charleton J held this was not a definite offer but an intimation that the bank would do its best — capable, perhaps, of grounding an estoppel, but not a contract.
Advertisements
An advertisement of goods for sale is presumed an invitation to treat. In Partridge v Crittenden [1968] 2 All ER 421 Persuasive (Eng) an advertisement listing bramblefinches at 25s each was held not to be an offer to sell, so the advertiser had not offered for sale a protected wild bird. The reasoning is commercial: an advertiser with limited stock cannot be taken to have promised to supply every reader who responds.
Shop displays, self-service and price notices
Goods put out for sale are in the same position. In Fisher v Bell [1961] 1 QB 394 Persuasive (Eng) a flick-knife displayed and priced in a shop window was an invitation to treat, not an offer to sell — which is why the shopkeeper escaped conviction for offering an offensive weapon. Pharmaceutical Society of GB v Boots [1953] 1 QB 401 Persuasive (Eng) applied the same rule to the then-novel self-service shop: shelved goods are an invitation to treat, the customer offers at the till, and the retailer may accept or refuse.
Irish law has its own authority on priced displays. In Minister for Industry and Commerce v Pim Bros [1966] IR 154 Binding (IE) a shop-window notice giving a cash price and credit terms was a statement of price, not an "offer for sale" in the strict sense the penal statute required. Price lists and priced circulars fall the same way: they state terms on which the seller will consider selling, not terms he has committed to.
Tenders
An invitation to tender is ordinarily an invitation to treat too; the tender submitted in response is the offer, which the inviting party may accept or reject. The rule is not absolute. Smart Telecom plc v RTÉ [2007] 1 IR 733 (HC) Binding (IE) proceeds on the basis that a stated promise to award the contract to (say) the highest conforming bid may itself be a unilateral offer, accepted by submission of a conforming bid. The call for bids and the promise about how bids will be handled can differ in character within one document.
Unilateral offers to the world
The category that unsettles every presumption above is the unilateral offer. In a bilateral contract a promise is exchanged for a promise; in a unilateral contract a promise is exchanged for an act — I will pay if you do X. Only the promisor is bound in advance; the other party accepts, and earns the reward, by performing.
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 Persuasive (Eng) is the foundational case. The company advertised that it would pay £100 to any user of its smoke ball who caught influenza after using it as directed, adding that it had deposited £1,000 with a bank to show its sincerity. That was a unilateral offer to the world at large: performance of the stipulated act was the acceptance, notification was waived by the nature of the promise, and the bank deposit negatived the defence of mere puff. What did the work was not the medium but terms definite and self-limiting enough to show, objectively, an intention to be bound.
Irish courts reason identically. In Billings v Arnott & Co (1946) 80 ILTR 50 Binding (IE) an employer's unconditional notice offering half-pay to employees who enlisted was a unilateral offer, accepted when the plaintiff joined up. Between them the two cases make the point that matters: the advertisement and display rules are presumptions about ordinary commercial language, and definite words of commitment displace them. The exception is the objective test reasserting itself.
Why the distinction decides the case
It fixes who is the offeror, and so whose terms govern: if the shelf is an invitation to treat, the customer offers and the shop accepts on its own terms. It fixes the moment of formation, and with it who carries the risk of a mispriced tag or exhausted stock — which is why a shop is not bound to sell at a mistaken price to everyone who purports to accept.
Above all it fixes who may still walk away. An invitation to treat can simply be dropped: there is no offer to revoke and nothing that must be communicated. Once a true offer is on the table the offeror is exposed to the revocation rules instead: withdrawal is effective only when communicated, and a bare promise to hold an offer open binds nobody unless the offeree gave consideration for it. The real question is rarely whether this was an offer in the abstract, but when, if ever, this party lost the freedom to change their mind
The full, exam-ready version
Formation: offer, acceptance, the postal rule, revocation and certainty — with the full case table, worked problems and a model-answer skeleton.
see the full Contract course →Frequently asked questions
Is an advertisement an offer or an invitation to treat?
Usually an invitation to treat (Partridge v Crittenden): an advertiser with limited stock is not taken to promise supply to every reader. But an advert is an offer where its wording objectively commits the advertiser to be bound — as in Carlill v Carbolic Smoke Ball Co, where a definite promise of £100 to any user who still caught influenza, backed by a £1,000 bank deposit, was a unilateral offer to the world.
Are goods in a shop window an offer?
No. A display is an invitation to treat; the customer makes the offer at the till, which the shop can accept or refuse (Fisher v Bell; Boots).
Why does offer vs invitation to treat matter?
Because only an offer can be accepted to form a contract. The distinction fixes the exact moment a contract is made and who is free to walk away before then.
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