Contract Law

Carlill v. Carbolic Smoke Ball Co.

[1893] 1 QB 256

Facts

The Carbolic Smoke Ball Company advertised that it would pay £100 to anyone who used its smoke ball as directed and still contracted influenza.
The advertisement stated that £1,000 had been deposited in a bank to show the company’s sincerity.
Mrs Carlill purchased the smoke ball and used it according to the instructions.
She nevertheless contracted influenza.
She claimed the promised £100 reward.
The company refused payment.
It argued that the advertisement was merely promotional language and not a serious legal offer.
It also argued that:
the advertisement was too vague;
it was made to the public at large;
Mrs Carlill had not communicated acceptance;
there was no consideration;
the arrangement was too uncertain to create a contract.

Whether the advertisement amounted to a legally binding offer.
Whether Mrs Carlill accepted that offer and supplied valid consideration by performing the stated conditions.

An advertisement may amount to an offer where its language shows a clear intention to be bound.
An offer may be made to the world at large.
In a unilateral contract, acceptance occurs through complete performance of the required act.
Prior communication of acceptance is unnecessary where the offer itself invites acceptance by performance.
Consideration exists where the offeree undertakes inconvenience or performs an act requested by the offeror.

The Court examined the language and commercial context of the advertisement.
The promise was not treated as empty sales talk.
The statement that £1,000 had been deposited in a bank showed seriousness and an intention to create legal obligations.
The offer was sufficiently certain:
the reward was fixed at £100;
the required use was described;
the relevant event was contracting influenza after proper use.
The fact that the advertisement was made to the public did not prevent contractual effect.
It was a unilateral offer capable of acceptance by any person who performed its conditions.
Mrs Carlill accepted by:
obtaining the product;
using it as directed;
contracting influenza despite such use.
She did not need to notify the company in advance that she intended to accept.
The company had invited performance, not a return promise.
Consideration was also present.
Mrs Carlill suffered inconvenience by using the smoke ball as directed.
The company also obtained a commercial benefit because the advertisement encouraged sales and public confidence in the product.
The Court rejected the argument that the promise was too vague.
The wording could be interpreted reasonably and did not need impossible precision.
The company could not advertise a serious reward to induce public action and later dismiss it as mere exaggeration once the condition was fulfilled.

The Court held that the advertisement was a valid unilateral offer to the world.
Mrs Carlill accepted it by performing the required conditions.
Her use of the product constituted consideration.
The company was therefore bound to pay her £100.
Use this case for: an advertisement can be a binding unilateral offer where it is clear, serious and accepted by performance.