CASE LAW: CARLIL V. CARBOLIC SMOKE BALL COMPANY
DECIDED: 7 DECEMBER 1892
CITATION: Q.B. 256 (Court of Appeal 1893)
BENCH: Lord Justice Bowen, Lord Justice Lindley and Lord Justice A L Smith
INTRODUCTION:
It is an English contract law decision by the Court of Appeal, which held an advertisement containing certain terms to get a reward, constituted a binding unilateral offer that could be accepted by anyone who performed its terms. Carlill is frequently discussed as an introductory contract case, and may often be the first legal case a law student studies in the law of contract.
FACTS:
The Carbolic Smoke Ball Company manufactured the ‘Carbolic Smoke Ball’, which was designed to prevent users from contracting influenza or similar diseases. The company claimed that the medicine would cure influenza and other diseases related to sore throat and other cold flu. The product was made with rubber which was attached to a tube filled with carbolic acid.
The user had to insert the tube in the nose and squeeze the ball to release the vapours. The company advertised their product in various newspapers. The advertisement stated that the company would award 100 pounds to any person who contracted the increasing epidemic of influenza, cold, or any other disease related to cold after using the carbolic ball three times every day for two weeks. The person was asked to follow the directions printed on the products. Furthermore, the company deposited 1000 pounds in the Alliance Bank on Regent Street, thus showing how sincere they were towards this matter.
The claimant Mrs. Carlill, believed the advertisement to be true and purchased the Smoke Ball. She used it three times. Following this, she contracted influenza, thus making the advertisement untrue and vague. She sought the £100 reward from Carbolic but was denied on the grounds that the product was not utilized as per the instructions and also stated that they did not intend the advertisement to be an actual offer.
After being denied, she brought suit seeking to claim her reward. Carbolic argued that the advertisement did not constitute an offer because it was merely an expression of their confidence in the product. No notification of acceptance was received, and Carlill provided no consideration.
The claim was brought before the court of Justice Hawkins and a special jury which decided in favour of the claimant. The claimant won the case in the court, wherein the Hon’ble court stated that there was a contract between the claimant and the defendant. Following this decision, an appeal was filed by the defendant.
HELD:
The Court of Appeal held the essential elements of a contract were all present, including offer and acceptance, consideration and an intention to create legal relations, and rejected a number of defenses, including puffery.
FINDINGS:
In determining this case, the court relied on prior cases in the English courts to refute the defendant’s arguments:
First, the court held that the advertisement was an offer. The advertisement itself was clear and distinct in its offer to pay any user who complied with the stated conditions of the use of the ball but still contracted influenza. In addition, the advertisement stated that Carbolic deposited £1000 in a bank, “showing their sincerity in the matter.” Because there was no language stating otherwise, the advertisement was a clear offer that was valid until revoked.
Next, the court found that the offer was accepted by Carlill when she performed the actions required by the advertisement. Because the advertisement did not specify a manner of acceptance and the nature of the advertisement implied that no formal acceptance was needed, acceptance by performance was deemed valid.
Finally, the court found valid consideration. In exchange for receiving the reward, Carlill had to purchase the ball and provide money to Carbolic, and she was inconvenienced by having to use the ball as instructed. This was enough to constitute valid consideration. By finding a valid offer, acceptance, and consideration, the court established the precedent that an advertisement, unless stated otherwise, is a valid offer of a contract.