Carlill v Carbolic Smoke Ball Co
[1893] 1 QB 256
Facts
The Carbolic Smoke Ball Co produced the 'Carbolic Smoke Ball' designed to prevent users contracting influenza or simialr illnesses. The company's advertisement for the product read, in part:
“100 pounds reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the increasing epidemic influenza, colds, or any disease 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”.
After seeing this advertisement Mrs Carlill bought one of the balls and used it as directed. She subsequently caught the flu and claimed the reward. The company refused to pay; Mrs Carlill sued.
Held
On the issue of whether there was a valid offer: The Company argued that the ‘promise’ was not made to anyone in particular. The Court, however, held that this was not a 'contract with the world' (which would not be practicable) but was simply an offer to the world capable of becoming a contract with anyone performing the sitpulated conditions. The Court also rejected the Company's claim that their advertisement constituted a mere 'puff' and was not intended to be promissory. The Court was assisted in this regard by the stipulation in the Company's advertisement that a bank deposit of £1,000 had been made as a demonstration of sincerity.
On the issue of communication of acceptance: Lindley LJ: ‘Unquestionably, as a general proposition, when an offer is made, it is necessary in order to make a binding contract, not only that it should be accepted, but that the acceptance should be notified.’ In this case, however, it was not necessary to notify of acceptance prior to performing the requisite acts - the language of the offer showed the Company had waived the need for notification. Bowen LJ also made it clear that the ordinary rule was that acceptance ‘ought to be notified to the person who makes the offer, in order that the two minds may come together.’ However, as ‘notification of acceptance is required for the benefit of the person who makes the offer, the person who makes the offer may dispense with notice’ if he wishes or to stipulate a preferred method of acceptance. If the offeror (in this case the Company) expressly or impliedly indicates that it will be sufficient to perform the acts requested in the offer without communicating that to him, then ‘performance of the condition is a sufficient acceptance without notification.’ In most advertising cases, including this one, the inference in the advertisement is that ‘a person is not to notify his acceptance of the offer before he performs the condition, but that if he performs the condition notification is dispensed with.’
On the issue of consideration: There was consideration. Consideration was the benefit of sales to the promisor and the inconvenience Mrs Carlill suffered at the request of the promisor (although the Court said that it would be sufficient if Mrs Carlill suffered the detriment from using the smoke ball as directed even if the Carbolic Smoke Ball Co received no benefit). Lord Justice Bowen observed (quoting from a statement by Selwyn approved by Tindal CJ in Laythoarp v Bryant) that consideration can be:
'Any act of [Mrs Carlill] from which the [Company] derives a benefit or advantage, or any detriment, or inconvenience sustained by [Mrs Carlill], provided such act is performed or inconvenience sustained by [Mrs Carlill], with the consent, either express or implied, of the [Company]'
He continued, 'Inconvenience sustained by one party at the request of the other is enough to create consideration'.
Applied to this case, using the smoke balls in the way directed was an inconvenience suffered by Mrs Carlill, at the request of the company, sufficient to constitute consideration. Although not required, her use of the smoke balls was also a benefit to the Company in that it could promote further sales.
Lindley LJ reached the same conclusion, also observing that contrary to the claims of the Company, Mrs Carlill's use of the smoke ball was a benefit to the company in getting the public to use and have confidence in its product which (it hoped) would result in further sales. This was sufficient to constitute consideration. But even if there was no benefit to the company, it was sufficient that Mrs Carlill was put to some inconvenience at their request – and there was a ‘distinct inconvenience’ in using the balls as directed in this case.
Catching the cold, on the other hand, was a condition precedent to entitlement – not consideration. |
