The case of Grainger & Son v Gough concerned a dispute between Grainger & Son and a customer, Gough, over the formation of a contract for the sale of wine.
| Case name & citation: Grainger & Son v Gough [1896] AC 325 (HL) |
| Year of the case: 1896 |
| Jurisdiction: The House of Lords, UK |
| Learned judge: Lord Herschell |
| Area of law: Offer and invitation to treat |
Facts (Grainger & Son v Gough)
Grainger & Son (G&S) was a wine merchant that circulated a catalogue containing a price list of its products. The claimant, Gough, placed an order for wine from the defendant, G&S, after seeing the price list in the catalogue. However, G&S refused to supply the wine, and Gough sued, alleging that a contract had been formed.
Issue
The court had to decide whether the price list in the catalogue constituted an offer or merely an invitation to treat.
Court’s Judgment in Grainger & Son v Gough
The decision was in favour of the defendant. The court ultimately held that the price list was an invitation to treat, not an offer. This meant that Gough’s order was not an acceptance of an offer, and therefore, no contract was formed.
Reasoning
The House of Lords observed that if the price list in G&S’s catalogue were treated as an offer rather than an invitation to treat, it would place an unreasonable burden on G&S to deliver an unlimited quantity of wine at the quoted prices upon receipt of any order. This was because G&S’s stock was objectively limited, making it impossible for them to fulfil an unreasonably large number of orders. As a result, the price list was interpreted as an invitation for customers to make an offer to purchase the wine at the quoted prices, which G&S could then accept or reject. Since G&S did not accept the order placed by Gough, no contract came into existence.
Key Takeaway from “Grainger & Son v Gough”
This case established the principle that an invitation to treat is not an offer, and that a contract is formed only when an offer is accepted.
General Principle Concerning Advertisements
Advertisements offering specified goods at a certain price—such as those found in newspapers and magazines—are generally considered invitations to treat rather than offers. This is because the advertiser is not expressing a willingness to be immediately bound by terms to anyone who responds. Instead, the advertisement invites potential buyers to make an offer to purchase the goods, typically at the advertised price. The seller can then choose whether to accept that offer. This approach accounts for situations where stock may be limited or other conditions apply, and avoids the implication that the advertiser must contract with every interested buyer.
List of references:
- https://www.pbookshop.com/media/filetype/s/p/1405700635.pdf
- https://www.acecollege.in/CITS_Upload/Downloads/Books/1029_File.pdf
- https://www.pearsonhighered.com/assets/samplechapter/e/l/l/i/Elliott_contract_C01.pdf
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Ruchi is a legal research writer with an academic background in CA, MBA (Finance), and M.Com. She specializes in digesting and summarizing complex judicial decisions into clear and structured case notes for students and legal professionals.