Contract Offer and Acceptance

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  • 8/4/2019 Contract Offer and Acceptance


    Contract offer and acceptance

    Carlill v Carbolic Smoke Ball Company

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    Carlill v Carbolic Smoke Ball Co

    Court Court of Appeal (Civil Division)

    Full case nameLouisa Carlill v Carbolic Smoke

    Ball Company

    Date decided 7 December 1893

    Citation(s)[1892] EWCA Civ 1, [1893] 1QB 256

    Judge(s) sittingLindley LJ, Bowen LJ and ALSmith LJ

    Case history

    Prior action(s)Carlill v Carbolic Smoke Ball Co

    [1892] 2 QB 484 (QBD)


    action(s) none

    Case opinions

    Lindley LJ, Bowen LJ and AL Smith LJ

    Carlill v Carbolic Smoke Ball Company [1893] EWCA Civ 1 is an English contract law

    decision by the Court of Appeal. It is notable for its curious subject matter and how theinfluential judges (particularly Lindley LJ and Bowen LJ) developed the law in inventive ways.

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    Carlillis frequently discussed as an introductory contract case, and may often be the first legalcase a law student studies.

    The case concerned a flu remedy called the "carbolic smoke ball". The manufacturer advertised

    that buyers who found it did not work would be awarded 100, a considerable amount of money

    at the time. The company was found to have been bound by its advertisement, which it construedas creating a contract. The Court of Appeal held the essential elements of a contract were allpresent, including offer and acceptance, consideration and an intention to create legal relations.



    y 1 Factsy 2 Judgment

    o 2.1 Lord Justice Lindleyo 2.2 Lord Justice Boweno 2.3 Lord Justice AL Smith

    y 3 Significancey 4 Aftermathy 5 See alsoy 6 Notesy 7 Referencesy 8 External links

    [edit] FactsThe Carbolic Smoke Ball Company made a product called the "smoke ball". It claimed to be acure forinfluenza and a number of other diseases, in the context of the 1889-1890 'flu pandemic

    which is estimated to have killed 1 million people. The smoke ball was a rubber ball with a tubeattached. It was filled with carbolic acid (phenol). The tube was then inserted into the user's nose.

    It was squeezed at the bottom to release the vapours into the nose of the user. This would causethe nose to run, and hopefully flush out the viral infection.

    The Company published advertisements in the Pall Mall Gazette and other newspapers on

    November 13, 1891, claiming that it would pay 100 to anyone who got sick with influenza after

    using its product according to the instructions set out in the advertisement.


    reward will be paid by the Carbolic Smoke Ball Company to any person who contracts

    the increasing epidemic influenza colds, or any disease caused by taking cold, after having usedthe ball three times daily for two weeks, according to the printed directions supplied with each


    1000 is deposited with the Alliance Bank, Regent Street, showing our sincerity in the matter.

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    During the last epidemic of influenza many thousand carbolic smoke balls were sold aspreventives against this disease, and in no ascertained case was the disease contracted by those

    using the carbolic smoke ball.

    One carbolic smoke ball will last a family several months, making it the cheapest remedy in the

    world at the price, 10s. post free. The ball can be refilled at a cost of 5s. Address: C

    arbolicSmoke Ball Company, 27, Princes Street, Hanover Square, London.

    Mrs Louisa Elizabeth Carlill saw the advertisement, bought one of the balls and used three timesdaily for nearly two months until she contracted the flu on January 17, 1892. She claimed 100

    from the Carbolic Smoke Ball Company. They ignored two letters from her husband, who hadtrained as a solicitor. On a third request for her reward, they replied with an anonymous letter

    that if it is used properly the company had complete confidence in the smoke ball's efficacy, but"to protect themselves against all fraudulent claims" they would need her to come to their office

    to use the ball each day and be checked by the secretary. Mrs Carlill brought a claim to court.The barristers representing her argued that the advertisement and her reliance on it was a contract

    between her and the company, and so they ought to pay. The company argued it was not aserious contract.

