Carlill v. Carbolic smoke ball is one such landmark case law that has not just earned a name but also a reference for law students. It is an English Contract Law decision by the court of appeal.
Full case name- Louisa Carlill v. Carbolic Smoke Ball Company
Date Decided- 8th December 1892
Judges- Justice Lindley, Justice Bowen, and Justice Smith
Plaintiff- Louisa Carlill
Defendant- Carbolic smoke ball company
FACTS OF THE CASE
The Carbolic smoke ball company made a product called the Smoke Ball. They came up with a new advertising strategy that would require the company to advertise their smoke ball and claimed that the smoke ball was a cure to influenza, high fever, coughs and colds, headache, and many other diseases. The company was very confident about their product. They also claim that the smoke ball not only possesses the ability to cure influenza but also prevents one from getting any type of flu.
The company Published advertisements in all the newspapers, claiming that it would pay £100 to anyone who got sick with influenza after using their product. The company also stated that the company had also gone as far as to deposit £1000 in a certain Alliance Bank. This deposit was made by the company in the event of any claim that could be made in place of their advertisements.
The advertisements read up as follows-
£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 believing in the accuracy of the statement of the smoke ball in cases of influenza, purchased one packet. She followed all the procedures of using the carbolic smoke ball. Even after following all the procedures she still caught the flu. Therefore, the plaintiff claimed £100 from the Carbolic smoke ball company as promised in the advertisement. They refused the claim and the action was brought up in court before the three-judge bench justice. Arguments were heard on both sides and finally, the verdict was given in favor of Mrs. Carlill.
The defendants appealed.
- Whether Mrs. Carlill was required to communicate her acceptance of the offer to Carbolic Smoke Ball Company?
- Was there any consideration made?
- If there was a binding effect of the agreement between the parties?
DEFENDANTS ARGUMENTS –
The Carbolic Smoke Ball Company argued that their offer didn’t have a binding effect on them to form a legal contract. They reasoned that the word used in the advertisement didn’t amount to promise because the advertisement was not clear in terms to form a contract.
Second, they argued that there was no limit to the amount of time spent and there was no way to monitor the use of the smoke ball by consumers.
Thirdly, there was no contract because to make a contract requires communication for all all-purpose of the acceptance. In this case, Carlill didn’t send any acceptance about the offer.
Thus, it is clear that the advertisement was just a marketing strategy and the company has no intention of creating any kind of contract while offering a worldwide offer.
The plaintiff on the other hand said that the promise was not vague and also the formulation of the offer was such that it was clear that in case the product doesn’t work and wasn’t effective the company would reward a certain amount. And also to imply the same company had deposited in the alliance bank account. Thus, their act of depositing the amount is proof of their intention to make a contract. The plaintiff also proved that there was a consideration in form of money paid to buy the carbolic smoke ball. Thus, the company has to fulfill its part of the bargain.
The court of appeal unanimously rejected the company’s argument and held that there was a fully binding contract for £100 with Mrs. Carlill and finally Mrs. Carlill received compensation of £100.
Reasons given by the three judges are as follows-
- That the offer was a unilateral offer to the entire world.
- The satisfying condition for using the smoke ball constituted acceptance of the offer.
- The purchasing of the smoke ball constituted good consideration.
- The company’s claim that £1000 was deposited at the Alliance Bank showed the serious intention to be legally bound.
This is one of the most frequently cited cases in the English Common Contract Law. It is a perfect example of unilateral contracts. Essential elements of the contract including offer, acceptance, consideration, etc. were mentioned in this case. This case has become a foundation case for contract law.
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