Authored By: Joel Okpa-Iroha
University of Surrey
Court: Court of Appeal
Judgement Date: December 7th or 8th 1892
Citation: 1 Q.B 256
Introduction
Claimant: The claimant in this case is Mrs. Carlill
Defendant: The defendant in this case is the Carbolic Smoke Ball Company.
Nature of the Case: This was a contractual dispute.
Procedural History: Mrs. Carlill, the claimant, filed a claim against the Carbolic Smoke Ball Company to High Court in order to recover the £100 that was advertised by the company. Ultimately, the High Court ruled that Mrs. Carlill was indeed entitled to the £100, holding that a contract had indeed been established between the two parties, and that the claimant was entitled to recover the £100[1]. Displeased with the result of the trial, the Carbolic Smoke Ball Company decided to appeal this verdict, taking the case up to the Court of Appeal.
Facts of the Case
The defendant, the Carbolic Smoke Ball Company, produced and marketed medicine which they claimed could prevent the flu and influenza, which had become a worldwide and deadly pandemic at the time. As a part of their advertising, they offered a monetary reward of £100 to any person who still contracted influenza even after using the smoke ball product in accordance with the instructions for its usage provided to them, which was three doses of the smoke ball per day for a period of two weeks. In order to endues the confidence of their customers, they all but guaranteed the payment of the reward by presenting a bank statement showing that they had deposited £1,000 as proof of their intention to pay the £100 reward. Mrs. Carlill, convinced by the various advertisements of the product in the newspapers, decided to purchase the smoke ball for herself and used it as the company directed, taking it three times a day from November 20th 1891 to January 17th 1892[2]. Despite all the marketing done by Carbolic Smoke Ball Company and the insurance that it would prevent the flu and influenza, Mrs. Carlill still eventually suffered an influenza attack. Mrs. Carlill claimed that she was entitled to the £100 reward that was advertised by the defendant, with the Carbolic Smoke Ball Company claiming that there was no intention to form a contract, with the £100 reward just being a marketing ploy.
Legal Issue
The issues raised by this case was whether:
1) Was the advertisement of a £100 reward meant to be an expressed promise or a mere sales ploy?
2) Was there any notification of the defendant’s acceptance?
3) Was there, in fact, sufficient consideration?
Arguments
The Plaintiff – Mrs. Carlill
The plaintiff argued that the advertisement of the £100 reward constituted as an offer, being that it was made with the intention to be acted upon in case of a situation where someone still contracted influenza after utilising the product, with everyone that bought the smoke ball and followed the prescription given to them subsequently forming contracts ‘with him’[3]. When it comes to the need for communication of the acceptance of the offer, the plaintiff says that merely doing the act of purchasing the product and following the dosage constituted as an acceptance of the proposal in question, citing the words of Lord Blackburn in the case of Brodgen v. Metropolitan Ry. Co. “…when an offer is made to another party, and in that offer there is a request express or implied that he must signify his acceptance by doing some particular thing, then as soon as he does that thing, he is bound.”[4] In regards to notice, the plaintiff holds that notice before the event cannot be required, as an advertisement Is an offer to all of the people who chose to fulfil the condition. They ask for the court to clarify the wording of Lord Campbell’s statement in the case of Gerhard v. Bates[5] whilst also stating that the money that the plaintiff paid to buy the smoke ball proved that consideration existed.
The Appellant – Carbolic Smoke Ball Company
The defendant points out the similarities between this case and the case of Harris v. Nickerson[6], where the advertising of a sale was held to be a mere declaration and did not amount to a contract to anyone who potentially acted upon the said sale, stating that there was no promise to pay anyone £100 since there was no binding contract. The advertisement itself was just an expression of intention to pay £100 as a reward. They point out that the advertisement was too vague to be held as a contract due to the fact that there was no time limit or a way to check the use of the ball itself, which could open up the floodgates to people who claim that they caught influenza after utilising the product for the fortnight and there would be no possible way to disprove their claim. They argue that there must be communication of their intention to accept the offer, or there must be a performance of an act, but it must be overt and not private[7]. The defendant also cites the case of Gerhard v. Bates[8] to argue that there was no consideration present in this case, as there is no consideration moving from the plaintiff[9].
Court Analysis
Legal Reasoning
First of all, the court clarified that they were not dealing with any inference of fact, and that they were instead dealing with an express promise to pay £100 to those who contracted influenza after using the product at the prescribed dosage. The court analysed the advertisement that the Carbolic Smoke Ball Company put out and stated that by assuring the public and those who purchased the product that they were guaranteed the £100 by presenting to them a bank statement that clearly showed that they had deposited £1,000 to show their sincerity, that the advertisement as a whole was not intended to be a mere sales ploy, and that the advertisement was clearly meant to be a promise to pay the £100. The court thoroughly looked into whether all the grounds for a contract was present in this case, appreciating the fact that a notification of an acceptance does not have to precede the performance in this case, holding that the true view in this case that the offeror shows whether they expect or need the notice of the acceptance other than notice of the performance through their language.
Relevant Law
The court takes case of Brogden v. Metropolitan Ry. Co[10] and the words of Lord Blackburn into consideration in this case when considering the requirement of a notification of acceptance when creating a binding contract. The case states that the offeror gets notice of the acceptance at the same time as the notice of the performance of the condition, which helped the court come up with the nuanced conclusion that the offeror in this case does not require the offeree to notify them of their acceptance, and that notifying them of their performance of the condition would suffice.
In addition, the court examines the case of Gerhard v. Bates[11] which was a case that was previously mentioned in the appellant’s argument. They make it clear that the original case showed that the promise was to the original bearer and not the plaintiff, so there was no consideration shown. This is stated, but the court also recognises that the observations made by Lord Campbell may very well have been different if the circumstances were similar to the present case, concluding that there is indeed consideration.
Decision
The Court of Appeal held in favour of the claimant, Mrs. Carlill, and dismissed the appeal made by the Carbolic Smoke Ball Company by unanimous decision. This ruling by the Court of Appeal upheld the prior decision that was previously made by the High Court, which culminated in the £100 compensation that Mrs. Carlill was entitled to as a reward for her suffering an influenza attack after using the smoke ball product being paid out to her in kind.
Significance
The Carlill v. Carbolic Smoke Ball Company case still remains as a cornerstone in contract law to this day, with this being one of the most frequently cited cases in contract law, especially when it pertains to cases that involve reward cases or unilateral contracts, which is when an offer is made to the world at large.
Conclusion
In conclusion, The Carlill v. Carbolic Smoke Ball Company case is an important case in the realm of English contract law as it remains as its foundation, with the case bearing all the necessities and essentials in terms of the formation of a contract since there is mention of an offer, acceptance and an intention to create legal relations. The decision in this case has also establishes the key principles of unilateral contracts, which plays a huge factor as to why it still plays a role in modern day English law.
References
Carlill v Carbolic Smoke Ball Company [1892] 1 Q.B. 257
Carlill v Carbolic Smoke Ball Company [1892] 2 Q.B. 484
Brodgen v. Metropolitan Ry. Co. [1877] 2 App. Cas. 691
Gerhard v. Bates [1853] 118 E.R. 845
Harris v. Nickerson [1872-73] L.R 8 Q.B 286
[1] [1892] 2 Q.B. 484
[2] [1892] 1 Q.B. 257
[3] [1892] 1 Q.B. 258
[4] [1877] 2 App. Cas. 691
[5] [1853] 118 E.R. 845
[6] [1872-73] L.R 8 Q.B 286
[7] ibid (n4)
[8] ibid (n5)
[9] ibid (n3)
[10] ibid (n4)
[11] ibid (n3)
