Business law essay 1500 words


  1. a) Offer: b)   Invitation to treat:                   c)   Offers made to the world at large:

An offered can be distinguished on the basis that one party is expressing an interest to contract with another party on specified terms made with the intention that it is to become binding once the other party accepts the offer. (Treitel, 2003:8).  In determining whether an offer has been made, the courts will look to all the circumstances to determine whether an offer was made and accepted by the party to which it was made.  (Furmston, 2007:39).  The most important case of Carlill v Carbolic Smoke Ball [1892] 2 QB 484 set out the important principles to determine what constitutes an offer.  The defendants had made a claim in an advertisement that the ‘Carbolic Smoke Ball’ could prevent influenza and guaranteed that anyone who use the ball and contracted influenza would be compensated with £100.  The defendants showed their sincerity by lodging £1000 with their bankers, but when the plaintiff contracted influenza after using the carbolic smoke ball and subsequently sought to claim the compensation as advertised.

The defendants argued that the advertisement was only a sales ‘puff’ that was not to be taken as an offer intended to create a binding legal obligation and additionally if in the event it was an offer, the plaintiff failed to notify the defendants of her intention to accept the offer.  The Court of Appeal rejected the defendant’s argument and stated that the advertisement was an offer made to the world, and those that came forward and performed the purchase of the product entered into a legally binding contract with the terms as set out in the advertisement.  The important aspect of the judgement was the fact that the plaintiff had bought the carbolic smoke ball on the basis of seeing the advertisement which induced the contract and secondly the defendants had lodged £1000 into a separate bank account which showed their intention for the advertisement to be binding. (Fafinski and Finch, 2010: 4).

Distinguishing an offer from an invitation to treat is core to evaluating whether a contractual obligation exists, the courts will adopt an objective test as to the offeror’s intention. (Moran v University College Salford (No 2) [1994] ELR 187).  An offer carries with it the capability of being converted into a legally binding contract, which must consist of a definite promise to be bound by specified terms which are accepted by those to whom the offer is made. (OT Africa Line Ltd v Vickers plc [1996] 1 Lloyd’s Rep 700).  An invitation to treat, on the other hand is merely the expression of a statement containing a willingness to receive offers which does not create the intention of a legally binding agreement. (Fafinski and Finch, 2010: 4).  It is considered the part of an agreement that is at the preliminary stages prior to an actual offer being made.  Furmston (2007: 40 – 41) suggests there are three circumstances in which an invitation can manifest itself at law.

(1)   Auctions: this is where the auctioneer is willing to receive offers but only once the highest bid is accepted by the auctioneer will the invitation to treat be converted into an accepted offer capable of forming a legally binding agreement. (Payne v Cave (1789) 3 Term Rep 148).

(2)   Advertisements: this can arise where goods are advertised at a certain price, for example magazines/newspapers.  It was held in Partridge v Critten [1968] 1 WLR 1204 that the placing of advertisement is merely an invitation to treat and did not constitute an actual offer, but rather an expression of a willingness to receive offers which could be rejected or accepted by the shopkeeper.  It is important to note that some advertisements may constitute an offer when a party is seeking to make a unilateral offer like Carlill  discussed above, which consisted of a promise in return for an act. (Fafinski and Finch, 2010: 6).  The defining feature is the promise of an act, in general advertisements they just display the price with no promise of an act, if they go beyond just pricing to promising some act then it may constitute an offer.

(3)   Self-service and window displays: Similarly where shops just display goods at a price it constitutes an invitation to treat which can ultimately be rejected by the shopkeeper at the till. (Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd [1953] 1 All ER 482).  Similarly anything displayed in shop windows can be considered an invitation to treat which can be rejected or accepted at the shop counter.  (Fisher v Bell [1961] 1 QB 394).

