Formation of a contract : offer, acceptance, invitation to treat
When we hear the word contract, what comes to mind of many of us immediately is the thought of legal definitions, Latin phrases, and heavy textbooks explanations. But in reality, contracts are a part of our day to day lives. Simple acts of getting food at the restaurant, booking a ride, getting nice stuffs online, or even agree to be subject to certain procedures.
As a law student, one of the first things you realize is that contract law is not just theoretical. It is practical, relatable, and deeply rooted in daily interactions. At the heart of every valid contract is one foundational idea: agreement. But in law, agreement is not just about saying “yes.” It follows a clear structure. The elements of a valid contract includes offer, acceptance and consideration. An intention to enter into legal relations can be added as a fourth, although parties to a contract do not consciously contemplate this element when entering into a contract.
This article breaks down the formation of a contract under Nigerian law, focusing on offer, acceptance, and invitation to treat, in a way that is clear, relatable, and easy to remember.
What Is a Contract?
A contract is a legally binding agreement between two or more parties that the law will enforce.
Under Nigerian law, for a contract to be valid, certain elements must be present. These include:
- Offer
- Acceptance
- Consideration
- Intention to create legal relations
- Capacity
- Legality
In this post, our focus is on the first stage of contract formation: offer and acceptance, and where invitation to treat fits in. Very often, what one party regards as a clear cut case of offer or acceptance is firmly rejected by the other party who claims that it is something else. Hence, related factors like invitations to treat, counter offers, conditional acceptances, acceptance in ignorance of an offer, have all developed together with the study of what constitutes an offer and an acceptance respectively. Infact, these other elements usually appear in varying combinations with the offer and acceptance in most agreement. Indeed at least in Nigeria, the parties in most case do not conclude clear cut agreements and it is left to the court in such cases to construe from the correspondence and the conduct of the parties whether there is a contract, and if so, what the exact terms of the contract are. Balonwu v. Odumuko (1971)2ALR 38
Understanding an Offer
An offer is a definite promise made by one party (the offeror) to another (the offeree), showing a clear willingness to be bound as soon as the offer is accepted.
For an offer to be valid:
- It must be clear and definite
- It must be communicated to the other party
- It must show an intention to be legally bound
Example:
If Mr. A says to Miss B,
“I will sell my laptop to you for ₦150,000,”
that statement constitutes an offer. Once Miss B accepts it under the same terms, a contract can arise.
In Storer v Manchester City Council, the court held that an offer exists where the language used shows a clear intention to be bound without further negotiation.
What Is Acceptance?
Acceptance is the unconditional and final agreement to all the terms of an offer. It must correspond exactly with the offer this is known as the mirror image rule. An acceptance of an offer is the reciprocal act or actions of the offeree to the offer in which he indicates his agreement to the terms of the offer as conveyer to him by the offeror. Acceptance is simply the offeror agreeing to the terms of the offer made to him.
For acceptance to be valid:
- It must be clear and unqualified
- It must be communicated to the offeror
- It must be made while the offer is still open
Example:
If Miss B replies, “Yes, I agree to buy the laptop for ₦150,000,”
that is a valid acceptance. But if she says,
> “I’ll buy it for ₦130,000,”
that is not acceptance it is a counter-offer, which destroys the original offer. An acceptance must correspond with the terms of the offer Any qualification or amendments of the offer will constitute a counter offer which goes against the terms of the original offer. The proposed acceptance thus becomes a fresh offer, which is open to the original offeror, now the offeree, to accept or reject.
In Hyde v Wrench, the court held that a counter-offer amounts to a rejection of the original offer.
Communication of Offer and Acceptance
Both offer and acceptance must be communicated otherwise it will no be valid. Not only that, the communication must be in such a form that it can be objectively determined. In other words, it must be externally manifested, either by words, conduct, writing, or by one of the modern modes such as telex, telegram, fax or email. Silence does not amount to acceptance.
In Felthouse v Bindley, the court held that a person cannot impose a contract on another by stating that silence will amount to acceptance.
Invitation to Treat Explained (Very Important)
This is where many students get confused.
An invitation to treat is not an offer. An invitation to treat is the first step in negotiations between the parties to a contract which may or may not lead to a definite offer being made by one of the parties to the negotiation. It is merely an invitation to the public or another party to make an offer.
In simple terms:
> An invitation to treat says, “Come and negotiate.”
An offer says, “I am ready to be bound.”
Common Examples of Invitation to Treat:
i. Goods displayed in a shop with price tags
ii. Advertisements
iii. Auction notices
iii. Menus in restaurants
Example:
When a supermarket displays goods on a shelf with prices, it is not making an offer. The customer makes the offer when they bring the item to the cashier, and the cashier accepts by processing payment.
In Pharmaceutical Society of Great Britain v Boots Cash Chemists, the court held that goods on display are invitations to treat, not offers.
Similarly, in Fisher v Bell, displaying a knife with a price tag was held to be an invitation to treat, not an offer.
Why Invitation to Treat Matters
Understanding invitation to treat helps prevent confusion about when a contract is actually formed. It protects sellers from being forced into contracts they did not intend to accept and ensures fairness in commercial transactions.
Bringing It All Together: A Simple Scenario
Imagine this:
A shop displays a phone for ₦200,000 → Invitation to treat
A customer takes it to the counter and agrees to buy → Offer
The cashier accepts payment → Acceptance
Contract is formed
Conclusion
Contract law may appear complex at first, but once you understand the foundation, everything begins to make sense. Offer and acceptance are the building blocks, while invitation to treat helps us identify when negotiations begin and when legal obligations truly arise.
At Law Made Simple, the goal is not to overwhelm you with bulky explanations, but to help you understand the law clearly, confidently, and practically. Once you grasp these basics, topics like consideration and intention become much easier to follow.
Take your time with it. Revisit it. And most importantly, see the law beyond the textbook.
If you would like to read more on how Nigerian courts have treated offer, acceptance, invitation to treat in real cases, www.britannica.com provides simplified summaries based on various decided cases.