Invitations to treat – Seán Crossan's Scots Law

Right to refuse?

Thanks to @beamomatic9000 for making this photo available freely on @unsplash 🎁

The COVID-19 crisis continues to throw up some interesting legal questions e.g. employment rights, EU freedom of movement rights, frustration of contract etc.

One area which seems somewhat overlooked is in relation to the actions of many retailers – principally supermarkets and grocery stores – which have been restricting sales of particular items. The items in question include soap, hand gel and sanitiser, bleach, anti-septic wipes, paper towels and even toilet rolls.

The COVID-19 situation has led to panic buying of these essential hygiene items and supermarkets have imposed clear limits on their sale.

Can supermarkets and other retailers impose these sorts of restrictions?

This, of course, takes us back to the basic rules governing the formation of a contract. Retailers are especially guilty when applying the term ‘offer’ to the goods which they stock. It is no such thing: goods on the shelves; on display; or in shop windows are invitations to treat. It is the the customer who is being invited to make the offer (see Fisher v Bell [1961] 3 ALL ER 731 where the English Court of Appeal ruled that a knife displayed in a shop window was not being offered for sale, it was merely an invitation to treat. Lord Parker, the Chief Justice being particularly emphatic on this point).

In the seminal case of Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953] 1 QB 401, the judges of the English Court of Appeal helpfully distinguished between an offer and an invitation to treat. The case arose as a result of a provision in the Pharmacy and Poisons Act 1933 which stipulated that the sale of certain medicines must take place in the presence of a registered pharmacist.

Boots Chemists operated a self service system whereby it’s customers were able to place the medicines which they wished to purchase in their shopping baskets. The key question was whether Boots was breaking the law by allowing customers to do this. In other words, was the sale completed when the customer placed the medicines in their baskets? Now, if goods on shelves were to be regarded as ‘offers’, Boots would indeed be breaking the law because customers would be deemed to be ‘accepting’ these ‘offers’ by placing the goods in question in their baskets.

If, on the other hand, the sale was concluded elsewhere i.e. at the cash register where there was always a registered pharmacist on duty, Boots would be fully complying with the Act.

The Court of Appeal concluded that it was the customer who made the offer by presenting the goods at the cash register. The sales assistant (properly supervised by the pharmacist) could conclude matters i.e. accept the offer by ringing the sale up on the cash register. Furthermore, it was always open to the assistant to refuse the customer’s offer. Goods on shelves were, therefore, merely an invitation to treat.

In more normal times, a customer’s offer would and should be refused by retailers because they are an underage person who is attempting to purchase e.g. alcohol, cigarettes or video games or DVDs which are age specific.

So, in this way, retailers are generally within their rights to impose strict limits on the numbers of certain items that customers wish to purchase. The customer can offer to buy 20 bottles of hand gel or sanitiser, but the store will have the right to refuse.

Presently, retailers are putting these sorts of restrictions into place in order to protect and promote public health by giving as many customers, as possible, reasonable access to basic hygiene products. If we co-opt the language of the Equality Act 2010, retailers are putting restrictions in place because these are a proportionate means of achieving a legitimate aim. So, hopefully, such restrictions – if fairly implemented and monitored – will not be subject to a legal challenge on grounds of discrimination.

Related Blog Articles:

https://seancrossansscotslaw.com/2019/12/06/tis-the-season-of-special-offers/

https://seancrossansscotslaw.com/2019/03/27/special-offers/

https://seancrossansscotslaw.com/2019/03/14/too-good-to-be-true/

Copyright Seán J Crossan, 26 March 2020

Tis the season of special offers?

Photograph by Seán J Crossan

Don’t believe the hype …

If you were fooled by all the hype surrounding the retail extravaganza that has become Black Friday (and now extending to Cyber Monday), you might think that retailers (both on the High Street and on-line) have gone offer crazy …

… and that is where you would be wrong (very wrong).

Let’s begin by examining the photograph of the McDonald’s flyer at the top of this Blog. The word ‘offer’ helpfully appears in the flyer, but is this what it seems to be? I’ll return to this issue at the end of this Blog.

During the last fortnight, I’ve just started teaching a group of students about the basics of contract law.

I often begin these sessions by asking them to consider whether advertising material (or advertorial content these days – I must have missed this development) whether it is of the on-line variety; goods in shop windows or goods on the shelves or plain old fashioned advertisements constitutes an offer capable of acceptance by the customer?

My students seem quite surprised when I say to them that the vast majority of these so called offers are nothing more than an invitation to treat. Merely because the retailer calls a marketing device an offer doesn’t make it so.

I must admit that the first time that I heard the phrase ‘invitation to treat’ during one of my first contract law classes as an 18 year old university student I was pretty baffled.

What was this mysterious thing? It turned out to be quite simply a device used by a retailer or a trader to get potential customers interested in the goods and services that they could supply. A stimulus in other words. In fact, it was up to the customer to make the offer to purchase the goods and/or services and, most of the time, the retailer or the trader would accept this offer.

Obviously, a retailer might refuse to accept an offer if, for example, it someone under the age of 18 attempting to purchase alcohol or cigarettes.

In situations, where the customer wished to haggle over the price, the retailer might reject any offer which was lower than that wished they hoped to achieve. After all, price tickets are merely an indication of what the trader or retailer would like to achieve (although beware of a possible breach of a possible breach of the criminal law in terms of the Consumer Protection from Unfair Trading Regulations 2008).

Previously decided case law (or judicial precedent) in the United Kingdom is very clear about the differences between offers and invitations to treat, as we can see below:

Harvey v Facey [1893] AC 552
Jaeger Brothers Ltd v J & A McMorland (1902) 10 SLT 63
Fenwick v MacDonald Fraser & Co Ltd (1904) 6 F 850
Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953] 1 QB 401
Fisher v Bell [1961] 3 ALL ER 731

As Lord Parker CJ remarked in Fisher v Bell (1961):

‘It is clear that, according to the ordinary law of contract, the display of an article with a price on it in a shop window is merely an invitation to treat. It is in no sense an offer for sale, the acceptance of which constitutes a contract.‘

Invitations to treat are, therefore, a form of marketing:

Advertisements
Goods on shelves
Goods in shop windows
Goods placed for sale at auction
Internet sites e.g. Amazon
Price indications/tickets
Quotes

You’ve got to admit the following statement blasted out across the public address system of a retail outlet or on a website doesn’t quite have the desired impact:

“Hello shoppers! We have a great range of invitations to treat in store and on-line. Grab one while you can because they won’t last! When they’re gone, they definitely gone!“

I suspect that most shoppers would find the above announcement most unhelpful.

That is not to say, however, that businesses themselves always get their marketing approach spot on. Two cautionary cases are worth mentioning:

the better known English decision, Carlill v Carbolic Smokeball Co Ltd [1893] 1 QB 256; and
the less celebrated Scottish decision, Hunter v General Accident Fire and Life Assurance Corporation Ltd (1909) SC (HL) 30; 1909 SC 344.

Both cases involved advertisements aimed at the general public. Individual members of the public (Mrs Carlill and Mr Hunter respectively) responded to the advertisements by purchasing the item or service (in Mrs Carlill’s case, a carbolic smokeball; and in Mr Hunter’s case, life insurance cover).

The legal status of both advertisements came under scrutiny when both customers tried to hold the traders to statements which appeared therein. The businesses fell back on the traditional argument that the advertisements were nothing more than invitations to treat. Unfortunately, this is not how the English and Scottish courts viewed matters. The advertisements contained a level of very specific detail which gave them status of offers which both Mrs Carlill and Mr Hunter had accepted. Both customers had, therefore, concluded a binding contract with the traders.

The lesson learned? Since these two cases, advertisers have gone to great lengths to avoid being caught out. The lack of concrete detail in advertisements is often astonishing when you examine them; or statements about goods and services are usually qualified by all sorts of exceptions.

I often say to my students to look out for the stock phrases in advertisements or other marketing material, such as:

Terms and conditions apply
While stocks last
For a limited period only
On selected products only
‘Offer’ ends on or ‘offer’ valid until …
Subject to status
Subject to availability

If any of these appear in an advertisement, in all likelihood you’re looking at an invitation to treat – most definitely not an offer.

This, of course, takes me neatly back to our flyer from McDonalds: offer or invitation to treat?

Well, two smoking guns from me are the phrases: ‘Offer valid until 15 December 2019’ and ‘Not valid at restaurants with a drive thru’. Definitely, an invitation to treat. In any case, I live in area where all the McDonald’s outlets have a drive thru, so no use to me.

Related Blog Articles:

Special offers!

https://seancrossansscotslaw.com/2019/03/27/special-offers/

Too good to be true

https://seancrossansscotslaw.com/2019/03/14/too-good-to-be-true/

Copyright Seán J Crossan, 6 December 2019

Special Offers!

Photo by Artem Bali on Unsplash

My students are well aware that I like to use stories which appear in the media to illustrate legal points or issues. Today, I have been reviewing some old media stories which I have distributed to students over the past few years.

One such story which caught my eye, and is always a topical issue, concerns contract law. When I begin to teach students about the basics of contract law, we often spend a bit of time discussing the difference between genuine offers and invitations to treat.

Invitation to treat

The phrase “invitation to treat” often causes puzzled expressions to appear on the faces of the individuals attending the lecture. I’ll say to them that it’s probably an expression that they have not previously heard. Even if they work in a retail environment or a customer facing role, it’s not something that they are likely to have encountered.

After all, when was the last time you walked around a supermarket or department store and heard over the PA system something like this:

“Hello shoppers, we’d like to make you aware that we have a great range of invitations to treat in the store today.”

I can just imagine the reaction from most of the customers: utter and total bemusement.

What you’re much more likely to hear is the disembodied voice saying something like this:

“Hello shoppers, we’d like to make you aware that we have a great range of offers in the store today.”

Now, the content of the above announcement isn’t strictly correct. The store or the retailer isn’t making you (the potential customer) an offer; they are making you an invitation to treat.

