INDEX

1. INTRODUCTION
2. CASE FACTS
3. ISSUE
4. HOLDING AND LAW
5. JUDGEMENT
6. AFTERMATH
7. CONCLUSION
 CA-2

A Case Study on,

CARLILL V. CARBOLIC SMOKE BALL CO.

SUBMITTED TO SUBMITTEED BY

MAMIHA KAPILA MA’AM BHUMIKA SHAH

SCHOOL OF LAW SEC.- L1704

LOVELY PROFESSIONAL UNIVERSITY REG. NO.- 11719334

INTRODUCTION:

Court: Court of Appeal (Civil Division)

Full Case Name: Louisa Carlill v Carbolic Smoke Ball CompanyDate Decided: 8th December
1892

Judges: Lindley LJ, Bowen LJ and AL Smith LJ

Defendant: Carbolic Smoke Ball Company

Plaintiff: Louisa Carlill

Carlill v Carbolic Smoke Ball Company is an English contract law decision by the Court of
Appeal. It is notable for its curious subject matter and how the influential judges (particularly
Lindley LJ and Bowen LJ) developed the law in inventive ways. Carlill is frequently discussed
as an introductory contract case, and may often be the first legal case a law student studies.

A medical firm advertised that its new wonder drug, a smoke ball, would cure people's flu, and if
it did not, buyers would receive £100. When sued, Carbolic argued the ad was not to be taken as
a serious, legally binding offer. It was merely an invitation to treat, and a gimmick. But the court
of appeal held that it would appear to a reasonable man that Carbolic had made a serious offer.
People had given good "consideration" for it by going to the "distinct inconvenience" of using a
faulty product.

Case Facts

The company made a product called “Smoke Ball". It claimed to be a cure to influenza and many
other diseases, in the context 1889-1890: Flu pandemic which is estimated to have killed 1
million people. The smoke ball was a rubber ball with a tube fixed to its opening. The ball is
filled with Carbolic acid (Phenol). The tube is supposed to be inserted in one of your nostrils and
the bottom part of the rubber ball is to be pressed. The gas enters your respiratory tract and
flushes out all the viruses.

Advertisement:
The Company published advertisements in the Pall Mall Gazette and other newspapers on
November 13, 1891, claiming that it would pay £100 to anyone who got sick with influenza after
using its product according to the instructions set out in the advertisement.

“£100 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.
£1000 is deposited with the Alliance Bank, Regent Street, showing our sincerity in the matter.
During the last epidemic of influenza many thousand carbolic smoke balls were sold as
preventives against this disease, and in no ascertained case was the disease contracted by those
using the carbolic smoke ball. One carbolic smoke ball will last a family several months, making
it the cheapest remedy in the world at the price, 10s post free. The ball can be refilled at a cost of
5s. Address: “Carbolic Smoke Ball Company, “27, Princes Street, Hanover Square, London."

Plaintiff:

Louisa Carlill

She, believing in the accuracy of the statement made in the advertisement with respect to
efficacy of the smoke ball in cases of influenza, purchased one packet and used it thrice everyday
from mid November, 1891 until 17th Jan, 1892, at which latter date she had an attack of
influenza.

Thereupon, her husband wrote a letter for her to the defendants, stating what had happened, and
asking for £100 as promised in the advertisement. They refused and this action was brought in
court before Hawkins J. and a special jury. Arguments were heard on both the sides and finally
the verdict was given in favor of Mrs. Carlill.

The defendants appealed.

Issue

Can an advertisement be construed as a unilateral offer inviting acceptance to form a contract?

Holding and Law

Yes. The court held that an advertisement could be construed as a unilateral offer to the entire
world. The court went further to determine that where an offer is made with the intent to sell
more goods, notification of acceptance of the offer is not necessary, and that performance of
the condition sought by the offeror would be sufficient. In this case, use of the Carbolic Smoke
Ball as directed (along with eventual contraction of the flu) constituted the performance of the
condition in the offer and acceptance of the offer – resulting in a contract. The court even
determined the price paid by the defendant’s customers for the Carbolic Smoke Ball to
be consideration.

Addressing the defendant’s argument that the advertisement was mere puffing, or puffery, the
court stated that where an advertisement contains language underscoring the sincerity of the offer
(i.e. £1000 has been deposited in a local bank account) it is very plainly a promise to pay.

Judgments
The Court of Appeal unanimously rejected the company's arguments and held that there was a
fully binding contract for £100 with Mrs. Carlill

Among the reasons given by the three judges were

(1) That the advertisement was a unilateral offer to the entire world

(2) The satisfying conditions for using the smoke ball constituted acceptance of the offer.

(3) That purchasing or merely using the smoke ball constituted good consideration, because it
was a distinct detriment incurred at the behest of the company and, furthermore, more people
buying smoke balls by relying on the advert was a clear benefit to Carbolic

(4) That the company's claim that £1000 was deposited at the Alliance Bank showed the serious
intention to be legally bound.

