Introduction

“In this paper the researcher going to explain about the concept of acceptance without
notification, consideration, unilateral contract through the case of Carlil v. Carbolic Smoke
ball case Carbolic Smoke Ball Company [1892] EWCA Civ. 1 is an English contract
law decision by the Court of Appeal in this case the company on Nov. 13, 1891, published an
advertisement in “Pall Mall Gazette”: that whoever will buy this smoke ball will not contract
influenza. This was basically a general offer, if accepted have to be performed by both the
parties. 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. “Carlil is
frequently discussed as an introductory contract case, and may often be the first legal case a
law student studies in the law of contract.” The Court of appeal discusses essential elements
offer, acceptance, consideration, intention to create legal relations.

Objectives

1. This case in the light of Indian Contract Act 1872.

2. This case in the light of acceptance without notification.

Facts & Arguments

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 all the viruses”1.

1
https://www.oxfordlawtrove.com, (Visited on May 3, 2020)
Advertisement:

On Nov. 13, 1891 an ad was published by the Carbolic Smoke Ball Co. (defendant) in Pall
Mall Gazette i.e. “£ 100 reward will be paid by the Carbolic Smoke Ball Co. to any person
who contracts the increasing epidemic influenza, colds, or any diseases caused by taking
cold, after having used the ball three times daily for two weeks according to the printed
directions supplied with each ball”. £100 was deposited with the Alliance Bank. 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.

On seeing this advertisement Ms. Carlil went and sought at the chemists in Oxford street one
of the smoke balls, she used 3 times daily for two weeks according to the prescribed direction
supplied. However, she contracted influenza. Thereupon her husband wrote a letter for her to
the defendants, stating what had occurred, and asking for the £100 promised by the
defendants in the advertisement. The payment of that sum was refused by the defendants, and
the present action was brought for its recovery.

Issues of the Court

Did the Carbolic Smoke ball company’s ad constitute a contractual offer accepted by
plaintiff’s performance?

a. Was there consideration in this case?

Procedural history

First the case went to the trial court there the judgment was pronounced in the favour of
Carlil

Defendant arguments were: There was no binding contract – the words of the ad did not
amount to a promise because:

 “The company argued that contract was ‘nudum pactum’ means ‘naked promise’ or ‘bare
promise’ because in these agreements no consideration or corresponding value in exchange.
It was mere a puff means the product was praised only to increase its sales”.
• The ad was too vague to make a contract – there was no limit as to time & no means of
checking use of the ball by consumers;

• The terms are too vague to make a contract - no limit as to time – a person might claim they
contracted flu 10 years after using the remedy

• No contract because a contract requires communication of intention to accept the offer or

performance of some overt act

Plaintiff’s arguments were: ad was an offer they were under an obligation to fulfil because it
was published so it would be read and acted upon & it was not an empty boast.

Decision

The promise was not vague & there was consideration. Therefore, it was a binding contract.
Normally one party must have made an offer for a contract to exist, and the other has to have
approved it. Upon approval, a contract will normally be binding to all parties and the
principles of offer and acceptance will generally be used to decide whether a series of
agreements have reached the stage to decide if the parties are expected to fulfill their
commitments.

Reasoning

The reasoning behind this decision was that, as the carbolic smoke ball company said the ad
was merely a puff, but the court stated that ad was not merely a puff because of the statement
“1000 is deposited with the Alliance Bank, shewing our sincerity in the matter” – proof of
sincerity to pay. Though it was general offer, but if a person performs it becomes specific
offer. Promise is binding even though not made to anyone in particular – a unilateral offer –
i.e. “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

Indian Contract Act, 1872

“The second clause of Section 1 of the act says in the most general terms that the act is to
extend to the whole of India except the State of Jammu and Kashmir. These words are wide
enough to include all courts and persons of all the denominations” 2. And it is also written that

2
Dinshaw Fardunji Mulloa, The Indian Contract Act, 15 th ed. 2018, pp. 1 – 2.
provisions in this act should not affect the any other statute. In Madhub Chunder v.
Rajcoomar Doss3 this circumstance gave rise to a question as to the applicability of the
Contract Act to Hindus. The parties were Hindu and the case came before the High Court of
Calcutta in the exercise of its original Jurisdiction. On behalf of the plaintiff it was contended
that Section 27 of the Indian Contract Act did not apply and case was governed by Section 17
of the Statue of 1781 was that agreement was not rendered void under section 27 of the
Contract Act since the Hindu Law of contract did not render the agreement in restrain of trade
void. However, it was held that the act applied to Hindus in view of general words .

