Which test helps determine if a statement is an offer or an invitation to offer?

The correct answer is the Intention Test, which is essential in distinguishing whether a statement functions as an offer or merely as an invitation to treat (offer). This test focuses on the intention behind the statement made by the party. An offer is a clear proposal made with the intent to create a legal obligation upon acceptance, while an invitation to offer is a preliminary communication indicating a willingness to negotiate or discuss terms without committing to a binding agreement.

When applying the Intention Test, courts evaluate the language used, the context in which the statement was made, and the circumstances surrounding it. The objective is to discern if the offeror genuinely intended to be bound by the terms proposed upon acceptance by the offeree.

In contrast, the other options do not carry the same significance in determining the nature of the statement. The Clarity Test may refer to how clear and specific the terms are but does not address intent directly. The Binding Test could suggest whether the terms create an obligation, yet it does not focus on the intention behind the communication. The Proposal Test, though closely related, is not a formally recognized standard for evaluating the intention in contractual agreements. Thus, the Intention Test remains the most relevant approach for this determination.