Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256
Chapter 5 (pp 206, 209, 216, 218)
Relevant facts
On 13 November 1891, Carbolic Smoke Ball Co (‘CSBC’) placed an advertisement in the ‘Pall Mall Gazette’ which included the following:
100 pounds 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. 1,000 pounds is deposited with the Alliance Bank, Regent Street, showing our sincerity in the matter.....
Based on the advertisement, Mrs Carlill purchased a smoke ball and used it as instructed from mid November 1891 until 17 January 1892, at which time she caught influenza. Mrs Carlill’s husband then contacted CSBC on his wife’s behalf claiming the 100 pound reward. CSBC refused to pay the reward. Mrs Carlill sued for damages for breach of contract.
At first instance, the trial judge decided that CSBC was liable to pay the reward to Mrs Carlill. CSBC appealed to the Court of Appeal.
Legal issue
The main issue for the Court of Appeal to determine was whether a binding contract existed between Mrs Carlill and CSBC in relation to the reward. This was a separate contract to the contract for the purchase of the smoke ball and required consideration of the following questions:
1. Wastheadvertisementoftherewardanofferoraninvitationtotreat?
2. If the advertisement was an offer, had Mrs Carllil communicated her acceptance of the offer?
3. Didthepartiesintendtobelegallybound?
4. HadMrsCarllilprovidedconsiderationforCSBC’spromisetopayareward?
Decision
On 7 December 1892, the Court of Appeal (in separate reasons) unanimously decided as follows:
1. Theadvertisementwasaconditionaloffermadetoalltheworld,andnotmerely an invitation to treat.
2. CSBChadwaivedtherequirementthatacceptanceofitsofferbecommuni- cated to it. Instead, through its advertisement, CSBC had implied that the performance of certain conditions would constitute acceptance. These conditions were purchasing and using the smoke ball as instructed but still catching one of the ailments the smoke ball was said to prevent. Mrs Carlill had met these conditions and a contract was created on fulfilment of the conditions. CSBC received notice of the acceptance at the same time as being told about notice of the performance of the conditions, which was, in any event, before the offer was retracted.
3. In the circumstances, CSBC had not successfully rebutted the presumption that the parties to commercial or business agreements intend to be legally bound. CSBC’s argument that the advertisement was an advertising gimmick such that no reasonable person would take seriously was rejected. The Court considered how the general public would view the advertisement, including the fact that the advertisement had said CSBC had deposited 1000 pounds with a bank in demonstration of their sincerity.
According to Lord Justice Bowen:
It seems to me that in order to arrive at this contract we must read it in its plain meaning as the public would understand it. It was intended to be issued to the public and to be read by the public. How would an ordinary person reading this document construe it upon the points which the defendant’s counsel has brought to our attention?
4.