Model Answer
0 min readIntroduction
In the realm of Contract Law, a fundamental element for the formation of a valid contract is a clear ‘offer’ and its subsequent ‘acceptance’. The display of goods with price tags in shops frequently raises the question of whether such display constitutes an offer to sell, or merely an invitation to offer. This distinction is crucial as only an offer can be accepted to form a binding contract. The legal position, established through various judicial pronouncements, clarifies that such displays are generally not considered offers, but rather invitations to receive offers from potential buyers.
Offer vs. Invitation to Offer
An offer is a definite promise to be bound on specified terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed. It demonstrates a willingness to enter into a contract. Conversely, an invitation to offer is an expression of willingness to negotiate. It is a step towards initiating negotiations, but does not demonstrate a firm intention to be bound.
Display of Goods with Price Tags: An Invitation to Offer
Generally, the display of goods in a shop window or inside the shop with price tags is considered an invitation to offer, not an offer itself. This is because the shopkeeper does not intend to be bound by the display to sell to anyone who walks in and picks up the item. The shopkeeper retains the right to refuse to sell, even if the price tag is displayed. The customer, by selecting the goods and presenting them at the counter, makes the offer to buy.
Key Considerations
- Intention to Create Legal Relations: The shopkeeper’s intention is to invite customers to make an offer, not to be immediately bound by a contract.
- Quantity & Stock: Displaying goods doesn’t guarantee the availability of unlimited stock. The shopkeeper may not have enough items to meet all demands.
- Negotiation: The customer may attempt to negotiate the price, indicating it’s not a fixed offer.
Decided Cases
Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953] 1 QB 401
This landmark case established that the display of goods on shelves with price tags is an invitation to offer. The court held that a customer makes an offer when presenting the goods to the cashier, and the cashier accepts the offer by processing the payment. Self-service shops were considered, and the court reasoned that the shopkeeper had the right to refuse to sell even after the customer selected the item.
Lefkowitz v. Great Minneapolis Surplus Store (1957) 245 Minn. 188, 73 N.W.2d 689
This US case provides a contrasting view, but is often used to illustrate the importance of clear and definite offers. The store advertised fur coats at a specific price, stating “First Come, First Served.” The court held this to be a clear, definite offer, and the store was bound to sell the coats to the first customers who responded. However, this case is an exception and doesn’t alter the general rule regarding displays with price tags.
Bowerman v ABTA (The Association of British Travel Agents) [1996] 1 WLR 1130
This case highlighted the importance of considering the wording of advertisements. An advertisement offering holidays was held to be an invitation to treat, but the court emphasized that if the advertisement contained a clear promise, it could be considered an offer.
Table Summarizing the Distinction
| Feature | Offer | Invitation to Offer |
|---|---|---|
| Definition | Definite promise to be bound | Expression of willingness to negotiate |
| Intention | To create legal relations immediately | To invite offers |
| Acceptance | Requires acceptance to form a contract | Leads to an offer from the other party |
| Example | “I offer to sell my car to you for ₹5 lakhs” | Display of goods with price tags in a shop |
Conclusion
In conclusion, the display of goods with price tags is generally considered an invitation to offer, not an offer itself, as established by the <i>Pharmaceutical Society of Great Britain v Boots Cash Chemists</i> case. The customer makes the offer when presenting the goods, and the shopkeeper has the right to accept or reject it. While exceptions exist, like the <i>Lefkowitz</i> case with its specific “first come, first served” wording, the general principle remains that displays are invitations to negotiate, allowing retailers flexibility in their sales process.
Answer Length
This is a comprehensive model answer for learning purposes and may exceed the word limit. In the exam, always adhere to the prescribed word count.