An offer may be defined as an expression of willingness to enter into a contract on a stated terms. Thus, the statement I will sell you 5,000 shares for £1,000 is an offer.
Distinction from ‘invitation to treat’
Invitation to treat is an expression of willingness to enter into negotiations on stated terms, for example, if I wish to sell my car, I may enquire if you are interested in buying it. This is clearly not an offer. The distinction between an offer and an invitation to treat is an important one, but is not always easy to draw. Even where the parties appear to have reached agreement on the terms on which they are prepared to contract, the courts may decide that the language they have used is more appropriate to an invitation to treat than an offer.
This was the view taken in Gibson v Manchester City Council (1979). Mr. Gibson was a tenant of a house owned by Manchester City Council. The Council, which was at the time under the control of Conservative party members, decided that it wished to give its tenants the opportunity to purchase the houses which they were renting. Mr Gibson wished to take advantage of this opportunity and started negotiations with the Council. He received a letter which indicated a price, and which stated ‘The Corporation may be prepared to sell the house to you’ at that price. It also instructed Mr. Gibson, if he wished to make a formal application, to complete a form and return it. This Mr. Gibson did. At this point, local elections took place, and control of the Council changed from the Conservative Party to the Labour Party. The new Labour Council immediately reversed the policy of the sale of council houses, and refused to proceed with the sale to Mr. Gibson. At first instance and in the Court of Appeal, it was held that there was a binding contract, and that Mr Gibson could therefore enforce the sale. Lord Denning argued that it was not necessary to analyse the transaction in terms of offer and acceptance....