This landmark case had defined as to what it is to create an “offer” in an advertisement, and how a member of the public successfully argued that they had “accepted” the offer and performed under the terms of the advertisement (contract).
A company named Carbolic Smoke Ball placed an advertisement in the Pall Mall Gazette in 1891, claiming that they have found the treatment of the epidemic influenza virus. They have introduced a product called Smoke Ball that can prevent from causing influenza and a number of other such diseases ( which includes fever, whooping cough, laryingitis and sore throasts). In context of the 1889-1890 flu pandemic (estimated to have killed 1 million people). The smoke ball was a rubber ball with a tube attached. It was filled with carbolic acid. The tube would be inserted into the user`s nose and squeezed at the bottom to release the vapors. The nose would run, ostensibly flushing out viral infection. The company mentioned that if a person purchased and used this product but still contracted to influenza despite properly following the instructions would be entitled to a reward of £100. They further stated that the company had sincerely placed £1000 in a bank as a reward. The company`s advertised (in part) that:
“£100 rewards 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. £1000 is deposited with the Alliance Bank, Regent Street, showing our sincerity in the matter”
After seeing the advertisement Mrs. Carlill had purchased and consumed the medicine as per the directions despite that she got contracted with the disease. She attempted to claim the £100 reward from the defendant but they contended that they are not bound to pay the reward as it was the general offer not an invitation to offer. Thus, the plaintiff had not technically provided acceptance; the working of the advertisement was insufficiently precise; and, that there was no consideration as necessary for creation of a binding contract in law. She took the Carbolic Smoke Ball Company to the court to claim her £100. The court found in her favor, but the defendant appealed.
- Whether or not there was a binding contract between the parties.
- Whether or not there was a notification of acceptance of the offer.
- Whether or not the consideration was provided in exchange for the £100 rewards.
(1) The defendant argued that there was no binding contract between the company and Mrs. Carlill as the words of the advertisement did not amount to a promise because of the following reasons:
-The advertisement was too vague to make a contract and there was no limit as to time & no means of checking of the product usage by the consumers.
-The term are too vague to make a contract no limit as to time by which a person can claim that they contacted flu 10 years after using the remedy.
-There was no contract because a contract requires communication of intention to accept the offer or performance of some overt act or the approval had actually not been interacted to the defendant.
The plaintiff`s argument was that she just followed the instructions and guideline given on the newspaper. The advertisement was an offer that they were under an obligation to fulfill because it was published so it would be read and acted upon and it was not an empty boast.
The promise was likewise not vague as in there was clearly mentioned about everything and there was consideration available.
The Court of Appeal unanimously had rejected the company`s argument and had held that there was a fully binding contract for £100 with Mrs. Carlill.
(1) The advertisement was a unilateral offer to the entire world but restricted to those who acted upon the advertisement.
(2) The satisfying conditions for using the smoke ball constituted acceptance of the offer made.
(3) That purchasing or merely using the smoke ball constituted good consideration.
(4) That the company`s claim that £1000 was being deposited at the Alliance Bank showed the intention to be legally bound.
- Offer can be Unilateral: In the case the advertisement was a unilateral offer but limited to those who had fulfilled the condition.
- Essence to create a binding contract: The judge (Lindley & Bowen) had claimed that there was offer and acceptance to establish a contract. Offer: reward of £100 and Acceptance: Mrs. Carlill had bought and had used the smoke ball.
Author: PRANJALI PANDYA,
Damodaram Sanjivayya National Law University, Visakhaptnam,