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LAW 122 Study Guide - Milkshake, Cheeseburger, Reasonable Person

Law and Business
Course Code
LAW 122
Jane Monro

of 6
Invitation to treat
Invitation to treat: Is an indication of willingness to receive an offer.
Invitation for others to make offer
Distinction between an offer and an invitation depends on the objective test.
How a reasonable person would interpret a particular statement
Would a reasonable person believe that the person making the statement was prepared to enter
into a contact as soon as an acceptance was received?
Or would it be more reasonable to believe that the person making the statement was simply
prepared to receive and consider offers
1. if it said ad classified as invitation to treat each response would be an offer you could reject or
2. If your ad is classified as an offer, you might be held liable to fulfill 10 contracts, even though you
have only two cars to sell.
1. An advertisement me be considered an offer IF a reasonable peron would read it that way. If I
say indicate that a limited number of items are avaible while supplies last. “ First come first
Communication of an offer
Statement is not an offer unless it is communicated and received as an offer
1. Written: if you buy a tv from a department store on credit, you will probably be asked to
complete a lengthy application that contains countless terns and conditions. That is your offer to
the store
2. Verbally: if you go to the restaurant and say : a cheeseburger and a milkshake please.: you are
offering to enter into a contract for the purchase of the meal
3. Inferred conduct alone: If you go to a barber and you sit on the chair and get a trim without
saying ANYTHING, you have offered and the barber has accepted a contract to cut your hair.
The Life of an offer
Offer doesn’t last for ever. If it is accepted it gives way to a contract, and if it is not accepted , it may
cease to exist in these way:
Lapse time
Death or insanity
Counter offer
Revocation: occurs if the offeror withdraws an offer.
Offeror is MASTER of the offer and can revoke at any time
You can only revoke only when reasonably communicated to the offeree,
Firm Offers
Firm offers: occurs when the offeror promises to hold an offer for acceptance for a certain period
(not binding)
Offeror can revoke at any given tize
Firm offer is NOT contain in a contract and therefore not enforceable in law
Firm offer cannot be revoked if: the offers promise was placed under a seal or if the offeree
paid for the right to accept within a certain period
1. You may want buy a piece of land in the future BUT you are not prepared to commit
yourself to the transaction just yet, you might try an OPTION from an owner
Option: is a contract in which the offeror is paid in exchange for a binding promise to hold an offer open
for acceptance for a specific period (binding)
1. It would allow you and the offeror at some point of time in the future to create a contract for
the sale of land
2. It would immediately create an entirely separate contact requiring the offeror to wait while you
decide whether to buy the land.
Tender: is an offer to undertake a project on particular terms.
Invitation to treat and promises to award the project to the company that submits the best
Example: if the city wants to bulid a library it will call for tenders. Compaines would sumbit there
best offers. If a company decides to withdraw its offer while the city is looking at the offers it cannot
1. Bidding process immediately creates a special contract between the city and each company that
submits an offer.
Contract a: Contract to enter process
Contract b: Contract to fulfil requirement if won
Contract A: for invitation to treat
An offer to enter in a special contract. To hold a fair tendering process in exchange for the
submission of an irrevocable bid.
Contract B: For invitation to treat
To receive offers to enter into a contract for what ever they entered
Contract A: For offeror
Acceptance to enter into a fair and irrevocable tendering process
Contract B: For offeror
An offer to enter into a contract.
Refer to concept summary on page pg 162
Lapse time
Offeror is entitled to limit the lifespan of an offer, possibly by stating that acceptance myst
occuer by a specific date
If no time period stated, an offer is only open for a “reasonable period depending on what it is
of course.
Ex. Selling farm land in depression can be open for week, shares open for minutes or hours.