Invitations to Treat

   An invitation to treat is a 'mere declaration of willingness to enter into negotiations', it does not represent an 'offer' therefore does not amount to the creation of a binding contract. We will typically be faced with invitations to treat in the negotiation stage of contract development, as often such invitations are a prerequisite to a formalised contract. The reason that invitations to treat do not give rise to contracts is simply due to the fact that there is no intent to establish a legal relationship. Often we will be required to identify where the negotiations process terminates and where a definitive offer is made, the most effective way to do this is to examine the correspondence between the parties.

The best exemplar of case law for this is Gibson v Manchester City Council (1979). Gibson had been invited to make a 'formal application' to purchase his council house after the administration had changed over and adopted a policy of privatisation. The claimant, Gibson, had received a form stipulating that the council 'may be prepared to sell' and requesting that he fill out a form if he wished to apply to buy the house. He did so and believed that he had accepted the council's 'offer'. However, the Labour party came back to power and ceased the selling of council houses before he was able to buy his own. Gibson brought a claim against the council, asserting that a binding contract had been created and that their refusal to sell would amount to a breach.

It was held that the language used by the council, specifically that they 'may be prepared to sell' was not clear enough to constitute an offer. There was also no indication that they intended to be bound to the agreement legally due to the ambiguity in language. Subsequently, the House of Lords found that there was no offer in the first place- meaning that there was nothing for the claimant to accept to give rise to a binding contract. If the council had responded accepting Gibson's 'formal application' then it could be the case that there was indeed a contract. More on this case can be found here: http://www.lawschoolcasebriefs.net/2012/12/gibson-v-manchester-city-council-case.html.