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differences between treats and proposal

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differences between treats and proposal

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  • April 20, 2014
  • 2595 Words
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  • Course: Manegement
  • Professor: Amina
  • School: Taylors' university
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Differrences between Invitation to treat and Proposal
A proposal is made when a person is willing to enter into a legally binding contract. However, an invitation to treat is merely a supply of information (eg. an advertisement) to tempt a person into making a proposal. 

It is important to differentiate a proposal which will consequently lead to binding obligations on acceptance. On the other hand an "invitation to treat" is a mere suggestion of a readiness to deal or trade. In essence, an invitation to treat is a preliminary approach to others inviting them to make a proposal which can then be accepted or rejected. For example, if A said: "I want to sell you my Xbox 360 but I will not let it go for less than $300", that is an invitation to treat. Even if B wanted to buy A's Xbox for $300 he cannot be obliged to sell it to you for there is no official proposal in which to accept or reject. However if A said "I will sell you my Xbox 360 for $300", that would constitute as a proposal. 

The invitation does not constitute a proposal, it is an invitation to engage in negotiations to form a contract, or an proposal to receive an proposal from another party (Willmott et al., 2005, p. 37). In Partridge v Crittenden, case law has established that advertisements and in Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd auctions and displays of goods for sale are invitations to treat rather than proposals. However, in other types of transactions it can be hard to differentiate between the two. This is where the ‘objective test’ applies: it must be determined how a reasonable person would regard the situation. An invitation to treat may sometimes appear to be a proposal and the difference can sometimes be difficult to determine. The distinction is important because if one accepts an proposal, they have created a binding contract however if one accepts an invitation to treat then they will be making an proposal. The main difference between an...
Differrences between Invitation to treat and Proposal
A proposal is made when a person is willing to enter into a legally binding
contract. However, an invitation to treat is merely a supply of information (eg. an
advertisement) to tempt a person into making a proposal.
It is important to differentiate a proposal which will consequently lead to binding
obligations on acceptance. On the other hand an "invitation to treat" is a mere suggestion
of a readiness to deal or trade. In essence, an invitation to treat is a preliminary approach
to others inviting them to make a proposal which can then be accepted or rejected. For
example, if A said: "I want to sell you my Xbox 360 but I will not let it go for less than
$300", that is an invitation to treat. Even if B wanted to buy A's Xbox for $300 he cannot
be obliged to sell it to you for there is no official proposal in which to accept or reject.
However if A said "I will sell you my Xbox 360 for $300", that would constitute as a
proposal.
The invitation does not constitute a proposal, it is an invitation to engage in negotiations
to form a contract, or an proposal to receive an proposal from another party (Willmott et
al., 2005, p. 37). In Partridge v Crittenden, case law has established that advertisements
and in Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern)
Ltd auctions and displays of goods for sale are invitations to treat rather than proposals.
However, in other types of transactions it can be hard to differentiate between the two.
This is where the ‘objective test’ applies: it must be determined how a reasonable person
would regard the situation. An invitation to treat may sometimes appear to be a proposal
and the difference can sometimes be difficult to determine. The distinction is important
because if one accepts an proposal, they have created a binding contract however if one
accepts an invitation to treat then they will be making an proposal. The main difference
between an proposal and an invitation to treat is where an invitation to treat lacks the
intention to be legally bound.
The difference between an proposal and an invitation to treat lies solely in the
promisor's intentions. An proposal is a proposal in which all bargaining is resolved and