The judgments of the court were as follows.

Lindley.L.J:

He dismissed the appeal. He, giving his decision first and reasons later, explained his judgment
answering to all allegations put up by the defendant’s counsel and upholding the lower court’s
decision. An excerpt which makes a short shrift of the insurance and wagering contract that were
dealt with in the Queen’s Bench

“I will begin by referring to two points which were raised in the Court below. I refer to them
simply for the purpose of dismissing them. First, it is said no action will lie upon this contract
because it is a policy. You have only to look at the advertisement to dismiss that suggestion.
Then it was said that it is a bet. Hawkins, J., came to the conclusion that nobody ever dreamt of a
bet, and that the transaction had nothing whatever in common with a bet. I so entirely agree with
him that I pass over this contention also as not worth serious attention.

Then, what is left? The first observation I will make is that we are not dealing with any inference
of fact. We are dealing with 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."

He discussed the following issues with respect to this case:

The advertisement was not a “mere puff" as had been alleged by the defendant. The very fact
that £1000 was deposited with Alliance Bank, Regent Street. So what is that money for? What is
that passage put in for, except to negative the suggestion that this is a mere puff, and means
nothing at all? The deposit is called in aid by the advertisers as proof of their sincerity in the
matter. What do they mean?-The advertisement definitely means seriousness.

The advertisement was an offer to the world. It was contended that it is not binding. It is said that
it is not made with anybody in particular. In point of law this advertisement is an offer to pay
100ℓ to anybody who will perform these conditions, and the performance of the conditions is the
acceptance of the offer.
Communication of acceptance is not necessary for a contract when people's conduct manifests an
intention to contract. But then the defense council put forth a point “Supposing that the
performance of the conditions is an acceptance of the offer, that acceptance ought to have been
notified." 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 in cases of this kind, it is apprehended that they are an exception to the
rule 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, then the person
who makes the offer gets the notice of acceptance contemporaneously with his notice of the
performance of the condition before his offer is revoked.

The defense counsel has argued that this advertisement is a nudum pactum – that there is no
consideration. They say “it is of no advantage to them how much the ball is used". The judged
answered “The answer to that I think is this. It is quite obvious that, in the view of the
defendants, the advertisers, a use of the smoke balls by the public, if they can get the public to
have confidence enough to use them, will react and produce a sale which is directly beneficial to
them, the defendants. Therefore, it appears to me that out of this transaction emerges an
advantage to them which is enough to constitute a consideration." But there is also another view
to this point which the Judge Lindley aptly asserts: what about the person who puts himself/
herself in an inconvenient, if not detrimental to his health, while inhaling potent fumes of
carbolic gas? So therefore there is ample consideration to this promise.

Bowen, L.J:

He concurred with Lindley, L.J. He was of the same opinion but he also discussed few points
with respect to vagueness and time period of the contract. His opinion was more tightly
structured in style and frequently cited.

In response to Defense’s council point that this contract is too vague to be enforced. He,
dismissing their claim, relied on his construction of the document and he said that there is no
time limit fixed for catching influenza, and it cannot seriously be meant to promise to pay money
to a person who catches influenza at any time after the inhaling of the smoke ball. There is also
great vagueness in the limitation of the persons with whom the contract was intended to be made.
But this document was intended to be issued to the public and to be read by public. So it is very
important to understand how would a commoner interpret this advertisement? And the effect of
this advertisement was to attract people and make them use it, which would amount to more
sales, thus more profit. Based on this intention to promote the distribution of the smoke balls and
to increase its usage, the advertisement was accepted as a contract addressing public at large but
limited to those people who are using it either for prevention or treatment of influenza and other
mentioned diseases.

Another point which was discussed in the court was that of the time limit of the contract. How do
you define reasonable time period? And after great discussion, the respected judge came to a
conclusion that the protection warranted by the contract was to last during the epidemic (1889-90
Flu epidemic).If so, it was during this epidemic that the plaintiff contracted this disease. So the
contract holds.

A.L.Smith, L.J:

His judgment was more general and concurred with both Lindley LJ and Bowen LJ's decisions.

Aftermath

The appeal was dismissed unanimously by all the three judges and Mrs. Carlill finally received
compensation of £100. She lived to the ripe old age of 96. She died on March 10, 1942;
according to her doctor principally of old age. There was one cause noted though: Influenza.

Mr. Roe, owner of Carbolic Smoke ball Co., continued with his aggressive marketing. This time
he increased the reward to £200 following the loss of the case.

Conclusion

This is the most frequently cited case in the common law of contract, particularly where
unilateral contracts are concerned. It provides an excellent study of the basic principles of
contract and how they relate to every day life. Essential elements of contract including Offer &
Acceptance, Consideration, Intention to create Legal Relations, etc. were mentioned in this case.
This case forms the foundation for Contract Law.
BIBLIOGRAPHY

1. LAW OF CONTRACTS BY R.K. BANGIA

2. WIKIPEDIA