Case Summary: Carlill v Carbolic Smoke Ball Co. (1893) - Business Law

This case summary analyzes the landmark case of Carlill v Carbolic Smoke Ball Co. The case involved a company that advertised a smoke ball as a cure for influenza and promised a reward to anyone who contracted the illness after using it as directed. The central legal issue was whether the advertisement constituted a binding contract. The court determined that the advertisement represented a unilateral offer, which Mrs. Carlill accepted by purchasing and using the smoke ball as prescribed. The court found that the company's deposit of £1,000 demonstrated its seriousness, and that the plaintiff provided consideration by using the smoke ball. The court ruled in favor of Mrs. Carlill, establishing the formation of an enforceable contract. The case highlights the principles of offer, acceptance, consideration, and the intention to create legal relations in contract law.

CASE SUMMARY
STUDENT ID:
[Pick the date]

Relevant Facts
A company named Carbolic Smoke Ball Co. (the “Defendant”) had designed a cure for
influenza and other related diseases. This product was named as “smoke ball”. On November
13, 1891, the company published an advertisement in various newspapers stating that if any
individual would use the smoke ball in the prescribed manner and still got sick with
influenza, then he/she would be given an amount of £100. In order to highlight the
seriousness of the company regarding the promise, £1,000 was deposited by comoaby with
Alliance Bank. Mrs. Elizabeth Carlill (the “Plaintiff”) saw the advertisement and purchased
the smoke ball. She used the smoke ball in the prescribed manner as suggested by the
company but still got sick with influenza. She sought £100 payment from the company but it
refused payment highlighting that the promise was not serious.
Legal Issues
The key legal issue in the wake of the above facts was to determine if there was an
enforceable contract between the two parties. This needed to be carried out considering the
various prerequisites of formation of a legal contract. Based on the above, it was to be
decided if the company had the contractual obligation of paying £100 to Mrs. Carlill.
Relevant Law
In order to form an enforceable contract, certain key elements such as offer, acceptance,
consideration and intention to create legal relations are required. For determining whether a
promise intended to be offer or not, it needs to be distinguished from a puff. In this regards, it
is pivotal to consider the underlying case facts representing the seriousness of the promise
coupled with the underlying vagueness. An offer which is extended to multiple offerees is
known as unilateral offer. For these offers, acceptance need not be communicated to the
offeror but indulgence in the underlying action automatically indicates acceptance provided
the offer has not been revoked. This is different from bilateral contracts where notification of
acceptance precedes performance but a waiver is available for unilateral contracts
considering their nature. Further, there ought to be mutual consideration present for the
contracting parties to keep the promise and engage in a particular action. Besides, intention to
create legal relations ought to be there which is presumed in commercial transactions.
Actual Decision

The Court of Appeal highlighted that the promise given by the company through the
advertisement formed a unilateral offer. This is because the company in the advertisement
had mentioned the precise method of taking the smoke call and also deposited £1,000 in
Alliance Bank for claim settlement. The plaintiff read the advertisement and thereby
purchased the smoke ball and started consuming it in the manner prescribed by the company.
This action by the plaintiff constituted acceptance of the unilateral offer. Further, there was
consideration involved for both parties. The defendant intended to use the advertisement as a
promotional tool to increase the sale of smoke ball. For the plaintiff, the consideration was
present in the form of £100. As a result, it was decided that there was an enforceable contract
owing to which defendant was directed to make the payment of £100 to plaintiff.