What is an invitation to treat?

This area is especially relevant for retailers and their pricing policies. Customers might think that a price ticket or indication is a firm offer issued by the retailer.

Very simply, it’s a basic form of marketing or advertising by the retailer or the trader. They wish to alert you to the fact that they have goods or services available that might be of interest. It is then up to you to go and make the offer to the appropriate representative of the trader. This offer will be considered (perhaps extremely quickly and without much in the way of negotiation) and accepted leading to a contractual agreement between the parties. An invitation to treat is a willingness by the trader/retailer to enter into negotiations with a potential customer. The trader or retailer is effectively saying: ‘I’m open to offers or make me an offer‘.

It’s been well established law for some time that goods displayed on shelves or in shop windows are not offers to the general public capable of acceptance, but rather they should be seen for what they are: invitations to treat (see Pharmaceutical Society of Great Britain v Boots Cash Chemists (1953) and Fisher v Bell (1961)) .

Misleading price indications

What if the retailer or trader applies the wrong prices to a product? Does the customer have the right to hold the seller to this price – even if it’s a mistake?

This can be a particularly acute problem for retailers and traders which use the internet or other digital platforms to advertise and sell goods. You only have to think about some of the big internet traders to realise that keeping track of the prices on every product sold by them must represent a really tough operational challenge.

What if prices are not kept up to date?

What about data input error where someone keys in the wrong price and is totally unaware of this?

What if the promotion (e.g. a discount) applies to only a small group of products or a particular geographical area?

These have all been known to happen to retailers and traders who use the internet or other digital media.

We’re now living in a more hi-tech age where lots of traders will advertise goods and services on the internet, but these platforms should be seen as the virtual equivalent of the high street trader’s shelves or shop window. Even if prices are affixed to certain products or services, the customer should always be wary. These are merely an indication of what the trader would like to achieve. There is nothing, in theory, to stop the customer haggling or negotiating over the goods or services.

In traditional retail or sales environments i.e. face to face situations, the customer sales representative could quickly deal with the problem of wrongly mispriced goods. The customer might huff and puff and threaten legal action, but usually to no avail. Quite simply, the goods which were on display were invitations to treat (not offers). The customer was, in fact, making the offer which the customer sales representative was refusing to accept.

True, many retailers might choose to go ahead and sell the goods at the wrongly marked price as a gesture of goodwill because this was seen as a sensible customer relations tactic, but legally the store was not obliged to do this. Obviously, if there was a really big price discrepancy, even the most customer centred business might choose to draw the line somewhere (I suppose all organisations have their bottom line).

In sales generated using the internet or other digital media, there is a lack of a traditional gate-keeper (a sales assistant). Transactions are processed electronically and remotely and contracts for wrongly (i.e. lower) priced goods may slip through.

Usually, but not always, the virtual retailer or trader will have an explicit term in their general contractual conditions which states that the transaction will not be binding until such time as the customer receives a confirmatory email or other form of message.

Legal consequences

Although a store might not be liable to a customer for misleading price indications or statements under the law of contract, there are potential criminal consequences. The store could be prosecuted under criminal law and fined for misleading consumers. These laws are now contained in the Consumer Protection from Unfair Trading Regulations 2008.

Please see link to the story about the Co-op getting its pricing policy wrong:

Co-op chain accidentally introduces 20% discount at stores

A supermarket chain accidentally introduces a 20% discount at 140 stores instead of just at one branch – costing it thousands in lost revenue.

Conclusion

Contrary to popular opinion, advertisements displayed in newspapers, magazines, trade journals and on the internet are not offers, but are regarded as invitations to treat. The offer is to be made by the consumer in response to the advertisement. The advertiser is at liberty to accept or decline any offers potential customers might choose to make.

An invitation to treat can take the following forms: goods in a shop window display, on a shop shelf or in a catalogue, goods exposed for sale at an auction or via the internet. The offer can be made by taking goods to the checkout (real or virtual) or requesting them from the shop assistant, it is then up to the advertiser or the shop assistant to decide whether to accept or refuse the offer. A shop assistant does not have to give a customer a reason for refusing to accept an offer and is not bound by the marked price on the goods. If, for instance, you happen to be under 18 years of age and you attempt to purchase alcohol from your local supermarket, the assistant will be well within her rights to refuse to accept your offer to purchase these goods.

Questions

1. For a contract to exist, the agreement must also be legally binding/legally enforceable. What does this mean?

2. What are the two elements of any contract?

3. What is an invitation to treat?

4. Provide FIVE examples of an invitation to treat.

5. Why must an invitation to treat be distinguished from a distinct and definite offer?

6. Where is the point of sale in a supermarket and what, in terms of offer and acceptance, happens there?

7. What is a misleading price indication?

8. Does a retailer have to sell a consumer the goods with the wrong price on the ticket or label?

9. What other legal consequences arise as a result of misleading price indications by a retailer?

See link to find answers to the above questions:

https://seancrossansscotslaw.com/questions-answers/