Question

For this discussion, research the Carlill vs. The Carbolic Smokeball Company. You may choose to use the NAU Online Library or any other web search. Provide a short reference list with links of sources used at the bottom of your initial discussion post. (Do not use Wikipedia)
After you have researched this case, provide a brief summary. Include the facts about the case, court ruling, defendant's appeal, judgment, etc. Also, explain whether each element of a contract was met. Additionally, include how this could be applied in today’s business environment. Give an example or scenario in which the circumstances would be similar to the Carbolic Smokeball Case. You may provide an actual case as well.

Brief Fact Summary. The Plaintiff, believing Defendant’s advertisement that its product would prevent influenza, bought a Carbolic Smoke Ball and used it as directed from November 20, 1891 until January 17, 1892, when she caught the flu. Plaintiff brought suit to recover the 100£, which the Court found her entitled to recover. Defendant appealed.

Synopsis of Rule of Law. This case considers whether an advertising gimmick (i.e. the promise to pay 100£ to anyone contracting influenza while using the Carbolic Smoke Ball) can be considered an express contractual promise to pay.

Facts. The Defendant, the Carbolic Smoke Ball Company of London (Defendant), placed an advertisement in several newspapers on November 13, 1891, stating that its product, “The Carbolic Smoke Ball”, when used three times daily, for two weeks, would prevent colds and influenza. The makers of the smoke ball additionally offered a 100£ reward to anyone who caught influenza using their product, guaranteeing this reward by stating in their advertisement that they had deposited 1000£ in the bank as a show of their sincerity. The Plaintiff, Lilli Carlill (Plaintiff), bought a smoke ball and used it as directed. Several weeks after she began using the smoke ball, Plaintiff caught the flu.

Issue. Lindley, L.J., on behalf of the Court of Appeals, notes that the main issue at hand is whether the language in Defendant’s advertisement, regarding the 100£ reward was meant to be an express promise or, rather, a sales puff, which had no meaning whatsoever.

1. LOUISA CARLILL VS CARBOLIC SMOKE BALL COMPANY 7 DECEMBER 1892 LINDLEY LJ, BOWEN LJ, AL SMITH LJ

2. FACTS • Carbolic Smoke Ball Co. (D) manufactured and sold The Carbolic Smoke Ball. The company placed ads in various newspapers offering a reward of 100 pounds to any person who used the smoke ball three times per day as directed and contracted influenza, colds, or any other disease. To show their sincerity, ?1000 is deposited in Alliance Bank. • After seeing the ad, Carlill (P) purchased a ball and used it as directed. Carlill contracted influenza and made a claim for the reward. • Carbolic Smoke Ball refused to pay and Carlill sued for damages arising from breach of contract. Judgment for 100 pounds was entered for Carlill and Carbolic Smoke Ball appealed

3. ISSUE • WAS THERE A BINDING CONTRACT BETWEEN THE PARTIES? - A contract requires notification of acceptance - Did Mrs Carlill notify Carbolic Co of the acceptance of the offer? • THE DEFENDANT ARGUED THAT THERE WAS NO BINDING CONTRACT – the words of the ad did not amount to a promise as: - the ad was too vague to make a contract (no means of checking) - the terms are too vague (no time limit)

4. HELD • The judges unanimously decided that there was a binding contract • Carlill is successful. • Carbolic Co appealed, but was dismissed.

5. JUDGES OPINION – LINDLEY LJ • The ad was an express promise – to pay 100 pounds to anyone who contracts flu after using the ball three times daily x 2 weeks. • The ad was not a mere puff: b/c of this statement “1000 is deposited with the Alliance Bank, shewing our sincerity in the matter” – proof of sincerity to pay • Promise is binding even though not made to anyone in particular – a unilateral offer – ie. “offers to anybody who performs the conditions named in the advertisement, and anybody who does perform the condition accepts the offer”. • The ad is not so vague that it cannot be construed as a promise – the words can be reasonably construed. For example, that if you use the remedy for two weeks, you will not contract the flu within a reasonable time after that. • Notification of acceptance – notification of the acceptance need not precede the performance – “this offer is a continuing offer”

6. JUDGES OPINION – BOWEN LJ • The contract is not too vague to be enforced. Promise was not a mere puff b/c statement that 1000 pounds in bank • An offer can be made to the whole world – and will ripen into a contract with anybody who comes forward and performs the condition • Notification of acceptance - There is no need for notification of acceptance of the offer. (Bowen LJ differs from Lindley LJ on this point) • An inference should be drawn from the transaction itself that if he performs the condition, there is no need for notification. • AL SMITH LJ decides on the same basis as Lindley LJ & Bowen LJ

Answer 1

If an offer is made by means of an Advertisement it is called an open offer which is open to the world and if anyone wants to accept the offer and perform the conditions imposed within the offer then that person would be eligible to be treated as a legal party to the contract.

It is not required to notify the advertisement issuing party that the contract has been accepted, if it is not the part of the offer to notify its acceptance. Also, it is to be noticed that the open offer of this type can be accepted ad performed by any body if proper guidelines and conditions are not imposed.

In the presented case the contract which was advertised, it was not able to defend the case as the company has mentioned the deposition of the prize amount as their token of sincerity which was way too affirmative in an open advertisement to put.

Additionally, include how this could be applied in today’s business environment.

In today’s business environment the same can be applied through the consumer tribunals. There are certain stringent rules in some countries in issuing this type of contracts.

Many companies like automotive ads give this type of open offer to provide free service for certain initial years. Also some telecome service providers provide such conditions as 100 percent network coverage across all locations that may be challenged in the court of law by the consumers.

In these cases it may be noted that the modern day advertisements have are safeguarded by the means of a contract that needs to be agreed upon by the consumer when they avail such service.

All lottery companies also try to advertise in these ways but recent laws prevent them for using such advertising practices which may mislead public.