CARLILL v CARBOLIC SMOKE BALL

General Principle:

In unilateral contracts, the performance of a requested action amounts acceptance and binds the offeror to give a reward.

Name:

Carlill v Carbolic Smoke Ball Co. [1892] 1 QB 256

Facts:

At the time of an influenza epidemic, the defendants advertised the sale of a device called a ‘smoke ball’. They posted the advert in the newspapers, which stated that they would pay £100 to anybody who ‘caught influenza, a cold, or any other kind of disease that came from catching a cold’ after they used the ‘smoke ball’ three times a day for fourteen days, in accordance with the instructions they provided with each ball. Carbolic Smoke Ball Company also mentioned in the advertisement that they had put aside £1000 in a bank account to be able to pay such fees. Mrs. Carlill bought a smoke ball and followed all of the instructions, but caught influenza and, as such, went on to claim £100 from the company. The company responded by saying that the advert was nothing but a ‘sales puff,’ or a piece of sales talk (e.g. Red Bull gives you wings), and thus there was no offer; furthermore, they argued it would be unreasonable and impossible to contract to the entire world at large.

Ratio:

The Court of Appeal held that the offer was actually a unilateral one; one with the intention to create relations to anyone who met the conditions of the offer to claim £100. The court also rationalised that because it was a unilateral offer, there was no need for communication of acceptance. The court finally addressed the point that an offer to the world at large could be made if it was capable of acceptance, so long as the conditions stated were fulfilled. Mrs. Carlill was, therefore, able to claim £100.

Application:

Carbolic Smoke Ball Co. claimed that their advertisement was too vague to be treated as a definite offer. However, if an advertisement is precise and detailed to the point where completing the stated conditions would fulfil a contract, then it is an enforceable unilateral contract and not merely a “sales puff.”

Analysis

Rita put an advertisement in a local newspaper declaring that she wants to sell and antique diamond brooch for a thousand pounds. Stefan replied to the advertisement by offering an immediate payment of the sum. Rita refused the payment. Did such circumstances amount to an acceptance of the offer, hence to a binding contract? To begin with, it must be settled whether the advertisement constituted an offer. Regarding advertisements, the principle is that they are regarded as statements inviting for further negotiations or invitations to treat (Partridge v Crittenden [1968] 1 WLR 1204) unless it is a unilateral offer or if the advertisement is absolutely clear, precise and unequivocal (Carlill v Carbolic Smoke Ball Co. (1893) 1 QB 256). Hence, having regard to the case law, the advertisement that Rita placed in the local paper will most likely be regarded as an invitation to treat. The advertisement is not sufficiently precise to amount to an offer; it only states what the item is and its price. There are no indications of how the payment shall be made and if the price is final or negotiable. Hence, it turns out that Stefan was the offeror as he made an offer to Rita to buy her brooch for a thousand pounds his offer was precise, clear and unequivocal however Rita clearly refused to either accept or reject the offer. A contract has consequently not been formed because there was no acceptance of the offer.