What must be tested to ascertain if a communication is an offer or an invitation?

To determine whether a communication constitutes an offer or an invitation to treat, it is essential to focus on the intention behind the communication. In contract law, an offer is a proposal by one party to enter into a legal agreement with another, and it must be made with the intent to create a binding contract upon acceptance. This means that the person making the communication must demonstrate a clear intention to be bound by the terms presented.

Conversely, an invitation to treat is simply an indication that one party is willing to negotiate or enter into discussions, which does not automatically result in a legally binding agreement. Common examples include advertisements, price lists, or invitations for tenders, where the sender is inviting others to make offers.

Thus, analyzing the intention behind the communication allows individuals to discern whether a party genuinely intends to create legal obligations or is merely inviting further negotiation. Understanding this distinction is crucial for interpreting contractual agreements accurately within business law.