The Defendants were a medical company named “Carbolic Smoke Ball”. Who manufactured and sold a product called the “smoke ball”, a cure for influenza and a number of other diseases. 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 three times a day for two weeks, according to the instructions provided with it. The advertisement also claimed that £1000 was being deposited into the bank to demonstrate their sincerity. The plaintiff, Mrs Louisa Elizabeth bought one of these balls after seeing the advertisement. She used it three times daily for nearly two months until she contracted the flu on 17 January 1892. She sued the company to recover the money promised in the advertisement. Procedural history
Appeal from decision of Hawkins J. wherein he held that the plaintiff, Ms. Carlill was entitled to recover £100. Issue:
Does an advertisement to the general public promising to pay money to anyone who does something create a binding contract between the parties?
The Defendant argued that there was no contract between it and that there was no acceptance of its offer. So the contract was too vague to be enforced, there was no way to check the conditions were met, you cannot contract with everybody and the timeframe was not specified. Also the acceptance had not been communicated to the offeror. And the last argument was that there was no consideration: nudum pactum. The plaintiff’s argument was that she just followed the constructions. The advertisement was also an offer were under an obligation to fulfil because it was published so it would be read and abided. The promise was also not vague .
The court rejected both arguments of the company, ruling that the advertisement was an offer of a unilateral contract between the Carbolic Smoke Ball Company and anyone who satisfies the conditions set out in the advertisement. According to the judgment of lord justice Lindley, “…the person who makes the offer shows by his language and from the of the transaction that he does not expect and does not require notice of the acceptance apart from notice of the performance.”
The advertisement was an express promise to pay 100 pounds to anyone who contracts flu after using the ball three times daily for two weeks. Also the ad was not a mere puff: “ 1000 is deposited with the Alliance Bank, showing our sincerity in the matter” , which is a proof of sincerity to pay. The promise is binding even though not made particular, a unilateral offer. The advertisement is not so vague that it cannot be construed as a promise because the words can be reasonably construed . Notification of acceptance
The notification of the acceptance need not precede the performance- “ this offer is a continuing offer”. If notice of acceptance is required, the person who makes offer gets the notice of acceptance contemporaneously with the notice of the performance of the condition. Also when there is an offer to the world at large, acceptance is legally valid when the offeree communicates to the offeror notice of performance of the specified conditions. This means acceptance is not legally valid when notification of the performance of the specified conditions does not occur.
There was consideration in this case for two reasons: first reason is that the carbolic received a benefit. In the sales directly beneficial to them by advertising the Carbolic smoke ball. The second reason is that the performance of the specified conditions constitutes consideration for the promise. The judgment of Lord Justice Bowen : How would an ordinary person construe this document? Was it intended that the 100 should, if the conditions were fulfilled, be paid? The advertisement says that 1000 is lodged at the bank for this purpose.
Therefore the statement was not a mere puff, “I think it was intended to be understood by the public as an offer which was to be acted upon.” According to the judgment of Bowen LJ, the contract was not too vague to be enforced. Whereby an offer can be made to the whole world and will ripen into a contract with anybody who comes forward and performs the condition. Notification of acceptance
There is no need for notification of acceptance of the offer ( Bowen LJ differs from Lindley LJ on this point). Because an inference should be drawn from the transaction itself that if he performs the condition there is no need for notification.
Lord Justice Bowel founds that there was consideration for the problem for same reasons as Lindley LJ. The consideration was using the smoke ball and the reason of using the smoke balls would promote their sale. And finally Lord Justice AL Smith decides on same basis as Bowen LJ.
In unilateral contracts, communication of acceptance is not expected or necessary. Advertisements of unilateral contracts are treated as offers. Where the language is clear that an ordinary person would construe an intention to offer, anyone who relies on this offer and performs the required conditions thereby accepts the offer and forms an enforceable contract.
The contract was binding and the defendant was ordered to pay the 100 to the plaintiff. Appeal Dismissed.