Canadian Business Contracts Handbook. Nishan Swais
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as an invitation for you to make an offer to purchase them. Thus, whenever you buy something off a shelf in a store, the law considers you to be the offeror.
That might seem like a misguided analysis given that items on display in a store are usually labelled with a price. You may think: Clearly a hardware store is offering to sell me a hammer for $19.99 by displaying that hammer, with that price, on its shelf. Not so. According to the law, the hardware store is simply setting out some of its merchandise — in this case, a hammer — and labelling it with a price for the purpose of inviting you to make an offer to the store to purchase the hammer. By labelling that hammer $19.99, the store is merely indicating to you the offer it will accept from you to purchase it.
You might legitimately ask why the law would take such a counterintuitive approach. No store is in business just to show off its wares. Clearly, in any reasonable interpretation, the store is offering them for sale. Why is the law so seemingly out of touch with the way business is really done?
This is a good time to offer an observation about the law in general, because it can sometimes seem counterintuitive or out of touch. Let’s suppose that, instead of talking about a store, we were talking about a public art gallery. There are valuable paintings displayed in those galleries with much said about the price they could fetch at market. Would it be fair to say that the paintings were being offered for sale? Before you say “no,” doesn’t an art gallery look in many ways like a store?
Next, consider a display of science projects at a fair, one of which may present a patentable and, therefore, very valuable invention. Is it fair to conclude that the invention is for sale simply because it is displayed? Again, doesn’t a science fair in many ways look like a store?
How about a musician arranging her guitars on stage? Is she offering them for sale?
You might object by saying the paintings, science fair projects, and guitars aren’t labelled with a price! Then consider a collector displaying his rare coins and stamps at a hobby show. Stamps and coins are all labelled with a price. Does that mean that they are for sale? Books, too, are often labelled with a price. Does that mean your library is offering its books for sale?
The answer, of course, is no. Not everything that is on display is being offered for sale. That is the premise from which the law begins its analysis. The reason it does so is because the law recognizes that to force everyone who is displaying things (e.g., museums, musicians, stamp collectors, libraries) to deny that they are offering those things for sale is much more of a social burden than to simply deem the person who is viewing the display as the person who is making an offer if he or she wants to purchase what can be seen.
The law takes the approach that nothing is offered for sale merely by having been displayed, even in a store. At best, the person doing the displaying is merely setting the stage for an offer, which the law calls an invitation to treat.
You can now see how something that initially seemed counterintuitive and out of touch with the way business is really done makes perfect sense on closer examination. The law is full of such examples.
2.1c Advertising
Are flyers, ads, and unsolicited emails trying to sell you the latest diet pills considered “offers” (in the legal sense), an “invitation to treat,” or something else? In fact, they are invitations to treat. However, ads require special comment because there are numerous laws that regulate advertising, which puts advertising in a legal class of its own.
A hammer displayed on a shelf in your local hardware store is, generally speaking, available for you to examine and, if you wish, purchase right on the spot. Ads, however, do not present you with the item itself, but rather information concerning the item: price, capabilities, quality, availability, and so on. Moreover, that information is being presented to you as an inducement to (make an offer to) buy the goods advertised.
However, because you cannot examine the goods themselves, ads create ample opportunity for abuse by the advertiser. The item may not be as described in the ad, the price may be different than advertised, or the item may not even be available when you arrive at the store (i.e., bait and switch). In reality, the invitation to treat contained in the ad may be an elaborate ruse designed to mislead you about a product, its price, or its availability.
As a consequence, the law contains dozens of items of legislation that strictly regulate this type of invitation to treat in order to ensure that potential buyers are not deceived. Price guarantees, restrictions on the use of the term “sale,” and the necessity to issue “rain checks” are all steps the law has taken to ensure that your trip to the store is not made under false pretences.
Advertising is, therefore, a special kind of invitation to treat because it is highly regulated.
2.2 Acceptance
The second component of a contract is acceptance. How does acceptance stem from the notion of drawing together?
The offeror has made an offer. The offeree now has the option of either rejecting or accepting what was offered. If the offeree rejects the offer (i.e., says “no” to it), there is no sense in which we can say that the persons involved have been drawn together. Accordingly, rejecting an offer cannot be a step in creating a contract, at law. This conclusion is common sense.
However, if the offeree accepts the offer (i.e., says “yes” to it), we will have taken the second step on the way to forming a contract, which is acceptance. Acceptance is another step in drawing together: You ask and I say yes. Again, both common sense and the law acknowledge that we are now jointly taking action to form some sort of relationship with each other.
As was the case with an offer, not everything that looks like acceptance is acceptance.
2.2a No intention to accept
Where there is no intention to offer, there is no offer at law. The same rule applies to acceptance. Where there is no intention to accept, there is no acceptance at law.
Returning to our earlier example: Suppose that you were intending to offer your car for sale to your friend when you said that it would be ideally suited to his business needs. Now suppose that your friend agreed that the car was exactly what he required. Has he accepted your offer?
The answer to that question comes down to whether we can infer an intention to accept your offer on the part of the offeree (i.e., your friend) when he agreed with your assessment about his needs. By agreeing with you, he might simply have been expressing an opinion about your recommendation, intending to communicate that he will go out and buy a car similar to yours. To be sure, it’s not entirely clear whether he accepted your offer, but common sense and most judges tell us that the answer is no.
Let’s take the question of intention to accept an offer one step further. Suppose you had come right out to your friend and said, “I’ll sell you my car for $10,000.” What could we infer about your friend’s intention if he responded, “I’ll think about it”? In that case, can it reasonably be said that the offeree’s intention is to communicate acceptance of the offer? Again, common sense tells us no. Clearly, the offeree’s mind is not made up.
Now suppose that, in response to your offer, your friend said, “Sounds good,” or “Awesome,” or “I’ve been waiting for you to finally sell it.” These answers would certainly tend to suggest that your friend intends to accept the offer. Can it be said for certain that he is accepting it? Not necessarily.
After all, the intended meaning of “Sounds good” may have been, “Your offer strikes me as fair, but I’ll pass.” The intended meaning of “Awesome” might have been, “Wow, you’ve finally decided to sell your car. I hope you find a buyer.” Even a response as seemingly unambiguous as, “I’ve been waiting for you to finally sell it” might simply have been intended to mean, “I always thought you should rid yourself of that heap and get a new car for yourself.”
As you can see, it is important