Offer vs. Invitation to Offer: What's the Difference?
Edited by Aimie Carlson || By Harlon Moss || Published on February 8, 2024
An offer is a definite proposal to enter into a contract, while an invitation to offer is a preliminary communication indicating a willingness to negotiate.
Key Differences
An offer is a clear proposal made by one party to another, indicating a readiness to enter into an agreement under certain terms. An invitation to offer (also known as an invitation to treat) is more of a preliminary step, signaling a willingness to discuss the terms of a potential agreement.
In legal terms, an offer, when accepted, results in a binding contract. On the other hand, an invitation to offer is merely a call to others to submit proposals and does not lead to a contract when responded to.
Examples of an offer include a bid at an auction or a proposal to sell goods at a specified price. An invitation to offer would be the display of goods for sale or an advertisement.
The distinction is crucial in determining the point at which a contract is formed. With an offer, acceptance finalizes the contract. In the case of an invitation to offer, it's only an invitation for others to make offers, and no contract is formed until an offer is made in response to the invitation and accepted.
An offer is a final step towards forming a contract, whereas an invitation to offer is more about initiating negotiations or indicating a readiness to negotiate.
ADVERTISEMENT
Comparison Chart
Definition
A definitive proposal to enter a contract
A preliminary communication to negotiate
Legal Implication
Results in a contract upon acceptance
Does not result in a contract upon response
Examples
Bidding in an auction, sales proposal
Displaying goods, advertising
Contract Formation
Acceptance of offer creates a contract
Invitation for others to make offers
Nature
A final step towards agreement
An initial step to invite negotiations
ADVERTISEMENT
Offer and Invitation to Offer Definitions
Offer
A definitive proposal indicating readiness to enter into an agreement.
He made an offer to buy the house for $500,000.
Invitation to Offer
A step to initiate potential negotiations.
The business listing was an invitation to offer from potential buyers.
Offer
Can be revoked before acceptance.
The company withdrew its offer before it was accepted.
Invitation to Offer
Indicates willingness to negotiate a deal.
The store's catalog was an invitation to offer for various products.
Offer
Specific terms proposed for a contract.
The vendor made an offer for a bulk purchase discount.
Invitation to Offer
A call to others to make proposals.
Displaying goods in a shop window is an invitation to offer.
Offer
Legally binding when accepted.
Her offer of employment was accepted by the candidate.
Invitation to Offer
Not legally binding upon response.
The job advertisement was merely an invitation to offer.
Offer
Indicates a clear intention to be bound by terms.
They made a formal offer for the merger of the two companies.
Invitation to Offer
Indicative of readiness to consider offers.
The auction house's catalog served as an invitation to offer.
Offer
To present for acceptance or rejection; proffer
Offered me a drink.
Offer
To put forward for consideration; propose
Offer an opinion.
FAQs
What constitutes a legal offer?
A definitive proposal with specific terms that, when accepted, forms a contract.
What is an invitation to offer?
A communication indicating willingness to enter into negotiations, but not a binding offer.
Is an advertisement an offer or an invitation to offer?
Typically, it's an invitation to offer.
Can an offer be withdrawn?
Yes, an offer can be withdrawn before it is accepted.
Does a catalog constitute an offer?
No, it’s generally considered an invitation to offer.
How specific must an offer be?
It must be clear and specific enough to allow for a contract upon acceptance.
Is a price quote an offer or an invitation to offer?
Usually, it's an invitation to offer.
Is displaying goods for sale an offer?
No, it's an invitation to offer, inviting customers to make a purchase offer.
What happens when an offer is accepted?
Acceptance results in a legally binding contract.
Can an invitation to offer be declined?
Yes, since it’s not a binding offer, it can be declined or not responded to.
Can terms of an offer be negotiated?
Yes, until it is accepted, the offer can be negotiated.
What is the legal status of an invitation to offer?
It's a precursor to a potential offer but has no legal status of an offer itself.
What distinguishes an offer from an invitation to offer?
An offer is a final proposal, whereas an invitation to offer is a call for proposals.
How is an offer terminated?
By acceptance, revocation, rejection, or expiration.
Are auction bids considered offers?
Yes, each bid in an auction is considered a legal offer.
Is a tender submission an offer?
Yes, each tender submission is considered a legal offer.
What role does intention play in an offer?
There must be a clear intention to be legally bound by the terms of the offer.
Is responding to an invitation to offer binding?
No, it simply leads to potential offers that can be accepted or declined.
Does an invitation to offer need to be formal?
No, it can be informal, like an advertisement or catalog.
Can a request for information be an offer?
Generally, it's considered an invitation to offer.
About Author
Written by
Harlon MossHarlon is a seasoned quality moderator and accomplished content writer for Difference Wiki. An alumnus of the prestigious University of California, he earned his degree in Computer Science. Leveraging his academic background, Harlon brings a meticulous and informed perspective to his work, ensuring content accuracy and excellence.
Edited by
Aimie CarlsonAimie Carlson, holding a master's degree in English literature, is a fervent English language enthusiast. She lends her writing talents to Difference Wiki, a prominent website that specializes in comparisons, offering readers insightful analyses that both captivate and inform.
