Offer vs Invitation to Treat in Contract Formation
Distinguishing an offer from an invitation to treat is a foundational contract law skill tested on the bar exam and in 1L courses. An offer creates the power of acceptance; an invitation to treat merely solicits offers. Mastering this distinction prevents errors in contract formation analysis.
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5 CardsWhat makes an offer definite?
How is ITT distinguished at auction?
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What is the main difference between an offer and an invitation to treat?
An offer is a definite proposal that, once accepted, creates a binding contract. An invitation to treat merely invites the other party to make an offer.
- Offers confer power of acceptance
- ITTs do not—no contract forms on mere assent
Why do courts treat advertisements as invitations to treat?
Advertisers can't bind themselves to unlimited buyers without knowing demand. Treating ads as ITTs lets sellers screen responses. Exception: ads with specific terms and limited addressees may be offers (Carlill v Carbolic Smoke Ball Co).
How does an offer differ from a counter-offer?
A counter-offer rejects the original offer and proposes new terms, extinguishing the original. The original offeror then becomes the new offeree and may accept or reject the counter-offer.