Definition of Contract

“A contract is a voluntary agreement between two or more parties that a court will enforce.
The rights and obligations created by a contract apply only to the parties to the contract (i.e.,
those who agreed to them) and not to anyone else”4.

Offer
According to Section 2 (a) of Indian Contract Act, “when one person signifies to another his
willingness to or abstain from doing anything, with a view to obtaining the assent of that
other person either to such act or abstinence, he is said to make a proposal” 5. An offer is an
invitation to other party to enter into a legally binding contract. “An offer is to do something
or abstain from doing something with an intention that other party will do something or
abstain from doing something. Offer is complete when it reaches to offeree”6.

From the above meaning of the offer, you will see that an offer includes the. following
components.

i) It must be a statement of status or ability to do or to swear off accomplishing something.

Accordingly, it might include a 'positive' or a 'negative' demonstration. For model, A
proposals to offer his book to B for Rs. 30. A is making a proposition to accomplish
something i.e., to sell his book. It is a positive follow up on the piece of the proposer A. Then
again when an offers not to record a suit against B if the last pay A the exceptional measure
of Rs. 1,000, the demonstration of A will be a negative one i.e., he is offering to swear off
recording a suit.

3
Madhub Chunder v. Rajcoomar Doss, (1874) 14 BLR 76.
4
Dinshaw Fardunji Mulla, The Indian Contract Act, 15 th ed. 2018, p. 1.
5
https://indiankanoon.org, (Visited on May 1, 2020).
6
https://s3.studentvip.com.au, “The Law of Contract: Offer and Acceptance”, (Visited on May 3, 2020)
ii) It must be made to someone else. There can be no 'proposition' by an individual

to himself,

iii) It must be made with the end goal of getting the consent of that other individual to such
act or forbearance. Along these lines, an unimportant articulation of aim "I may sell my
furniture in the event that I get a decent cost" isn't a proposition.

The individual creating the offer is known as the 'offerer' or the 'promisor' and the individual
to whom it is made is known as the 'offeree'. When the offeree acknowledges the offer, he is
known as the 'acceptor' or the 'promisee'. For instance, Ram offers to sell his bike to Prem for
Rs. 10,000 This is a proposal by Ram. He is the offerer or the promisor. Prem to whom the
offer has been made is the offeree and on the off chance that he consents to purchase the bike
for Rs. 10,000 he turns into the acceptor or the promisee.

Construction of Offer

An offer can be made by any demonstration which has the impact of conveying it to the
other. An offer may either be an 'express offer' or an 'implied' offer

Express Offer: When .an offer is made by words, spoken or composed, it is named as an
express offer. At the point when A says to B that he needs to offer his book to B for Rs. 20, it
is an express offer. Additionally, when A composes a letter to B offering to sell his vehicle to
him for Rs. 40,000, it is likewise an express proposal by A. The oral offer might be made
either face to face or via phone. Section 9 of the Contract Act peruses: "In so far as the
proposition or acknowledgement of any guarantee is made in words, the guarantee is
supposed to be express."

Implied Offer: It is an offer which isn't made by words expressed or composed. A suggested
offer is one which is induced from the lead of an individual or the conditions of the specific
case. For instance, open vehicle like DTC in Delhi or BEST in Bombay runs transports on
various courses to convey travellers who are set up to pay the predetermined passage. This is
a suggested offer. So also, when a coolie gets your gear to convey it from the railroad stage to
the taxi, it implies that the coolie is offering his administration for some instalment. This is a
suggested proposal by the coolie. Section 9 says that "To the extent that such proposition or
acknowledgement is made in any case than in words, the guarantee is supposed to be
inferred."
General Offer
When an offer is made to the public at large it is called general offer. This offer may be
accepted by anyone. For example, an offer to give reward to anybody who finds the lost horse
is a general offer. Though the general offer is made to the public at large, the contract in this
case comes to an end when any person acts upon the conditions of the offer.

