INTRODUCTION:

Carlill vs. Carbolic Smoke Ball case dealt with the question if to consider
whether an advertising company gimmick can be considered as express
contractual promise to pay. Here since a unilateral contract was made,
acceptance can be made without formal communication.

FACTS:

The defendant company that is Carbolic Smoke Ball Co. was a London
based company. On November 13th, 1891 they placed an advertisement in
several newspapers stating that their product “The Carbolic Smoke Ball”, if
used three times daily for two weeks then that person would not be affected
by colds and influenza. The company additionally offered to pay 100£
as reward if anyone caught influenza using their product. They also
guaranteed this reward by showing a bank statement saying they had already
deposited 1000£ in the bank to show their sincerity. Lili Carlill, the plaintiff had
bought this smoke ball and used it as directed by the company. Few weeks
later, she caught flu.

LEGAL ISSUES:

1. Whether there was any binding effect of the contract between the
parties?
2. Whether the contract in question required a formal notification of
acceptance?
3. Whether Mrs. Carlill was required to communicate her acceptance
of the offer to the Carbolic Smoke Ball Company?
4. Whether Mrs. Carlill provided any consideration in exchange for the
reward of £100 offered by the company?

CONTENTIONS:

Defendant’s contentions –

 The defendant company argued that the offer that they made didn’t
have a binding impact in order to form a valid contract.
 Secondly, they contended that there was no means of checking how
the customer used the product or what procedure the customer used.
 Thirdly, there was no contract since there was no intention to accept
and there was no formal communication.
 Thus the advertisement was just a marketing strategy and there was no
intention to form any contract.

Plaintiff’s contentions –
  Firstly, the plaintiff argued that promise was not vague and also the
construction of the offer was clear which said if the product isn’t
effective then the company would reward certain amount for the same.
 Secondly, by depositing large amount in the Alliance bank account,
proved the intention to form an agreement from one side.
 Thirdly, the plaintiffs proved that consideration existed in the form of
money paid to buy the smoke ball.
 Thus, the advertisement was not merely an empty boast. It
characterized all the essentials required to form a contract, more
precisely a unilateral contract. Thus the company has to fulfill its part.

RATIO DECIDENDI:

The judges sitting to hear this case were Justice Lindley, Justice
Bowen and Justice A.L Smith. All the 3 judges unanimously rejected the
arguments made by the defendants. The reasons given by the judges
were:

1. To the entire world, the advertisement was a unilateral offer.

2. The acceptance of the offer satisfies the conditions required for
using the smoke ball.
3. The purchasing or using the smoke ball can be considered as a good
consideration.
4. The company’s deposit of £1000 in the Alliance bank showed
the intention to be legally bound.

DECISION:

The court unanimously dismissed the appeal made by defendants and Mrs.
Carlill received the compensation of £100. The judges stated that
the advertisement shall be treated as an express promise and according to
this promise; anyone who contracts the flu despite the preventive ability of the
smoke ball as claimed by the company will be paid £100 provided that the ball
is utilized as per the directions.

CONCLUSION:

The particular judgment made in Carlill v. Carbolic Smoke ball Co. made a
huge impact on English contract law. This is the most cited case in the
common law of contract mostly if the case is concerned with unilateral
contracts. After this judgment the companies and agencies are more
careful about what they advertise to the world at large. It lays foundation
to contract law as all the essential elements are mentioned such
as offer and acceptance, intention to form legal relationship etc.