The legal term “invitation to treat” refers to a statement indicating that someone is interested in negotiating a business deal. It is not a binding obligation or offer, and all parties involved can choose not to take up the invitation to treat without suffering legal penalties. This allows people to make preliminary negotiations without having to commit, creating an opportunity for making business deals without obligations that might discourage parties from exploring the deal.
For example, a price tag in a store window is considered an invitation to treat in many areas of the world. It is not a binding offer. A customer can approach and ask to bargain down the price and negotiations may be carried out. The store can also refuse to sell the item, falling back on its right to refuse service because it has not entered a contractual obligation with the customer. This is true even when stores promise “special offers” or price-matching programs.
When someone accepts an invitation to treat, it indicates an interest in continuing negotiations and does not constitute a binding obligation. If the parties cannot reach an agreement, the deal is off and everyone can walk away. Negotiations that end with a decision to move forward will result in the generation of a contract spelling out the terms of the deal. Once endorsed, this contract becomes binding and people cannot remove themselves from the deal without legal penalties.
For an invitation to treat to turn into a binding agreement, the offer must be tendered and accepted. A contract may be implied in the arrangement, as when people make a purchase at the grocery store with the understanding that their payment entitles them to use of whatever they are buying. In other cases, a contract is specifically developed to cover the sale. This is more common for large deals, as well as situations where people may be inclined to dispute the deal after the fact.
Consumers are sometimes manipulated by claims that accepting an offer to treat constitutes a binding contract. People who are told they are obligated to make a purchase when they have not signed anything and do not remember making an agreement should ask for information to support the claim that a contract has been generated. For example, attending a timeshare presentation does not oblige people to purchase a timeshare, nor does accepting promotional materials at the presentation create a binding agreement of any kind.