The liberty of revoking an offer before acceptance is well known in case of a sale by auction.
Here, the owner of each lot put up for sale makes the auctioneer his agent to invite offersfor it
and “every bidding is nothing more than an offer on one side, which is not binding on either
side till it is assented to Mackenzie v. Chamaroo Singh7. Bidding through a tender process
also invites the application of a similar rule, i.e. the tender may be withdrawn at any time
before it is accepted and such acceptance is communicated to the tenderer. Communication of
such revocation need not necessarily be explicit, but can be deduced from clear conduct.

Similarly, a bid in an auction sale held by a court of law in execution of a decree can be
withdrawn before it is accepted by the court by an order confirming the sale.

Communication

Section 3 of The Indian Contract Act 1872 defines communication, acceptance and
revocation of proposals as “the communication of proposals, the acceptance of proposals, and
the revocation of proposals and acceptances, respectively, are deemed to be made by any act
or omission of the party proposing, accepting or revoking, by which he intends to
communicate such proposal, acceptance or revocation, or which has the effect of
communication it”.8

Communication of a Proposal

This section provides two stages for a valid communication of a proposal. The
communication of the proposal is the first stage. Receipt of the communication by the
acceptor is the second stage. In Powell v. Lee9, the managers of a school resolved to appoint a
person as the headmaster. One of the managers of a school resolved to appoint a person as the
headmaster. One of the managers communicated this to the candidate in his personal

7
Mackenzie v. Chamaroo Singh, (1889) 16 Cal 702.
8
https://indiankanoon.org, (Visited on May 1, 2020).
9
Powell v. Lee, (1908) 99 LT 284 (KB).
capacity. No other communication was received, and subsequently, the managers reversed
their decision. It was held that there was no contract as there had been no authorized
communication on the part of the managers “Non – authorization of communication was held
to imply that the managers reserved power to reconsider the matter.

Communication by silence

Communication should be through some external manifestation which the law regards as
sufficient. As a general rule, neither mere silence nor inaction is an effective expression of
intention. In Felthouse v. Bindley 10, F offered to buy his nephew’s horse for $30. 15s adding
“If I hear no more about him I shall consider the horse mine at $30. 15s”. The nephew did not
communicate his acceptance to F but told B, an auctioneer, to remove the horse by mistake. It
was held that the nephew’s acceptance was not communicated F, the nephew had no
obligation to reply, and his silence did not constitute acceptance. Hence, F’ action for
conversation failed.

Communication however can be inferred from silence in exceptional circumstances. If silence

is reinforced by conduct, or other relevant facts, it may be taken as sufficient communication.
Similarly, substantial delay, i.e. silence and inactivity, by the claimant in pursuing the
reference to arbitration after it has been instituted has been held to amount to a proposal to
abandon it.

Consideration

In common law, a promise isn't, when in doubt, authoritative as an agreement except if it is

bolstered by consideration (or it is made as a deed). The consideration is "something of
significant worth" which is given and is required so as to make the promise enforceable as an
agreement. This is customarily either some drawback to the promisee (in that he may give
esteem) as well as some advantage to the promisor (in that he may get esteem). For instance,
instalment by a purchaser is a thought for the dealer's guarantee to convey merchandise, and
conveyance of products is a thought for the purchaser's guarantee to pay. It follows that a
casual unwarranted guarantee doesn't add up to a contract.

Consideration must be sufficient, but need not be adequate

10
Felthouse v. Bindley, (1862) 11 CBNS 869: (1863) 7 L.T. 835.
Albeit a promise has no authoritative power except if some worth has been given for it,
though need not be sufficient. Courts don't when all is said in done, ask whether a satisfactory
worth has been given (in the feeling of there being any monetary proportionality between the
consideration given and the value of any products or administrations got). This is on the
grounds that they don't ordinarily meddle with the deal made between the gatherings. As
needs are, ostensible thought is adequate

Consideration must not be from the past

The consideration for a promise must be given in return for the promise. Decision in
Eastwood v. Kenyon11 also interesting because it highlights tension between consideration
and moral obligations. “While husband had moral obligation to honour his promise, he did
not have legal obligation (for want of consideration). Decision repudiated doctrine advanced
by Lord Mansfield that consideration was closely tied to moral obligations and, in particular,
that a pre-existing moral obligation furnishes consideration for one’s susequent promise to
pay (a doctrine that essentially dispenses with consideration as a separate requirement)”12.

