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

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

Court Name: The Court of Appeal, The Queen’s Bench

Name of the Judges: Lindley LJ, Bowen LJ and AL Smith LJ.

Date of Judgment: 7 December 1892

Parties Involved:

Defendant: Carbolic Smoke Ball Company, a British manufacturing company that  manufactured, sold and advertised its product, Smoke Ball. The newspaper advertisement  claimed that the Smoke Balls, if used correctly, would prevent influenza. In an attempt to sound  convincing, the company offered a reward of £100 to anyone who got infected with influenza  after using their Smoke Balls correctly. To give this claim weight, they deposited an amount of  £1,000 in a bank account. 

Claimant: Mrs. Louisa Elizabeth Carlill, a consumer who relied on the advertisement and  purchased the Smoke Ball, after which she contracted influence. 

Case Facts:

The Carbolic Smoke Ball Company (the defendant) advertised a smoke ball product in the  newspaper, claiming that purchasers of the product who used it according to the specified  instructions and still developed influenza would be rewarded £100. In addition, to imply the  sincerity of the reward, the company placed £1,000 in a bank account. For this reason, Mrs.  Louisa Elizabeth Carlill (the claimant) purchased some smoke balls. Even though she followed  the proper specified instructions, she got infected with influenza. She was denied the claimed  reward from the defendants. Upon being rejected for the reward, she sued the company. 

Issues raised:

It was up to the court to decide:

1. If the newspaper advertisement represented an offer or was mere ‘puffery’. In context, they had to decide whether a statement made to the public could constitute a legally binding offer.
2. If the newspaper advertisement was found to be an offer, did the claimant provide acceptance? This requires consideration of whether performance or fulfilling the conditions of the offer could constitute acceptance into a unilateral contract.
3. Whether there was sufficient consideration. Did the claimant’s action of purchasing the Smoke Ball, using it according to the instructions and still contracting influenza, amount to consideration?
4. Whether there is an intent to be legally bound. It was up to the court to decide if the terms of the advertisement show intent or were empty boasts.

Arguments of the parties:

Defendants:

The Carbolic Smoke Ball Company claimed that the newspaper advertisement was an  invitation to treat and not an offer because an advertisement was mere ‘puffery’.

1. They claimed that the newspaper advertisement lacked intent. This is because an offer made through an advertisement could not be applicable to the world, with reference to Week v Tibold¹.
2. The claimant had not accepted, nor communicated acceptance. To establish a contract, there needs to be communication of acceptance or some plain act, as demonstrated in Denton v Great Northern Ry. Co². Acting upon the contract in private is insufficient, as  demonstrated in Brogden v Metropolitan Ry. Co³.
3. The phrasing of the newspaper advertisement was too vague to be sufficient for a binding contract with reference to Harris v Nickerson⁴. In addition, it lacked a time limit as established in Guthing v Lynn⁵. 
4. The newspaper advertisement could not verify if the product had truly been used correctly as specified in the product instructions, as demonstrated in the case of Williams v Carwardine⁶.
5. There was no consideration, as in Gerhard v Bates⁷. If the contract was held to exist, then it would warrant liability towards people who stole the Smoke Balls for a reward claim. 
6. If a contract were to be found existing, it should be a ‘wagering’ contract, which was void.

Claimant:

Mrs. Louisa Elizabeth Carlill argued that there was an existing contract between them, based  on the company’s advertisement and her reliance on it, causing her to buy and use the Smoke  Ball. 

1. The newspaper advertisement was an offer. This is because it was made to be read and acted upon. It was not made to be perceived as an empty brag. In Gerhard v Bates⁸, it was never found that if there was a direct invitation to act, and upon acting on the faith  of it, there was no consideration. In Denton v Great Northern Ry. Co⁹., the act was a  ‘public’ act and not a ‘secret’ act. 
2. The public advertisement becomes a contract when a person does the specified act. The claimants argued that the newspaper advertisement was only an expression to pay £100 to a person who fulfils two conditions, rather than a plea to do something. ‘There is no  more consideration in using the Ball than in contracting influenza’ with reference to  Brogden v Metropolitan Ry. Co¹⁰.
3. Communication is not necessary, especially when a person proposes using the Smoke Ball, as they need to report to the company. Given that the newspaper advertisement was made to the world. This implied that rather than a notice, only acting upon the  fulfilment of the conditions was required with reference to Spencer v Harding¹¹.  Nothing beyond it could be inferred. This was demonstrated in Brogden v Metropolitan  Ry. Co¹². The case of William v Cardwardine¹³ shows that notice to the offeror is not  required when it is a promise. Furthermore, it was recognised that a fortnight’s use  should suffice to suggest the safety of the consumer for a reasonable time.
4. The terms were not vague or uncertain because, firstly, whether the claimant purchased the Smoke Balls directly from the defendant or through a middleman should not matter since the defendant would be profiting from the sale regardless. 

