Applying Elements of a Contract in Business Situations: A Case of East Midlands Airways

East Midlands Airways Airbus

This case presents the challenge arising in contracts where the situation remains unclear whether the party is making the acceptance of the offer or one is asked to place an offer. As such presents the legal issue of an invitation to treat interpreted as an offer. It is essential to distinguish the true offer from a mere invitation to treat. A true offer that is then accepted leaves the party making it legally bound by the promise. Conversely, an invitation to treat never constitutes a true offer, and the other party by stating ‘I accept’, cannot legally bind the offeror (Sparrow, 2012, p. 12). Rare are the times that a party would distinguish between the two principles. Nevertheless, an invitation to treat exists as a mere declaration revealing the willingness of the party to enter into a negotiation. The negotiation statement does not entail an offer, but it remains unacceptable to form the basis of a binding contract (Young, 2010, p. 11; Barnes & Davies, 2008, p. 10).

Pertaining to the question whether the statement represents an offer or merely an invitation to treat, relies mainly on the intention upon which it was made. In this light, a party may not claim the wording to be conclusive. The advertisement placed by East Midlands Airways revealing a second-hand Airbus 321 for sale in an aviation industry trade journal for £10.4m, constitutes a negotiating statement. The advertisement reveals an invitation to treat, that any party cannot assert to accept and claim to legally bind East Midlands Airways. Placing the advertisement in the industry trade journal, presents an invitation for everyone and does not constitute an offer, thus rejecting its acceptance.

An offer represents an expression of the willingness of a party to enter a contract, with the intention that the agreement becomes binding the moment the offeree accepts it. Contrariwise, an invitation to treat implies no offer, but simply an invitation made to others for them to make their offers. In view of this, it follows then that the invitation to treat Is unacceptable to constitute a contract. Equally, the party extending the invitation statement remains unbound to accept any offers placed in it (Howard, 2006, p. 116). Consequently, Phil cannot claim the promise to pay £100 amounts to the acceptance. Furthermore, the amount promised does not sustains the offer as such should be communicated to the offeree and remains ineffective till receipt. Furthermore, the notification to treat never amounts to an offer, and therefore discharges East Midlands Airways from liability claimed by Phil of breach of contractual relationships.

The application of the above mentioned issues arises on the sale in display context in Fisher-v-Bell. The display of the products with respective price tags amounted to an invitation to treat (Fisher & Greenwood, 2011, p. 47). The prospective buyer is expected to offer to purchase the item at the cash price, that the shop owner may decline or accept. In this case, the defendant was found not to violate the Offensive Weapons Act in the display of a flick-knife. Although the knife had a cash price tag, it constituted an invitation placed for any prospective buyer to make their offer (Marson, 2013, p. 17).

Moreover, placing in the aviation industry trade journal replicate a similar circumstance to Harris v. Nickerson (1873). Here, an advertisement to sell ones goods or any other property forms an invitation to treat (Kathrin Kuhnel-Fitchen, 2014, p. 10). It implies an invitation for any prospective customer to place their bid on the auction that the auctioneer may decline or accept. The court declined the claim that there existed a contractual relationship between the commission agent and the auctioneer. The auctioneer was relieved from any liability for failing to display the advertised furniture, as such, was an invitation for prospective buyers to treat (Kelly, Hammer, & Hendy, 2014). In this light, not a single claim by Phil would succeed as both the notification to pay £100 neither constitutes an offer to the advertisement intended by East Midlands Airways as an invitation to treat.

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