COURT CASE REVIEW

BUSINESS LAW (3235)

Case : CARLILL V CARBOLIC SMOKE BALL COMPANY

1. Who are the plaintiffs and the defendants in the case ?

Plaintiff is Louisa Carlill

Defendant is Carbolic Smoke Ball Company.

2. What are the fact(s) in the case ?

Plaintiff is 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

Defendant is Carbolic Smoke Ball Company. he 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.

3. In chronological order, what levels of administrative (due process hearing)

and court proceedings have taken place until a settlement was reached?

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. he 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

4. What is the nature of dispute?

Does one who makes a unilateral offer for the sale of goods by means of an
advertisement impliedly waive notification of acceptance, if his purpose is to sell as
much product as possible?

5. How was the case resolved and why?

The court of appeal held that Mrs Carlill was entitled to the reward as the advert
constituted an offer of a unilateral contract which she had accepted by performing the
conditions a stated in the offer. The court rejected all the arguments put forward by the
defendants for the following reason. 1)The statement referring to the deposit 1000
pound demonstrated intent and therefore it was not mere sales puff. 2)it is quite
possible to make an offer to the world. 3)The defendants would have value in people
using balls even if they had not been purchased by them directly. 4)Whilst there may be
some ambiguity in the wording this was capable of being resolved by applying a
reasonable time limit or confining it to only those who caught flu whilst still using the
balls. and the win of this case is Mrs Carlill.

6. What precedent (Rule) was set in the case?

One who makes a unilateral offer for the sale of goods by means of an advertisement
impliedly waives notification of acceptance if his purpose is to sell as much as possible.
The court held that the person who makes an offer may decline to require notice of
acceptance if he or she wishes. One who makes an offer dispenses with the
requirement of notice of acceptance if the form of the offer shows that notice of
acceptance is not required. To accept an offer, a person need follow the indicated
method of acceptance. If the offered either expressly or impliedly inimates in his office
that it will be sufficient acceptance without notification. The court held that an
advertisement is considered to be an offer when it specifies the quantity of persons who
are eligible to accept its terms. If such an advertisement requires performance. The
offered isnot required to give notice of his performance. The court addressed the issue
puffing, the court pointed to carbolic smoke ball claim in the advertisement that it had
deposited 100 pounds with alliance bank, which the court decided was intended to
demonstrate the company sincerity in paying the reward. section was use in this case is
section 2(a) definition of offer, section 2(b) definition of acceptance and section 4(1)
communication when complete.
Case :FELTHOUSE V BINDLEY

1. Who are the plaintiffs and the defendants in the case?

Plaintiff is Paul Felthouse

Defendant is Mr Bindley

2. What are the fact(s) in the case?

The complainant, Paul Felthouse, had a conversation with his nephew, John Felthouse,
about buying his horse. After their discussion, the uncle replied by letter stating that if he
didn’t hear anymore from his nephew concerning the horse, he would consider
acceptance of the order done and he would own the horse. His nephew did not reply to
this letter and was busy at auctions. The defendant, Mr Bindley, ran the auctions and
the nephew advised him not to sell the horse. However, by accident he ended up selling
the horse to someone else.

3. In chronological order, what levels of administrative (due process hearing)

and court proceedings have taken place until a settlement was reached?

The court ruled that Felthouse did not have ownership of the horse as there was no
acceptance of the contract. Acceptance must be communicated clearly and cannot be
imposed due to silence of one of the parties. The uncle had no right to impose a sale
through silence whereby the contract would only fail by repudiation. Though the nephew
expressed interest in completing the sale there was no communication of that intention
until before the horse was sold at auction on 25 February. The nephew's letter of 27
February which was submitted as evidence by Felthouse was judged to be the first
instance of communication where the acceptance was communicated to the
offeror(Felthouse).And by this time, the horse had already been sold.
AccordinglyFelthouse had no interest in the property.

4. What is the nature of dispute?

was whether silence or a failure to reject an offer amount to acceptance?

 5. How was the case resolved and why?

It was held that there was no contract for the horse between the complainant and his
nephew. There had not been an acceptance of the offer; silence did not amount to
acceptance and an obligation cannot be imposed by another. Any acceptance of an
offer must be communicated clearly. Although the nephew had intended to sell the
horse to the complainant and showed this interest, there was no contract of sale. Thus,
the nephew’s failure to respond to the complainant did not amount to an acceptance of
his offer. and the win of this case is Mr Bindley

6. What precedent (Rule) was set in the case?

Paul Felthouse offered to buy a particular horse from his nephew and stated (in a
written offer) that ‘if I hear no more about him, I consider the horse mine at £30 15s’. His
nephew did not reply but instructed the auctioneer, Bindley, not to sell the horse.
Bindley mistakenly sold the horse. Felthouse sued the auctioneer for conversion. To
succeed in an action for conversion Felthouse needed to demonstrate that he owned
the horse at the time of the sale; to do this he needed to prove that there was a contract
between himself and his nephew for the sale of the horse.Felthouse could not impose a
sale of the horse on his nephew by requiring him to notify Felthouse if he did not wish to
sell on those terms. There was no communication of acceptance before the sale;
consequently the nephew was not bound to sell Felthouse the horse on the day of the
auction.