Name: SAHIL SINGH

PRN:1182230144
Name: SAEE HOLKAR
PRN:1182230146
FY BBA.LLB(Hons.)
DIVISION B
SUBJECT: LAW OF CONTRACT
CASE-STUDY
CASE: CARLILL V. CARBOLIC SMOKE BALL CO. [1893]
INTRODUCTION:
Full case name: Carlill v. Carbolic Smoke Ball Company [1893]
Plaintiff: Mrs. Elizabeth Carlill
Defendant: Carbolic Smoke Ball Company
Court: Court of Appeal
Decided: 7 December 1892
Citation(s): [1892] EWCA Civ 1, [1893] 1 QB 256 (CA).
Judge(s): Lord Lindley, Lord Bowen, Lord Smith

BRIEF FACTS OF THE CASE:

There was a viral named ‘epidemic influenza’ which resulted in millions of death of the people.
A company named Carbolic smoke ball Co. made an advertisement in daily newspaper on
claiming that they have found a treatment to cure influenza and the liquid which they had
introduced was named as smoke balls and whomsoever will consume the medicine will not get
infected by influenza as per the given directions, failing to which will get rewarded with 100
pounds. To claim this, offer company the company deposited 1000 pounds in the alliance bank,
on the Regan street to build in people’s trust.
After coming across this advertisement, Mrs. Elizabeth Carlill bought the medicine and
consumed it as per the directions. The medicine was in the form of a spray. Even after
consuming the medicine Mrs. Carlill got infected by influenza. She posted letter twice to the
company but didn’t receive any reply from their side. After writing the letter for the third time
she got a response that the medicine is to be consumed in the presence of the company’s
representatives after which the company will decide whether she is infected with influenza or
not.
Mrs. Carlill filed a case against the Company to claim the 100 pounds as it was mentioned in the
advertisement. When she filed a case against the company, the Company stated that she is not
entitled to claim the amount. The company gave a reason that the company had not given Mrs.
Carlill a special offer and if there is no offer given hence there is no acceptance. So, no offer, no
acceptance and no contract.
The Court’s verdict to this statement was that the offer which was given in the daily newspaper
was a General Offer. Therefore, general offer is an offer for people enlarge and hence can be
accepted by anyone and the offer’s acceptance can be given by two ways either by returning or
by an act to which an acceptance could be done.
Carlill came forward consumed the medicine, this was her side of acceptance and hence she is
entitled to claim that amount from the company.

ISSUES RAISED:
1. In the Carlill v. Carbolic smoke ball case the question arises that was the advertisement
made by the smoke ball company a valid general offer. Was there any communication of
application done by Mrs. Carlill to the company or not.
2. The arguments of Mrs. Carlill were that advertisements as issues by the company was not
an invitation to an offer but offer in itself, as the company itself stating that they will
compensate if used by the prescribed in the paper. The aim for publishing the
advertisement is to let the people know about the validity of the offer and to even assure
that they have even paid a deposit in the bank.
3. The company argued that there is no such particular binding offer of Mrs. Carlill, as the
offer was made to population enlarge and there exists no particular contract to make
Mrs.Carlill take up the offer and take upon it.
4. Another argument was stated against Mrs. Carlill that she might not have taken the
medicines as prescribed or she might be lying to get the compensation.
5. It was stated that there was no particular consideration to constitute it as a contract.

LAWS INVOLVED:
Firstly, misleading an advertisement. Under the Consumer Protection Act from unfair trading
regulations (second legislation, passed under the European Communities Act 1972.
“if it contains false information and is therefore untruthful... or if it or its overall presentation in
any way deceives or is likely to deceive the average consumer... even if the information is
factually correct".
Secondly, there was an evidence at that time which was not discussed in the case that using the
smoke balls made people more vulnerable to the flu. The General Product Safety Regulations
which are a part of a European Union wide consumer protection regime (Directive 2001/95/EC)
again provide criminal penalties for unsafe products.
Thirdly, Consumer Protection Act 1987 creates a statutory tort of strict liability for defective
products which may cause any kind of personal injury or death, or damage over 100 pounds.
Fourthly, Under the Enterprise Act 2002, s 8, as in most developed countries, industry members
form a trade associations. Businesses are expected to collectively regulate one another by
drawing up Codes of Practice and have mechanisms for enforcement before tort or criminal law
does.

JUDGEMENTS:
The Carbolic Smoke Ball Company which is represented by H.H. Asquith lost the argument. The
court of appeal rejected the company’s argument and held that there was fully binding contract
for 100 pounds with Mrs.Carlill.
The judgements are as follows:
 The advertisement was not a unilateral offer to all the world but an offer restricted to
those who acted upon the terms contained in the advertisement.
 That satisfying conditions for using the smoke ball constituted acceptance of the offer.
 The purchasing or merely using the smoke ball constituted good consideration, because it
was a distinct detriment incurred at the behest of the company and more people will buy
smoke balls by relying on the advertisement was a clear benefit to the Carbolic.
 That the company’s claim that 1000 pounds was deposited at alliance bank showed the
serious intention to be legally bound.

The ration decidendi in this case Carlill v. Carbolic smoke Co. is that the advertisement was a
unilateral contract, whereby, the Carbolic Smoke ball company made a promise to perform an
obligation.

CONCLUSION:
This is one of the most cited cases in English contract law. This is a perfect example of one-sided
contracts. Problems related to unilateral contracts are also highlighted. This case also helps to
understand the basic principles of conventional contracts because it is an exceptional case of
those principles because acceptance of offer and consideration are not necessary. The
commercial uncertainty created by such a vacuum of unilateral contracts also affects the concept
of privacy of contracts. Thus, this case became the foundation of contract law. Overall, the
judgment was well drafted, but the implications of the judgment have become an evergreen topic
of debate in the business community.