    [edit] Judgment

    See also: Litigation before the judgment in Carlill v Carbolic Smoke Ball Company

    The Carbolic Smoke Ball Company, despite being represented by HH Asquith, lost its argument

    at the Queen's Bench. It appealed straight away. The Court of Appeal unanimously rejected thecompany's arguments and held that there was a fully binding contract for 100 with Mrs Carlill.

    Among the reasons given by the three judges were (1) that the advert was a unilateral offer to all

    the world (2) that satisfying conditions for using the smoke ball constituted acceptance of theoffer (3) that purchasing or merely using the smoke ball constituted good consideration, becauseit was a distinct detriment incurred at the behest of the company and, furthermore, more people

    buying smoke balls by relying on the advert was a clear benefit to Carbolic (4) that thecompany's claim that 1000 was deposited at the Alliance Bank showed the serious intention to

    be legally bound. The judgments of the court were as follows.[2]

    [edit] Lord Justice Lindley

    Lindley LJ gave the first judgment, after running through the facts again. He makes short shriftof the insurance and wagering contract arguments that were dealt with in the Queen's Bench.

    I will begin by referring to two points which were raised in the Court below. I refer

    to them simply for the purpose of dismissing them. First, it is said no action will lieupon this contract because it is a policy. You have only to look at the advertisement

    to dismiss that suggestion. Then it was said that it is a bet. Hawkins, J., came to theconclusion that nobody ever dreamt of a bet, and that the transaction had nothing

    whatever in common with a bet. I so entirely agree with him that I pass over this

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    contention also as not worth serious attention.

    Then, what is left? The first observation I will make is that we are not dealing with

    any inference of fact. We are dealing with an express promise to pay 100. in certainevents. Read the advertisement how you will, and twist it about as you will, here is a

    distinct promise expressed in language which is perfectly unmistakable

    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 weeksaccording to the printed directions supplied with each ball.

    Already, it is apparent which way that Lindley LJ will decide. Judges often differ in their style,

    and in 19th century cases it was more usual to be short and direct, giving the decision first andthen the reasons. Since the later 20th century, judges have made their opinions ever longer and

    wordier, often dealing with all sides and points of argument before reaching conclusions. He

    follows on with essentially five points. First, the advert was not "mere puff" as had been allegedby the company, because the deposit of 1000 in the bank evidenced seriousness.[3] Second, theadvertisement was an offer to the world. Third, communication of acceptance is not necessary

    for a contract when people's conduct manifests an intention to contract. Fourth, that thevagueness of the advert's terms was no insurmountable obstacle. And fifth, the nature of Mrs

    Carlill's consideration (what she gave in return for the offer) was good, because there is both anadvantage in additional sales in reaction to the advertisement and a "distinct inconvenience" that

    people go to use a smoke ball.

    Lord Justice Lindley was a prolific author, widely known for his work on partnership

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    and company law.

    We must first consider whether this was intended to be a promise at all, or whether it

    was a mere puff which meant nothing. Was it a mere puff? My answer to thatquestion is No, and I base my answer upon this passage: 1000. is deposited with

    the Alliance Bank, shewing our sincerity in the matter. Now, for what was thatmoney deposited or that statement made except to negative the suggestion that this

    was a mere puff and meant nothing at all? The deposit is called in aid by theadvertiser as proof of his sincerity in the matter - that is, the sincerity of his promise

    to pay this 100. in the event which he has specified. I say this for the purpose ofgiving point to the observation that we are not inferring a promise; there is the

    promise, as plain as words can make it.

    Then it is contended that it is not binding. In the first place, it is said that it is not

    made with anybody in particular. Now that point is common to the words of thisadvertisement and to the words of all other advertisements offering rewards. They

    are offers to anybody who performs the conditions named in the advertisement, andanybody who does perform the condition accepts the offer. In point of law this

    advertisement is an offer to pay 100. to anybody who will perform these conditions,and the performance of the conditions is the acceptance of the offer. That rests upon

    a string of authorities, the earliest of which is Williams v Carwardine,[4]

    which hasbeen followed by many other de

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