Carlill v Carbolic Smoke Ball Co

Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1 is an English contract law decision by the Court of Appeal. It is notable for its curious subject matter and how the influential judges (particularly Lindley LJ and Bowen LJ) developed the law in inventive ways. Carlill is frequently discussed as an introductory contract case, and may often be the first legal case a law student studies.

A medical firm advertised that its new wonder drug, a smoke ball, would cure people’s flu, and if it did not, buyers would receive £100. When sued, Carbolic argued the ad was not to be taken as a serious, legally binding offer. It was merely an invitation to treat, and a gimmick. But the court of appeal held that it would appear to a reasonable man that Carbolic had made a serious offer. People had given good “consideration” for it by going to the “distinct inconvenience” of using a faulty product.

Case Facts

Court: Court of Appeal (Civil Division)

Full Case Name: Louisa Carlill v Carbolic Smoke Ball Company

Date Decided: 8th December 1892

Citations:

[1892] EWCA Civil 1,

[1893] 1 QB 256

Judges:

Lindley LJ,

Bowen LJ

And AL Smith LJ

Prior Actions: Carlill v Carbolic Smoke Ball Co [1892] 2 QB 484

Defendant: Carbolic Smoke Ball Company

The company made a product called “Smoke Ball”. It claimed to be a cure to influenza and many other diseases, in the context 1889-1890: Flu pandemic which is estimated to have killed 1 million people. The smoke ball was a rubber ball with a tube fixed to its opening. The ball is filled with Carbolic acid (Phenol). The tube is supposed to be inserted in one of your nostrils and the bottom part of the rubber ball is to be pressed. The gas enters your respiratory tract and flushes out al the viruses.

Advertisement:

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.

“£100 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 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, Regent Street, showing our sincerity in the matter. During the last epidemic of influenza many thousand carbolic smoke balls were sold as preventives 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: “Carbolic Smoke Ball Company, “27, Princes Street, Hanover Square, London.”

Plaintiff: Louisa Carlill

She, believing in the accuracy of the statement made in the advertisement with respect to efficacy of the smoke ball in cases of influenza, purchased one packet and used it thrice everyday from mid November, 1891 until 17th Jan, 1892, at which latter date she had an attack of influenza.

Thereupon, her husband wrote a letter for her to the defendants, stating what had happened, and asking for £100 as promised in the advertisement. They refused and this action was brought in court before Hawkins J. and a special jury. Arguments were heard on both the sides and finally the verdict was given in favor of Mrs. Carlill.

The defendants appealed.

Judgments

The Court of Appeal unanimously rejected the company’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 advertisement was a unilateral offer to the entire world

(2) The satisfying conditions for using the smoke ball constituted acceptance of the offer.

(3) That purchasing or merely using the smoke ball constituted good consideration, because it 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 the company’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.

Lindley.L.J:

He dismissed the appeal. He, giving his decision first and reasons later, explained his judgment answering to all allegations put up by the defendant’s counsel and upholding the lower court’s decision. An excerpt which makes a short shrift of the insurance and wagering contract 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 lie upon 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 the conclusion 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 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 certain events. 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 weeks according to the printed directions supplied with each ball.”

He discussed the following issues with respect to this case:

The advertisement was not a “mere puff” as had been alleged by the defendant. The very fact that £1000 was deposited with Alliance Bank, Regent Street. So what is that money for? What is that passage put in for, except to negative the suggestion that this is a mere puff, and means nothing at all? The deposit is called in aid by the advertisers as proof of their sincerity in the matter. What do they mean?-The advertisement definitely means seriousness.

The advertisement was an offer to the world. It was contended that it is not binding. It is said that it is not made with anybody in particular. In point of law this advertisement is an offer to pay 100ℓ to anybody who will perform these conditions, and the performance of the conditions is the acceptance of the offer.

Communication of acceptance is not necessary for a contract when people’s conduct manifests an intention to contract. But then the defense council put forth a point “Supposing that the performance of the conditions is an acceptance of the offer, that acceptance ought to have been notified.” Unquestionably, as a general proposition, when an offer is made, it is necessary in order to make a binding contract, not only that it should be accepted, but that the acceptance should be notified. But in cases of this kind, it is apprehended that they are an exception to the rule that the notification of the acceptance need not precede the performance. This offer is a continuing offer. It was never revoked, and if notice of acceptance is required, then the person who makes the offer gets the notice of acceptance contemporaneously with his notice of the performance of the condition before his offer is revoked.

The defense counsel has argued that this advertisement is a nudum pactum – that there is no consideration. They say “it is of no advantage to them how much the ball is used”. The judged answered “The answer to that I think is this. It is quite obvious that, in the view of the defendants, the advertisers, a use of the smoke balls by the public, if they can get the public to have confidence enough to use them, will react and produce a sale which is directly beneficial to them, the defendants. Therefore, it appears to me that out of this transaction emerges an advantage to them which is enough to constitute a consideration.” But there is also another view to this point which the Judge Lindley aptly asserts: what about the person who puts himself/ herself in an inconvenient, if not detrimental to his health, while inhaling potent fumes of carbolic gas? So therefore there is ample consideration to this promise.

Bowen, L.J:

He concurred with Lindley, L.J. He was of the same opinion but he also discussed few points with respect to vagueness and time period of the contract. His opinion was more tightly structured in style and frequently cited.

In response to Defense’s council point that this contract is too vague to be enforced. He, dismissing their claim, relied on his construction of the document and he said that there is no time limit fixed for catching influenza, and it cannot seriously be meant to promise to pay money to a person who catches influenza at any time after the inhaling of the smoke ball. There is also great vagueness in the limitation of the persons with whom the contract was intended to be made. But this document was intended to be issued to the public and to be read by public. So it is very important to understand how would a commoner interpret this advertisement? And the effect of this advertisement was to attract people and make them use it, which would amount to more sales, thus more profit. Based on this intention to promote the distribution of the smoke balls and to increase its usage, the advertisement was accepted as a contract addressing public at large but limited to those people who are using it either for prevention or treatment of influenza and other mentioned diseases.

Another point which was discussed in the court was that of the time limit of the contract. How do you define reasonable time period? And after great discussion, the respected judge came to a conclusion that the protection warranted by the contract was to last during the epidemic (1889-90 Flu epidemic).If so, it was during this epidemic that the plaintiff contracted this disease. So the contract holds.

A.L.Smith, L.J:

His judgment was more general and concurred with both Lindley LJ and Bowen LJ’s decisions.

Aftermath

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.

Conclusion

This is the most frequently cited case in the common law of contract, particularly where unilateral contracts are concerned. It provides an excellent study of the basic principles of contract and how they relate to every day life. Essential elements of contract including Offer & Acceptance, Consideration, Intention to create Legal Relations, etc. were mentioned in this case. This case forms the foundation for Contract Law.