Authored By: Oboh Daniella Chidera
Babcock University
BACKGROUND
[1]Grainger & Son v Gough is a landmark decision delivered by the House of Lords in the late 19th century, which has since become a foundational authority in the law of contract, particularly in relation to the formation of legally binding agreements. The case is historically situated within the context of evolving commercial practices, especially the use of catalogues and circulars in marketing goods to prospective customers. At the time, such materials were increasingly common in commercial transactions, raising important legal questions about their effect in establishing contractual obligations.
The case is particularly significant for its judicial treatment of the distinction between legally binding offers and non-binding representations or statements, often referred to in legal parlance as “invitations to treat.” The judgment reflects the courts’ cautious approach to imposing contractual liability based on general communications intended for a wide audience. Rather than adopting a formalistic approach, the Lords examined the nature and purpose of the communication, considering both commercial practicality and legal principle. Their Lordships articulated the principle that not all expressions of willingness to enter into a transaction amount to offers in the legal sense. A communication must demonstrate a clear and unequivocal intention to be legally bound upon acceptance by another party in order to constitute an offer. Where such intention is absent, the communication is merely preparatory—inviting others to make offers rather than being an offer itself.
The ruling in Grainger & Son v Gough thus helped shape the modern understanding of pre-contractual communications and reinforced the objective test of contractual intention. It has been cited with approval in subsequent decisions and remains a key authority for the proposition that general advertisements, price lists, and catalogues are ordinarily not treated as offers but as invitations to negotiate or treat. This reasoning preserves commercial flexibility while protecting parties from unintended contractual liability.
FACTS
In Grainger & Son v Gough [1896] AC 325 (HL), the appellant, Grainger & Son, was a firm of wine merchants based in France but operating through an agent in England. They distributed a circular to a list of regular and potential customers. This circular contained a price list of wines, including the names, vintages, and prices of various wines available for purchase.
The respondent, Gough, received one of these circulars and, acting upon it, placed an order for a certain quantity of wine listed in the price sheet. However, Grainger & Son declined to fulfil the order, asserting that no contract had been formed. Gough contended that the circular and price list constituted an offer, and that his order was an acceptance, thereby creating a binding contract under general principles of contract law.
The matter escalated through the courts until it reached the House of Lords. The central focus was whether the distribution of a price list constituted a legal offer capable of being accepted, or merely an invitation to treat, which does not lead to a binding contract when a customer responds with an order.
The court considered that Grainger & Son, as distributors of wine from a limited supply in France, could not possibly guarantee to supply all the customers who might respond to the price list. Consequently, the House of Lords determined that such circulars and price lists are not offers but invitations to treat—expressions of willingness to enter into negotiations or receive offers from others, not promises to be bound immediately.
Grainger and Son, a wine merchant circulated price lists(catalogues) to potential customers which included details of wine available for sale. Gough ordered wine based on the price list and Grainger refused to supply, citing that the stock was limited and price list should not be taken as an offer to sell to any person who places an offer.
SUPPORTING LEGAL CASES
. [2]Partridge v Crittenden
The court held that an advertisement in a magazine was not an offer but an invitation to treat. The reasoning in Grainger & Son v Gough was applied here, particularly in distinguishing general advertisements from specific offers.
[3]Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd
Reinforced the principle that displaying goods with a price in a self-service store constitutes an invitation to treat, and not an offer. The customer’s action of taking goods to the cashier was the offer, and the shop accepted by ringing up the sale.
[4]Carlill v Carbolic Smoke Ball Co [1893] 1 QB
Distinguished from Grainger & Son v Gough, because in Carlill, the court found that the advertisement was a unilateral offer, due to the specificity and seriousness implied by the deposit of money in a bank account. This shows that context and intention determine whether a statement is an offer.
LEGAL ISSUE
The issue was whether the price list sent by Grainger & Son constituted an offer or merely an invitation to treat.
LEGAL REASONING
The core legal issue was whether the circular and price list constituted a binding offer, such that a customer’s order would amount to acceptance, forming a contract. The court concluded that no such contract arose, because a price list is an invitation, not an offer. An order placed in response to a price list is itself the offer, and The trader must accept the offer before a binding contract is formed.
Main Judgment Points and Legal Reasoning
- Price Lists Are Not Offers, But Invitations to Treat
The House of Lords unanimously held that a price list circulated to customers does not constitute a legal offer.
