Contract Law Cases - Carlill vs. Smoke Ball Company
Carlill vs. The Smoke Ball Company (1893)
Mrs. Carlill was an elderly woman who purchased a smokeball from the Smoke Ball Company after seeing their poster which declared "£100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the influenza after having used the ball three times daily for two weeks according to the printed directions supplied with each ball."
Mrs. Carlill used the item as instructed but still caught the flu; she then attempted to claim the £100, but was rejected by the company on the ground that the advertisement was merely a 'sales puff' since you couldn't make a contractual offer to the entire world. The company also pointed out that contracts require notified acceptance, and since Mrs Carlill did not notify them that she wanted to accept the offer, she could not claim the reward.
The Court of Appeal ruled that Mrs. Carlill was owed the money due to the following facts:
- The ad showed a clear promise on which the company was contractually obliged to follow through.
- You can in fact make an offer to the rest of the world and that this is exactly what the Smoke Ball Company's advertisement did. This makes the ad an unilateral offer, so anyone that fulfilled the expressed conditions was entitled to the reward.
- Advertisements are an exception to the general rule that one must provide notification of their acceptance of a contract to the other parties. This is because the contracts are made with the implied expectation that anyone who fulfils the conditions stated have accepted the offer
Lord Justice Lindley's View of the Case
- "Was it a mere puff? My answer to that question is no, and I base my answer upon this passage: "£1000 is deposited with the Alliance Bank, showing our sincerity in the matter'... The deposit is called in aid by the advertiser as proof of his sincerity in the matter."
- These advertisements "are of offers to anybody who performs the conditions... and anybody who does perform the condition accepts the offer."
- "Unquestionably, as a general proposition, when an offer is made, it is necessary in order to make a binding contract, not only that it should be accepted, but that the acceptance should be notified. But is that so in cases of this kind? I apprehend that they are an exception to that rule, or, if not an exception, they are open to the observation that the notification of the acceptance need not precede the performance."
Lessons to take away
- Unilateral contracts can be made to the whole world.
- In the cases of 'condition' and 'reward' in advertisements, there is no need for the party wishing to fulfil the conditions to give notification of accepting the offer.
- Don't buy a smoke ball.
Final Comment on Carlill vs. The Smoke Ball Company
This case was the attempt of a company to trick the public into feeling confident in their product by feigning a reward. Unfortunately for them however, the court of law found that they had made a real contract after all.
As for Mrs. Carlill, she received her £100 and lived to the ripe old age of 96 when she, funnily enough, died of the flu.
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