Some kinds of transactions involve a preliminary stage in which one party invites the other to make an offer. This stage is called an invitation to treat.
There is usually confusion between an offer being made and an invitation to treat being established. This position was clarified in the case of Gibson v Manchester City Council of 1979 in which Mr. Gibson being a council tenant was interested in buying the council house. He completed an application form and received a letter from the council stating that it may be prepared to sell the house for a given price. Mr. Gibson initially queried the purchase price but the council insisted the price could not be changed. The council decided to stop selling council houses to tenants due to political change after Mr. Gibson had expressly stated the council carried on with the purchase per his application. Mr. Gibson brought a legal action claiming that the letter he had received stating the purchase price was an offer that he had accepted.
The house of lords ruled that the council had not made an offer and the letter giving the purchase price was merely one step in the negotiations for a contract and amounted only to an invitation to treat. Its purpose was simply to invite the making of a formal application, amounting to an offer from the tenant.
Confusion can sometimes arise when what would appear in the day sense of the word, to be an offer, is held by the law to be only an invitation to treat.
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