Consideration must move from the promisee

The promisee must give consideration. Generally, an individual to whom a promise was
made can implement if he himself gave the consideration for it. He has no such right if the
thought moved from an outsider. For instance, if A guarantees B to pay £10,000 to B if C will
paint A's home and C does as such, B can't uphold A's guarantee (except if B had secured or
attempted to acquire C to accomplish the work). In any case, where the states of the Contracts
(Rights of Third Parties) Act 1999 are met, a third a gathering might have the option to
authorize rights made in support of himself by an agreement which he was not a gathering to,
and the courts are likewise embracing an increasingly adaptable position under the precedent-
based law here.

While consideration must move from the promisee, it need not move to the promisor.
Initially, consideration might be fulfilled where the promisee endures some disadvantage at
the promisor's solicitation, however, gives no comparing advantage on the promisor. For
instance, the guarantee to surrender tenure of a level might be satisfactory thought despite the
fact that no immediate advantage results to the promisor 13. Also, consideration may move
from the promisee without moving to the promisor where the promisee, at the promisor's

11
Eastwood v Kenyon, [1840] 11 Ad & E 438, 113 ER 482.
12
Emily M. Weitzenböck, “English Law of Contract: Consideration”, 2012.
13
Ibid.
solicitation, gives an advantage on an outsider. In circumstances where products are
purchased with a charge card, the guarantor makes a guarantee to the provider that s/he will
be paid. The provider gives thought to this by giving merchandise to the client. “The rule of
privity of contract, i.e. contract between A and B for benefit of T cannot be enforced by T (if
T did not provide consideration for the promise(s) concerned) Tweddle v. Atkinson14”.

15
In Combe v. Combe wife started proceedings for divorce and got a decree aginst her
husband. The husband then promised to give her $100 p.a. as permanent maintenance. The
wife did not in fact apply to the Divorce Court for maintenance, but this forbearance was not
at the husband’s request. The decree was made absolute. The annual payments were not made
and the wife sued the husband for his promised by forbearing to apply to court for
maintenance order in her favour. But it was held by the Court of Appeal that the husband had
not requested her to forbear and her action could not be said to have been in return fopr his
promise to pay.

Acceptance
An acceptance is “a manifestation of assent to the terms [of the offer] made by the offeree in
the manner invited or required by the offer”16.In determining if an offeree accepted an offer
and created a contract, a court will look for evidence of three factors: (1) the offeree intended
to enter the contract, (2) the offeree accepted on the terms proposed by the offeror, and (3)
the offeree communicated his acceptance to the offeror.”17

“An acceptance is a definitive and unqualified expression of agreement to the terms and
conditions of offer. An offer again, the receiver must have an objective representation The
bid, expecting to be bound by its terms and conditions” 18. Please accept an offer, whether it is
to form an arrangement, in compliance with its particular terms. It must suit the bid exactly,
and accept all terms. By actions, an offer can be accepted (for example, an offer to buy
products can be to the offeror to be accepted). Acceptance has no legal effect until the
Offeror is notified (because it may cause the offeror to be bound by hardship without
understanding that they had accepted his offer). The general concept is an acceptance by post,
will take effect when the acceptance letter is posted (even if the letter may be lost, delayed or
destroyed).

14
Tweddle v Atkinson, [1861] EWHC QB J57.
15
Combe v. Combe, (1951) 2 KB 215: [1951]
16
Dinshaw Fardunji Mulla, The Indian Contract Act, 15th ed. 2018, p. 42
17
Understanding the Roles of Offer and Acceptance in the Formation of a Contract, by
18
Dinshaw Fardunji Mulla, The Indian Contract Act, 15th ed. 2018, pp. 42 – 45.
However, the postal principle won't have any significant bearing on the off chance that it is
prohibited by the express terms of the offer. “An offer which expects acknowledgement to be
conveyed in a predefined way can, for the most part, be acknowledged uniquely in that
manner. On the off chance that acknowledgement happens through a momentary medium, for
example, email, it will take impact at that point and spot of receipt” 19. Note that an offeror
can't specify that the offeree's quite adds up to acknowledgement. A correspondence neglects
to produce results as an acknowledgment where it endeavors to shift the conditions of an
offer. In such cases, it is a counter-offer, which the first offeror can either acknowledge or
dismiss. For instance, where the offeror offers to exchange on its standard terms and the
offeree indicates to acknowledge, however on its own standard terms, that speaks to a
counter-offer. Making a counteroffer adds up to a dismissal of the first offer which can't in
this manner be re-established or acknowledged (except if the gatherings concur). It is
imperative to recognize a counter-offer from an insignificant solicitation for additional data
with respect to the first offer.

