As it is known under the English Law, formation of a contract is initiated with a proposal or offer. The term proposal in Indian Contract law is defined under Section 2(a) of the Indian Contract Act, 1872.
When one person signifies to another his willingness to do or to abstain from doing anything with a view to obtain the assent of that other to such act or abstinence, he is said to make a proposal.
The essential aspect of an offer is that, it must be made with a view to obtain the assent of the person to whom it is made. But in many cases it is difficult to understand, whether the actual offer is made or it was just an invitation to offer.
In this regard, it is essential to differentiate an Offer and invitation to treat OR a proposal and invitation to proposal.
Offer and invitation to treat
This may be explained with the help of an example;
You have come across a brochure of a law book seller where it provides the details of books including the author’s name, book title, publisher name and price of each title. In that, brochure, you have noticed a book titled; Arbitration, Conciliation and Mediation authored by Mr. Vishnu S Warrier and published by LexisNexis India.
Cost of said book is quoted as Rs. 395.00/- Only.You are very much concern about purchasing said book. You cannot just go to said shop, which issued the brochure and demand the book for Rs. 395/-. The seller may refuse to sell the book to you.
You cannot hold him responsible for the breach of contract because, the brochures or the catalogue issued by the book seller are merely an invitation to offer.But, when you have gone to the shop and made an offer to purchase the book titled Arbitration, Conciliation and Mediation authored by Mr. Vishnu S Warrier, it is the actual offer.
Said offer may either accept or reject by the book seller. However, once the book seller accepts your offer, he is bound to give you a copy of the book titled Arbitration, Conciliation and Mediation authored by Mr. Vishnu S Warrier and you are bound to pay him the price.
Similarly, a notice for tenders OR auction is an invitation to offer and the lowest OR highest bidder (as the case may be) has no legal right to insist that the tender OR the article kept for auction must be awarded OR sold to him.