Court: Court of Appeal (Civil Division)
Judges: Lindley LJ, Bowen LJ, and AL Smith LJ
Date Decided: 8th December 1892
Facts
The Defendant, the Carbolic Smoke Ball Company of London (Defendant), placed an advertisement in several newspapers on November 13, 1891, stating that its product, “The Carbolic Smoke Ball”, when used three times daily, for two weeks, would prevent colds and influenza. The makers of the smoke ball additionally offered a 100£ reward to anyone who caught influenza using their product, guaranteeing this reward by stating in their advertisement that they had deposited 1000£ in the bank as a show of their sincerity. The Plaintiff, Lilli Carlill, bought a smoke ball and used it as directed. Several weeks after she began using the smoke ball, Plaintiff caught the flu.
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 sides and finally, the verdict was given in favor of the plaintiff. However, the defendants appealed.
Issue
Whether the language in Defendant’s advertisement, regarding the 100£ reward, was meant to be an express promise or, rather, a sales puff, which had no meaning whatsoever.
Judgement
The Court of Appeal unanimously rejected the company’s arguments and held that there was a fully binding contract for £100 with the plaintiff
Among the reasons given by the judges were -
- That the advertisement was a unilateral offer to the entire world
- The satisfying conditions for using the smoke ball constituted acceptance of the offer.
- 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
- That the company’s claim that £1000 was deposited at the Alliance Bank showed the serious intention to be legally bound.
The appeal was dismissed unanimously by all the judges and the plaintiff finally received compensation of £100. She lived to the ripe old age of 96. She died on March 10, 1942; according to her doctor, principally of old age. There was one cause noted for influenza though. Mr Roe, the owner of Carbolic Smokeball Co., continued with his aggressive marketing. This time he increased the reward to £200 following the loss of the case.
This case stands for the proposition that while sales puffery in advertisements is generally not intended to create a contract with potential product buyers, in this case, it did because the defendant elevated their language to the level of a promise, by relying on their own sincerity. The particular judgement made a huge impact on English contract law. This is the most cited case in the common law of contracts mostly if the case is concerned with unilateral contracts. After this judgement, companies, and agencies are more careful about what they advertise to the world at large. It lays the foundation to contract law as all the essential elements are mentioned such as offer and acceptance, intention to form a legal relationship, etc.
