What is the difference between an offer and an invitation to offer?

Finance ManagementBanking & FinanceGrowth & Empowerment

Offer and invitation to offer are two different terms having separate meanings. An offer is a proposal and invitation of offer is to invite some body to make a proposal. Offer leads to enter into contract while invitation of offer leads to offer.

Now let us understand the meaning of both separately

Offer

It is the expression of person to show their willingness to another to do something or not to do something. Offer must be certain, complete and define in their respects. Offer is legally bind and acceptance of offer results in valid contract.

Types of offers

  • General offer
  • Cross offer
  • Counter offer
  • Standing offer
  • Specific offer

Invitation to offer

Invitation to offer is step before offer. In this person includes another and make a offer to him/her. If the second person responds to invitation of offer made by first person then it leads to offer. In this terms and conditions are made clear. Acceptance of invitation of offer does not lead to contract, it leads to Offer only.

Examples

  • Government tender
  • Recruitment advertisement
  • Railway timetable
  • Restaurant menu card

The major differences between an offer and an invitation to offer are as follows −

OfferInvitation to offer
It is an expression of interest by a person to another person to do something or not for an approval.It is an expression of interest by one person to another and to invite the other person to an offer.
It is stated in section 2 (a) of Indian Contract Act, 1872.not defined in Indian Contract Act, 1872.
enters into a contract.After negotiations, a contract is created.
essential to make an agreement.not essential to make an agreement.
If offer is accepted, then it becomes an agreement.If party/person responds to an invitation, then it becomes an offer.

Conclusion

In offer there is an intention to get into contract and making things whereas in invitation of offer leads to offer made with purpose of negotiating the terms and conditions.

raja
Updated on 18-May-2022 10:08:40

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