Carlill v Carbolic Smoke Ball Co.

(1982) 2 QB 484

Apellants: Carlill

Respondent: Carbolic Smoke Ball

Court: Court of Appeal

Facts

A Newspaper advert placed by the defendant stated:-

$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.

$1000 is deposited with the Alliance Bank, shewing our sincerity in the matter.

Mrs Carlill purchased some smoke balls and used them according to the directions and
caught flu. She sought to claim the stated $100 reward.

The defendant raised the following arguments to demonstrate the advertisement was a
mere invitation to treat rather than an offer:

1. The advert was a sales puff and lacked intent to be an offer.

2. It is not possible to make an offer to the world.
3. There was no notification of acceptance.
4. The wording was too vague to constitute an offer since there was no stated time limit
as to catching the flu.
5. There was no consideration provided since the 'offer' did not specify that the user of the
balls must have purchased them.

Issues:

1) Was there a binding contract between the parties?

2) A contract requires notification of acceptance
- Did Mrs Carlill notify Carbolic of the acceptance of the offer?
- Did Mrs Carlill provide consideration in exchange for the 100 pounds reward?

Judgement

The Court of Appeal held that Mrs Carlill was entitled to the reward as the advert
constituted an offer of a unilateral contract which she had accepted by performing the
conditions stated in the offer. The court rejected all the arguments put forward by the
defendants for the following reasons:

1. The statement referring to the deposit of $1,000 demonstrated intent and therefore it
was no
a mere sales puff.
2. It is quite possible to make an offer to the world.
3. In unilateral contracts there is no requirement that the offeree communicates an
intention to accept, since acceptance is through full performance.
4. Whilst there may be some ambiguity in the wording this was capable of being resolved
by applying a reasonable time limit or confining it to only those who caught flu whilst
still using the balls.
5. The defendants would have value in people using the balls even if they had not been
purchased by them directly.

The appeal was dismissed unanimously by all the three judges and Mrs. Carlill finally
received compensation of $100. She lived to the ripe old age of 96. She died on March
10, 1942. According to her doctor principally of old age. There was one cause noted
though: Influenza.
Mr. Roe, owner of Carbolic Smoke ball Co. , continued with his aggressive marketing.
This time he increased the reward to $200 following the loss of the case.

Ratio:
In unilateral contracts, communication of acceptance is not expected or necessary.
If there is an offer to the world at large, and that offer does not expressly or impliedly require
notification of performance, performance of the specified condition in the offer will constitute
acceptance of the offer and consideration for the promise. (The three judges in this case agreed on
this issue).
Statements made in an advertisement may be a mere puff and not intended to be legally
binding. If the advertisement shows a clear promissory intention to be legally bound, it may
constitute a unilateral offer.

Our Opionion: