Apr 20, 2018

Advertisements: An Offer Or An Invitation To Treat? | Eseoghene Palmer

“A communication by which a party is invited to make an offer is commonly called an invitation to treat. It is distinguishable from an offer, primarily on the ground that it is not made with the intention that it shall become binding as soon as the person to whom it is addressed simply communicates (his or her) assent to its terms. A statement is clearly not an offer if it expressly provided that the person who makes it is not to be bound merely by the other party’s notification of assent but only when he himself has signed the document in which the document is contained”- per Oduyemi JCA[1] (emphasis mine)

A few weeks ago, in an interview with a client it was revealed that he (my client) was a past winner of one beauty pageantry; he had been dubbed the King of some item or theme of the competition, and had a co-winner, a counterpart who had won the Queen category of the competition. His major grouse, amongst others, was that having fulfilled all obligations set by the organizers, including selling tickets and paying the levies, the promise of a cash price as stated in the advertisement along with other benefits and packages was yet to be fulfilled, and if the organizers still had the mind to live up to the promise, it would be coming almost a year late. Of course there was no signed agreement nor was there a handshake as evidence of acquiescence. So the question is, was there a contract?

The truth is, this story is just one of the many realities confronting many winners of show biz competitions. In court the usual defense for such glaring breach of contract is usually the term “invitation to treat”.

The case of CBN V. S.A.P.N which ruling is stated at the beginning of this article has given a strict answer to the fundamental question on “what is an “invitation to treat” and how can it be differentiated from an “Offer”? It must be understood, however, that not all contracts, particularly, the one in this story, are made in writing.

There are several classes of contract. It must be noted that the formation of a contract involves: Offer, Acceptance and Consideration. Under Simple contracts, we may involve contracts that are merely written on paper and devoid of complexities or contracts that are merely expressed by word of mouth between two parties, that is parole contract (oral contract). In ascertaining whether a person was directly offered something or simply invited to negotiate between offers, it is pertinent to bear in mind that not all contracts are clear cut. Much like the above story, a contract agreement can be inferred by conduct in lieu of signature.

 In Trade Bank PLC v. Dele Morenikeji & Anor[2], here the answer to the question on whether an agreement can be oral or inferred from conduct of parties was reiterated. A brief summary of the case is thus: the Respondents agreed with the Appellant Bank for a loan for the exportation of cocoa produce, this was agreed in writing and executed; the respondent similarly introduced another contract to import caustic soda with the proceeds of the Cocoa export. Although, there was no signed agreement in relation to the latter venture, the bank availed the respondents the money from the proceeds of the cocoa exports. However, the bank summarily decided to recover all debt due from the respondent and placed a lien over the caustic soda already imported. The bank went ahead to sell the caustic soda without informing the respondents. The court had this to say:

“An agreement can be oral or can be implied from conduct of the parties thereto. In the instant case, although the initial agreement between the parties was written, the conduct of the parties shows that there was an extension of agreement to cover the transaction relating to the importation of caustic soda, though not in writing.”

In application of this ruling to the modeling agency story earlier painted, it must be appreciated therefore that for an agreement to take place between parties there must be a consensus ad idem or a meeting of minds between them, hence, the terms Offer and Acceptance.

So, at this junction, was the advert, acted upon by my client, an offer? The locus classicus case of Carlil v. Carbolic Smokeball Company[3] readily comes to mind. In that case the defendant company advertised on newspapers to the effect that it would pay 100 pounds to any person who used a smoke ball manufactured by it for a minimum of two weeks, and nevertheless succumbed to influenza. The plaintiff bought one smokeball and used it as specified and still caught influenza. The company was held liable to the plaintiff for the 100 pounds. The court held that by the terms of the contract, there was no need to notify the defendant company of the fact of acceptance. This had apparently been waived by the company and acceptance took a form of performance. According to Bowen LJ

“An advertisement is an offer made to all the world: and why should not an offer be made to all the world which is to ripen into a contract with anybody who comes forward and performs the condition? It is an offer to become liable to anyone who, before it is retracted performs the condition…”

Summarily, the answer is simple and straight. An offer is simply a promise or an undertaking to do something if certain terms are followed. Whether this is stated orally or in writing, on a bill board or on the telephone, It becomes a contract when it Is accepted as evidenced by the conduct or the signature of the other party.

Do not forget that at the very core a contract is simply: OFFER, ACCEPTANCE and CONSIDERATION.

Eseoghene Palmer

Legal Practitioner

Adedunmade Onibokun & Co.

[1]CBN V. S.A.P.N LTD  (2004) 37 WRN P. 103
[2](2005) 6 NWLR (PT. 921) P. 309
[3] (1893) 1 QB 246