Rather, it is an invitation to treat, which invites offers from the recipient, allowing the sender to either accept or reject the offer.
This position ensures commercial reasonableness, as a business cannot be expected to supply goods to every person who responds, especially when stock is limited.
- Intention to Be Bound Must Be Clear and Definite
Lord Herschell emphasized that an offer must show a clear intention to be immediately bound upon acceptance. He reasoned that since the wine merchants could not guarantee supply to every customer receiving the circular, it could not reasonably be seen as an offer.
> “The transmission of such a price list cannot be construed as an offer to supply an unlimited quantity of the wine to everyone to whom the list is sent.”
- Commercial Practice Supports the Interpretation
The judges considered the practical realities of trade, especially the constraints of inventory and supply chains.
They explained that it is standard practice for traders to advertise or circulate prices without being bound to sell at those prices until they accept an order.
> “The mere statement of the price at which the vendor is willing to treat does not amount to an offer.”
- Distinction from Binding Offers (e.g. Carlill)
Though not directly discussed in the case, subsequent case law [5]Carlill v Carbolic Smoke Ball Co draws contrast: where language and conduct clearly show intent to be bound, the court may treat a communication as a binding unilateral offer. Grainger involved no such commitment.
RATIO DECIDENDI (LEGAL RULE):
A price list or catalogue sent to customers does not constitute a legal offer, but merely an invitation to treat. Therefore, no binding contract arises until the seller accepts the customer’s order, which is considered the offer.(Grainger & Son v Gough [1896] AC 325
Application in Nigerian Case Law:
Nigerian courts have applied this rule in several cases to distinguish between pre-contractual communications and binding offers: As seen in these following cases:
In [6]Kabuli v Oyegbola , the Court held that letters exchanged between employer and employee were not conclusive of an offer, but part of negotiations, echoing Grainger’s logic.
In[7] BFI Group Corp v BPE, the Supreme Court affirmed that an invitation to tender is not an offer, but an invitation to treat—just like a price list—until formally accepted.
In [8]Neka B.B.B. Manufacturing Co Ltd v A.C.B. Ltd the court held that incomplete or uncertain communications do not amount to a binding offer, in line with the reasoning in Grainger OBITER DICTA in Grainger & Son v Gough [1896] AC 325 (HL)
Although the core ruling in Grainger was that a price list is an invitation to treat, some remarks made by the judges went beyond what was necessary for deciding the case. These obiter dicta provide additional insights into contract formation, particularly the importance of intention and context in determining whether a statement amounts to an offer.
Lord Herschell (Obiter Remark):“If the circular had contained words to the effect that the sender undertook to supply any of the wines at the prices named to those who applied, then I should have thought it was an offer.”
This statement was not essential to the decision—it is obiter dictum—but it illustrates the importance of wording and intent to be bound.
Lord Herschell acknowledged that context and express terms can turn what would normally be an invitation to treat into a binding offer, particularly in the case of unilateral contracts or specific commitments. This obiter helped shape how courts later distinguished mere invitations from true offers. For example:
In [9]Carlill v Carbolic Smoke Ball Co,an advertisement with specific promises and a bank deposit was treated as an offer, partly reflecting Lord Herschell’s reasoning in Grainger that language showing intent to be bound changes the nature of the communication.
The obiter also foreshadowed modern distinctions between general advertisements (which are invitations) and clear, specific statements with intention to be bound, which may be offers.
OUTCOME
The House of Lords ruled in favour of Grainger & Son. The court held that the price list sent by the wine merchants did not amount to a legal offer, but rather an invitation to treat. Therefore, no binding contract was formed when Gough placed his order in response to the list, as Grainger & Son had not accepted it.Since there was no valid offer and acceptance, the court concluded that no enforceable contract existed, and Grainger & Son were not liable for refusing to supply the wine.
[1] Grainger & Son v Gough [1896] AC 325 (HL).
[2] Partridge v Crittenden [1968] 1 WLR
[3] Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB
[4] Carlill v Carbolic Smoke Ball Co [1893] 1 QB
[5] Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256)
[6] Kabuli v Oyegbola (1990) 4 NWLR
[7] BFI Group Corp v BPE (2012) LPELR-9339(SC)
[8] Neka B.B.B. Manufacturing Co Ltd v A.C.B. Ltd (2004) 2 NWLR (Pt 858) 521
[9] Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256,
