Carlill v Carbolic Smoke Ball Co PDF

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The document can be used to teach the principles of law of contract....

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Carlill v Carbolic Smoke Ball Co Court of Appeal [1893] 1 QB 256

Facts The Carbolic Smoke Ball Co produced the 'Carbolic Smoke Ball' designed to prevent users contracting influenza or similar illnesses. The company's advertised (in part) that: “100 pounds reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the increasing epidemic influenza, colds, or any disease caused by taking cold, after having used the ball three times daily for two weeks according to the printed directions supplied with each ball. 1,000 pounds is deposited with the Alliance Bank, Regent Street, showing our sincerity in the matter”. After seeing this advertisement Mrs Carlill bought one of the balls and used it as directed. She subsequently caught the flu and claimed the reward. The company refused to pay. Mrs Carlill sued for the reward. Held Mrs Carlill was entitled to the reward. There was a unilateral contract comprising the offer (by advertisement) of the Carbolic Smoke Ball company) and the acceptance (by performance of conditions stated in the offer) by Mrs Carlill. 

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There was a valid offer o An offer can be made to the world o This was not a mere sales puff (as evidenced, in part, by the statement that the company had deposited £1,000 to demonstrate sincerity) o The language was not too vague to be enforced Although as a general rule communication of acceptance is required, the offeror may dispense with the need for notification and had done so in this case. Here, it was implicit that the offeree (Mrs Carlill) did not need to communicate an intention to accept; rather acceptance occurred through performance of the requested acts (using the smoke ball) There was consideration; the inconvenience suffered by Mrs Carlill in using the smokeball as directed was sufficient consideration. In addition, the Carbolic Smoke Ball received a benefit in having people use the smoke ball.

Some more detail The claim Mrs Carlill sued, arguing that there was a contract between the parties, based on the company's advertisement and her reliance on it in purchasing and using the Smoke Ball. It was argued:

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The advertisement was clearly an offer; it was designed to be read and acted upon and was not an empty boast The advertisement was made to the public and as soon as a person does the specified act there is a contract o Merely performing the act constitutes acceptance; further communication is not necessary: in particular, it 'never was intended that a person proposing to use the smoke ball should go to the office and obtain a repetition of the statements in the advertisement. ... Where an offer is made to all the world, nothing can be imported beyond the fulfillment of the conditions. Notice before the event cannot be required; the advertisement is an offer made to any person who fulfils the condition ...' The terms are not too vague and uncertain o It would not matter if Mrs Carlill had not bought the balls directly from the defendant, as an increased sale would constitute a benefit to the defendants even if via a middleman. o On the issue of the absence of a time limitation, it was noted that there were several possible constructions; it may be that 'a fortnight's use will make a person safe for a reasonable time.'

The defence Carbolic Smoke Ball Co argued there was no binding contract. They argued that, while the words in the advertisement expressed an intention, they did not amount to a promise. They further argued:    

the advertisement was too vague to constitute a contract (in particular, it is not time limited and it would not be possible to check whether the ball had been used or used correctly) there was no consideration from the plaintiff - the terms of the alleged contract would enable someone who stole and used the balls to claim the reward to make a contract by performing a condition there needs to be either communication of intention to accept the offer or performance of some overt act; in particular, merely performing an act in private is not sufficient if there was a contract it was a 'wagering' contract (void under statute at the time)

At trial: Justice Hawkins held that Mrs Carlill was entitled to recover the reward. Held: Lord Justice Lindley Promise or puff? Lord Justice Lindley observed that there was an express promise to pay £100 in certain events: 'Read the advertisement how you will, and twist it about as you will, here is a distinct promise expressed in language which is perfectly unmistakable -

£100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the influenza after having used the ball three times daily for two weeks according to the printed directions supplied with each ball." ' It was not a mere puff; this conclusion was based on the passage in the advertisement stating that £1,000 was deposited with the bank to show sincerity. This could have no other purpose than to negate any suggestion that this was a mere puff. Was it a binding promise? Is notification of acceptance required? Noted this advertisement was an offer to pay £100 to anyone who performed the stated conditions, 'and the performance of the conditions is the acceptance of the offer'. On the issue of whether notification of acceptance was required: Unquestionably, as a general proposition, when an offer is made, it is necessary in order to make a binding contract, not only that it should be accepted, but that the acceptance should be notified. But cases such as this constitute an exception to this general proposition or, 'if not an exception, they are open to the observation that the notification of the acceptance need not precede the performance. This offer is a continuing offer. It was never revoked, and if notice of acceptance is required - which I doubt very much ... the person who makes the offer gets the notice of acceptance contemporaneously with his notice of the performance of the condition. If he gets notice of the acceptance before his offer is revoked, that in principle is all you want. I, however, think that the true view, in a case of this kind, is that the person who makes the offer shews by his language and from the nature of the transaction that he does not expect and does not require notice of the acceptance apart from notice of the performance.'...