On today’s episode of the Learning the law series, we’d be taking a glossary look at another landmark English case. The case of Carlill v Carbolic Smoke Ball Company.
Carlill v Carbolic Smoke Ball Company is a seminal case in English contract law and remains an important case which shaped English law, especially the law of contract. This case distinguishes a valid offer from puffery in advertising and provides what forms a valid contract in law viz a viz a mere puffery.
In general, the Carlill v Carbolic Smoke Ball Company case held that an advertisement containing certain terms to get a reward constituted a binding unilateral offer that could be accepted by anyone who performed its terms.
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Here are the facts of the case;
In the years 1889-1890, there was an outbreak of flu and everyone was scrambling for a cure inorder not to get infected. The Carbolic Smoke Ball Company, a pharmaceutical company made a medical product which they called the “smoke ball” and claimed it to be the cure for flu and other diseases.
As a way of proving the authenticity of the smoke ball drug, the company advertised that anybody who purchased the drug and used it religiously as prescribed and the person who ends up contracting the flu will be rewarded with £100. The company claimed that they have in fact deposited the sum of £1000 with the bank to this effect as sincerity that they will fulfill the promise.
Mrs Louisa Elizabeth Carlill saw the advertisement, purchased the smoke balls and used it as prescribed for about two months but she ended up contracting the flu. She then sent a letter to the Carbolic Smoke Ball company demanding a £100 reward from them claiming that she had used the drug as judiciously as prescribed for straight two months but she still contracted the flu.
The Carbolic Smoke Ball Company ignored her letters which forced her to institute an action in court for the claim of the £100. In the defense of the company, the company claimed that the advertisement they made claiming to reward users £100 if their product fails is mere puffery which does not validly form a contract hence why Mrs Carlill cannot lay claims to the £100.
The Court held otherwise and unanimously rejected the company’s arguments and held that there was a fully binding contract for £100 between the Carbolic Smoke Ball Company and Mrs Louisa Elizabeth Carlill and since Mrs Carlill have fulfilled her part of the contract, the company must correspondingly fulfill their own part of the contract.
The court in their ratio decidendi submitted that; the advertisement was not a unilateral invitation to treat to the whole world but an offer restricted to those who acted upon the terms contained in the advertisement; the satisfying conditions for using the smoke ball constitutes acceptance of the offer; the purchasing or merely using the smoke ball constitute good consideration; and the company’s claim that £1000 was deposited at the Alliance Bank showed the serious intention to be legally bound in the contract.
Therefore, this can be in every good conscience said to be a valid contract in law which after one party has fulfilled his or her obligation, the other party to the contract must fulfill his or her own side of the obligation so as not to be held for breach of contract.
Thus, once there is an offer, acceptance and a consideration, a contract is formed, and every party to that contract is bound by the terms of the contract.
Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1