Court Judgment:

The court of appeal held that the newspaper advertisement amounted to an offer to enter a  unilateral contract by the defendants. 

The unilateral contract did not need communication of acceptance, as stated by the court. Mrs.  Louisa Elizabeth Carlill’s performance of the specified conditions satisfied the court’s  consideration of acceptance. By fulfilling the conditions prescribed by the newspaper  advertisement, the claimant accepted. Additionally, it was held that the advertisement’s  sincerity was credited by its claim despite the defendant’s denial of intent to enter a contract. It  was found that even an offer made to the world can be considered if its wording is reasonably  clear to imply the terms. It was held that consideration was found in the use of the Smoke Balls. 

Legal Reasoning/ Ratio Decidendi:

A unilateral offer made to the public through an advertisement can be accepted by anyone who  meets the conditions stated in the offer. Additionally, such performance will be deemed as both acceptance and consideration. This will result in making the contract legally binding. This is  especially where the advertiser demonstrates an intention to be bound, in this case, by  depositing money in the bank account.

1. The newspaper advertisement is an offer:

The advertisement, being mere ‘puffery’, was rejected by the court. This was especially  because of the language used in the advertisement. “£100 reward will be paid”. Further,  depositing £1,000 in the bank account showed an intention to be bound by the advertisement.  It was held that offers can be made to the world. 

2. Acceptance and Performance of the Contract:

The court held that acceptance can generally be proved by satisfying the conditions of the  contract rather than a formal notice of acceptance, in cases of unilateral contracts. The claimant  used the Smoke Ball as directed and still got infected with influenza. This was held to be  sufficient acceptance. 

3. Consideration:

It was held that consideration for the company’s promise was the expense and difficulty  sustained by the claimant because of her use of the Smoke Ball. The court also found that the

company profited from the sales gained because of the advertisement, which further proved  consideration. 

Conclusion:

Carlill v Carbolic Smoke Ball Co¹⁴ is an important case in the concept of contract law regarding various facets such as unilateral contracts and their enforceability. It established that if a public  global advertisement is sufficiently explicit, clearly worded and shows clear signs to be legally  bound by its language, it may be considered a contractual offer. The Court concluded that the  company’s intention was represented in the company’s statement of a £100 reward in the  newspaper advertisement. In addition, the £1,000 deposit placed in the bank account further  demonstrated this. Even though there is an absence of a formal agreement, by using the Smoke  Ball correctly and according to the instructions, Mrs. Carlill’s subsequent sickness amounted  to both acceptance and consideration. This was important in order to prove that agreeing to the  terms of a unilateral offer constituted accepting it.

Further, the ruling supported the objective method of establishing contractual purpose rather  than diverging into subjective interpretations. There was heavy emphasis on how a reasonable  person would have interpreted the parties’ words and actions. Considering the above, Carlill  continues to serve as a strong foundation to understand contract law. It influenced how  companies and consumers (B2C) contracts are interpreted today, as well as how its elements  of offer, acceptance, intent, communication and consideration are understood.

Bibliography:

Table of Cases:

¹ Week v Tibold (1603) 1 Roll. Abr. 6 (M.)

² Denton v Great Northern Railway Co (1856) 20 JP 483

³ Alexander Brogden and other appellants; and the directors v Metropolitan Rail Co Respondents (1877) 2 App  Cas 666

⁴ Harris v Nickerson (1873) LR 8 QB 286

⁵ Guthing (or Gething) v Lynn (1831) 2 B & Ad 232

⁶ Williams v Carwardine (1833) 4 B & Ad 621

⁷ Gerhard v Bates (1853) 118 ER 845

⁸Ibid.

⁹ Denton (n2)

¹⁰ Brogden (n3)

¹¹ Spencer v Harding (1870) LR 5 CP 561

¹² Brogden (n3)

¹³ William (n6)

¹⁴ Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256