The central feature of an invitation to treat is the willingness to accept offers which can be accepted or rejected; they do not form the basis of a contract but may lead to a formal offer.  An offer is a firm commitment to enter into a legally binding agreement where one party agrees to do something in exchange for something else by the opposite party.  Similar to invitation to treat, offers made to the world at large have a distinction between offers and invitations to treat.  Carlill above is key to determining the liability of offers made to the world at large, in that if all the ingredients set out in Carlill can be identified then it will constitute an offer at law.  Therefore for an offer made to the world at large to be considered an offer capable of leading to a legally binding agreement, the plaintiff would need to prove that there is some condition or action required (in the case of Carlill it was the purchase of the smoke ball) to be taken by the plaintiff on the faith of that offer made by the defendant.  The offer made must be more than merely quoting a price, it must require some condition/action which is performed by the section of community who come forward and complete that action.  In Carlill it was the purchase of the smoke ball, the defendants placing the money in the bank and the plaintiff relying on the good faith of the advertisement.



From the facts it is possible to identify that Games Plc have made a general advertisement to the world at large which sets out an offer to sell games at ‘giveaway prices’ and a special offer for the first ten customers who respond to the advert with a cheque for £100. Similar to Carlill discussed above Games Plc have made an advertisement containing an offer which requires the customer to perform the act of sending a cheque for £100 in exchange for the portable game limited to the first ten customers.  There is a class of people identifiable which the offer has been made to, the first ten customers, there is reliance upon the offer when the ten people send the cheque in the post, therefore an objective observation would seem to indicate that Games Plc intended to be bound for the first ten customers at the set price of £100.  The advertisement does not appear to be an invitation to treat because, on the basis of the case law there is a definite offer of a portable game in exchange of £100 for the first ten customers which can be converted in to a legally binding agreement when the customer sends the cheque and Games Plc receives it as being one of the first ten responses.  (OT Africa Line Ltd v Vickers plc [1996] 1 Lloyd’s Rep 700). There is no expression of a willingness by Games Plc to receive offers but rather an actual offer is being made at a set price requiring the customer to perform the act of responding to the advertisement in good faith. (Harris v Nickerson (1873) LR 8 QB 286).

If the advertisement was merely a price list of portable games then it may be considered more an invitation to treat than an actual offer which is just an inducement for customers to make an offer.  (Spencer v Harding (1870) LR 5 CP 561).  The offer to provide a portable game for £100 for the first ten customers would suggest more than a mere price list and the fact that the customer has to rely on the advertisement by the sending a cheque in the post, shows that this is more than invitation to treat. (Partridge v Critten [1968] 1 WLR 1204).  Another important case relevant to the facts presented by Thomas is Gibson v Manchester Greater City Council [1979] 1 All ER 972.  The defendants had issued a letter to the plaintiff seeking that they ‘maybe’ interested in selling a council house at a set price to the plaintiff.  The fact that the Council was only ‘maybe’ interested indicated that the letter was only an invitation to treat.  In applying Gibson to Thomas’s case there is a fundamental difference, that being there is a firm offer made to the first ten customers which can relied upon in good faith and acceptance can be communicated by performing the act.

In summary conclusion Thomas would be likely to succeed at law in action against Games Plc for the portable game at £100 because:

(a)    There is a definite offer.

(b)   There is an identifiable class of people to which the offer is made, that being the first ten customers.

(c)    There is reliance on the offer by the customer.

(d)   There is communication of the acceptance of the offer by the customer completing the act of sending the cheque in the post and it arriving within the first ten customers.

(e)    There does not appear to be any communication of the revocation of the offer to Thomas and his acceptance of the offer would have been when he posted the cheque. (Routledge Grant (1828) 4 Bing 653).














Carlill v Carbolic Smoke Ball [1892] 2 QB 484.

Fafinski, S. And Finch, E., (2010) Contract Law, Pearson Education Limited, London.

Fisher v Bell [1961] 1 QB 394.

Furmston, M., (2007) Cheshire, Fifoot and Furmstone’s Law of Contract, Oxford University Press, Oxford.

Harris v Nickerson (1873) LR 8 QB 286.

Moran v University College Salford (No 2) [1994] ELR 187.

OT Africa Line Ltd v Vickers plc [1996] 1 Lloyd’s Rep 700.

Partridge v Critten [1968] 1 WLR 1204   .

Payne v Cave (1789) 3 Term Rep 148.

Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd [1953] 1 All ER 482.

Routledge Grant (1828) 4 Bing 653.

Spencer v Harding (1870) LR 5 CP 561.

Treitel, G., (2003) The Law of Contract, Sweet and Maxwell, London.