Case Analysis: Carlill v Carbolic Smoke Ball Company - Business Law

This case study examines the landmark case of Carlill v. Carbolic Smoke Ball Company [1893] 1 QB 256, focusing on the core legal issues surrounding contract law. The case involves the Carbolic Smoke Ball Company's advertisement promising a reward to anyone who contracted influenza afte...Read More

Running head: BUSINESS LAW
Business Law
Name of the Student
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Author Note

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Table of Contents
Facts of the Case..............................................................................................................................2
Arguments of the plaintiff...............................................................................................................2
Arguments of the defendant.............................................................................................................3
Reason for the decision....................................................................................................................3
Comment on decision of court.........................................................................................................4
References........................................................................................................................................6

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Carlill v Carbolic Smoke ball Company [1893] 1 QB 256
Facts of the Case
The Carlill v Carbolic Smoke Ball Company [1893] held in Court of Appeal is a
landmark case that was decided by Judges Bowen LJ, Lindley LJ and A.L. Smith. As per the
facts of the case, the defendant, Carbolic Smoke Ball Company advertised in the Pall Mall
Gazette and other newspapers in 1891 that its product Carbolic Smoke Ball prevents colds and
influenza, if it is used thrice a day for two weeks. The makers of the product confidently
advertised that anyone who uses the carbolic smoke ball in the prescribed way for a particular
period and still catches cold or influenza afterwards shall be awarded £100 from the company.
The company deposited £1000 in the Alliance Bank as a guarantee of the reward.
The plaintiff Lilli Carlill purchased the Smoke Ball and used it as per its direction but
she caught flu after using it for several weeks. The issue in the case was whether the contract
between the parties was binding upon them. She claimed her £100 from the company and the
court decided in her favor. The defendant made an appeal but the decision was again made in
favor of the plaintiff, entitling her to receive compensation of £100.
Arguments of the plaintiff
The plaintiff argued that the advertisement made by the defendant amounted to a valid
offer which obligated both the parties to fulfill the same. It formed a valid contract as it included
all the valid elements of a contract that is, an offer, an acceptance, consideration and legal
intention (Schwartz & Walters, 2016). The promise was valid and purchase of the product
implied acceptance. The company provided consideration of £100 on performance of the offer.

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The deposition of the £1000 in the bank guaranteeing the reward signified legal intention to
fulfill the offer. Therefore, they were legally bound by the contract.
Arguments of the defendant
The defendant contended that the contract was not binding upon them, as they did not
have any means to check the product-use by consumers or clarify whether the consumer had
used the ball as per the directions. Further, there was no specific time limit and the terms of the
contract was not clear making the offer too vague to make a contract. The defendant also
contended that a person might claim the contracted influenza 10 years after the use of the
product, which would be unjustified. Furthermore, a contract requires an intention to be
communicated to accept the offer or performance of some obvious act.
Reason for the decision
The decision made in favor of the plaintiff was justified based on the reasons provided by
the judges. The judges decided that the advertisement was an express promise as it expressly
stated that £100 shall be paid who contracts influenza or flu after using the product as per
directions for two weeks (Andrews, 2015). The contract was not too vague to become
enforceable, as the promise was not merely a puff that is evident from the fact that it deposited
£1000 in the bank as a guarantee to pay the reward after the fulfillment of the promise. Further,
in unilateral contracts, the notification of performance amounts to acceptance of the offer and the
fulfillment of any particular condition of the offer shall amount to consideration.

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The defendant argued that the words of the promise were ambiguous but it was not too
vague to understand as it clearly stated that any person who fulfils the offer shall be entitled to a
claim of £100 as a reward. Thus, the contract was binding upon the parties.
Comment on decision of court
From the decision of the case, it can be inferred that a promise is binding even in case of
a unilateral offer and the words of the promise can be interpreted reasonably and is not vague. In
case of unilateral contracts, it is not necessary to communicate the acceptance of the offer (Fried,
2015). If an offer made to the world at large does not require notification of performance either
impliedly or expressly, the performance of any particular condition mentioned in the offer shall
amount to an acceptance of the offer and the consideration of the promise as well. Further,
statements made in advertisements may be mere ‘puff’ and does not have a legal binding but if a
clear promissory intention is established that has a legal binding effect, it may amount to a
unilateral offer (Smits, 2017).
The opposing view that was contended by the defendant that the contract was not binding
as contractual terms were vague and acceptance was not notified cannot be agreed to because the
advertisement was a unilateral contract, which is acceptable on fulfilling of its conditions without
requirement of formal acceptance. The advertisement was not merely a puff as the deposits of
£1000 signified sincerity and a guarantee to pay the award on fulfilling the performance. The
consideration element was present which is evident from two instances.
Firstly, the defendant company received benefit in the form of sales resulting from the
advertisement made in the newspaper, which were directly beneficial to the company. Secondly,
performance of any particular condition of the offer shall amount to consideration of promise.

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This is evident from the direct detriment or inconvenience caused to the person who uses the
smoke ball thrice a day for two weeks as per the directions mentioned by the company
(McKendrick, 2014).
In this case, the plaintiff has accepted the unilateral offer made by the defendant and
notified the acceptance after performance of the offer and the offer was continuous without being
revoked (Kötz, 2017). Since the determination of a serious offer shall be determined from the
conduct and words of the parties, the deposition of £1000 in the bank as a guarantee of reward,
the fulfillment of the offer terms by the plaintiff and the continuation of the offer amounts to a
valid contract which is legally binding upon the parties.

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References
Andrews, N. (2015). Contract law. Cambridge University Press.
Carlill v Carbolic Smoke ball Company [1893] 1 QB 256
Fried, C. (2015). Contract as promise: A theory of contractual obligation. Oxford University
Press, USA.
Knapp, C. L., Crystal, N. M., & Prince, H. G. (2016). Problems in Contract Law: cases and
materials. Wolters Kluwer Law & Business.
Kötz, H. (2017). European contract law. Oxford University Press.
McKendrick, E. (2014). Contract law: text, cases, and materials. Oxford University Press (UK).
Schwartz, M. H., & Walters, A. J. (2016). Contracts: A context and practice casebook. Carolina
Academic Press.
Smits, J. M. (Ed.). (2017). Contract law: a comparative introduction. Edward Elgar Publishing.