An offer might be renounced whenever before its acknowledgement, be that as it may, the
disavowal must be conveyed to the offeree. In spite of the fact that disavowal need not be
conveyed by the offeror actually (it tends to be made by a solid outsider), on the off chance
that it isn't imparted, the denial is ineffectual. When an offer has been acknowledged, the
gatherings have an understanding. That is the reason for an agreement yet isn't adequate in
itself to make lawful commitments.

Acceptance of performance

As an ordinary rule of law, an acceptance of an offer made ought to be notified to the person
who makes the offer, in order that the two minds may come together20. However, if the
person making the offer that it will be sufficient to act on the proposal without
21
communicating acceptance without notification. Section 54 of the Restatement states that
“where an offer invites an offeree to accept by rendering a performance, no notification is
necessary to make such an acceptance effective unless the offer requests such a
notification”22.

Unilateral Contract
19
http://uputd.gov.in, “The Indian Contract Act, 1872”, (Visited on June 29, 2020)
20
Becker, William & Connolly, Terry & Slaughter, Jerel, “The effect of job offer timing on offer acceptance,
performance”, 2010.
21
https://indiankanoon.org, (Visited on May 19, 2020)
22
Dinshaw Fardunji Mulla, The Indian Contract Act, 15th ed. 2018, p. 178.
Suppose A says to B, "I will give you Rs. 500 if you walk across the Bridge," and B walks. Is
there a contract? It is clear that A is not asking B for B's promise to walk across the Bridge.
What A wants from B is the act of walking across the bridge. When B has walked across the
bridge there is a contract, and A is then bound to pay to B Rs. 500. At that moment there
arises a unilateral contract.23 Similarly in this case the Carbolic company only want the
patient/plaintiff to perform the action of using the smoke ball for the given time period. So,
this is the basically unilateral contract, in which one party ask another party to perform. “If
there is an offer to the world at large, and that offer does not expressly or impliedly require
notification of performance, performance of the specified condition in the offer will
constitute acceptance of the offer and consideration for the promise.” 24 When an act is thus
wanted in return for a promise, a unilateral contract is created when the act is done. It is clear
that only one party is bound.

To explain the laws on offer and acceptance, the principles of unilateral and reciprocal
contracts need to be understood. Most of such arrangements are bilateral. This means that
each party assumes and responsibility, usually by pledging something to the other-as there are
still reciprocal obligations that are called bilateral. By comparison, a unilateral contract
occurs where a contractual obligation is claimed by one party only. Examples could be
offering to give your mother £50 if she gives up smoking for a year or pay someone who
finds your missing bag a £100 reward.

Conclusion

For a contract to be valid there must be a definite offer by one party and its unconditional
acceptance by the other. There are various concepts included in this paper. “There is an offer
to the world at large, and that offer does not expressly or impliedly require notification of
23
The true conception of unilateral contracts, by Maurice Wormser, Vol. 26 Yale Law Journal, p. 136, 1916
24
Carlill v Carbolic Smoke Ball Co [1892] 2 QB 484, by Claire Macken, p. 1
performance, performance of the specified condition in the offer will constitute acceptance of
the offer and consideration for the promise”. In Carbolic company case an offer made by the
company was though general offer, but when Carlil accepted it, it became specific offer
because she used the ball according to the direction. And the claim by defendant “as mere
puff” was not accepted by court. Statements made in an advertisement may be a mere “puff”
and not intended to be legally binding. If the advertisement shows a clear promissory
intention to be legally bound, it may constitute a unilateral offer.