Case Analysis on Carlill V. Carbolic Smokeball Company

Carlill v. Carbolic Smoke Ball Company Ltd is one of the most leading cases in the law of contracts under common law. Known for both its academic importance and its contribution in the development of the laws relating unilateral contracts, it is still binding on lower courts in England and Wales, and is still cited by judges in their judgements. This research paper aims to critically examine and analyze the facts and the judgement of the case, along with the issues raised in the case and the impact of this case in general.

To understand the case better, firstly let us look at the law as it stood before the case. The law as it stood before the case: A number of important issues were determined in this case, which still remains as an authority in a number of aspects. Before the judgement in Carlill v. Carbolic smoke ball company, the laws relating to rewards announced in advertisements (General offers), acceptance and communication of acceptance, and consideration were as follows: General offers: It was already established in the 1833 case of Williams v.

Carwardine that an advertisement amounted to a general promise or contract to pay the offered reward to any person who performed the conditions mentioned in it. Though not entirely binding, this decision was very much relied on in this case, as we will see in the judgement of the court regarding this issue. Acceptance and communication of acceptance in cases of this kind: The law relating to communication of acceptance was somewhat stated by Lord Blackburn in the case of Brogden v.

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Metropolitan Railway Company when he observed “If notice of acceptance is required, the person who makes the offer gets the notice of acceptance contemporaneously with his notice of the performance of the condition. If he gets notice of the acceptance before his offer is revoked, that in principle is what you want. ” , but the case in which he stated the following lines were essentially different with regards to facts, so there was no definitive clarity on this matter till Carlill v.

Carbolic Smoke Ball company was determined. Consideration: There was no authoritative judgement regarding consideration in such a circumstance before the judgement in Carlill case. Though the defendants cited Lord Campbell’s judgement in the case of Gerhard v. Bates in which he held that there was no consideration involved between two parties as a secondary justification to the judgement given by him, the court in this case held that the facts in Gerhard v.

Bates were different in nature and consideration was not the main question raised in that case, thus refusing to accept the argument of the defendants. Facts of the case: The Carbolic Smoke Ball Company, an English firm, came out with a product called the ‘smoke ball’, which it claimed to be a cure for influenza and a number of other diseases, during a period when flu pandemic was claiming a lot of lives. The company came out with advertisements to their product and published it in the Pall Mall Gazette and other newspapers on November 13, 1891.

The advertisement contained, among other things, the following: “ 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. 1000 pounds is deposited with the Alliance Bank, Regent Street, showing our sincerity in the matter.

During the last epidemic of Influenza many thousand carbolic smoke balls were sold as preventives against the disease, and in no ascertained case was the disease contracted by those using the carbolic smoke ball. ” In late 1891, Mrs Louisa Carlill saw the advertisement, bought one of the balls and used it according to the instructions, three times daily for a period of three months. In spite of it, she contracted influenza on the 17th of January, 1892, and thus, she claimed the 100 pounds from the Carbolic Smoke Ball Company as announced by them.

After the company ignored two letters from her to this effect, she brought a claim to court. It was decided in the Queen’s Bench that the plaintiff (Carlill) was entitled to the 100 pounds from the company. The company appealed against the decision in the Court of Appeal. Issues before the court: * Whether the advertisement was intended to be a promise at all, and whether the words in the advertisement were too vague to form a binding contract. * Whether or not the advertisement is binding, as it is not a contract made with anyone in particular. * Whether communication of acceptance was necessary. Whether this was a case of Nudum Pactum, that is, whether there was no consideration involved. *  Even if it is a contract, would it come under the category of a wagering contract or an insurance contract, thus rendering it void. Issues which were determined by the court: The court indicated that they did not need further submissions on the wager or insurance point, as they clearly could not buy this argument from the defendants. However, they identified all the other issues raised in this case as noteworthy, and proceeded to rule on each of them with appropriate reasons and citations.

Decision of the court and reasons given: The judgement in this case was an unanimous one, with all the three judges, that is, Lord Justice Lindley, Lord Justice Bowen and Lord Justice A L Smith concurring with each other on all the important aspects of the case. The court, before taking up the main issues in the judgment, referred to the two points which were raised in the lower court, and completely concurred with Hawkins. J, dismissing the possibility of the advertisement being either a policy, or a bet.

After that, each issue is taken up one by one and the decision of the court is summarized below: Whether the advertisement was intended to be a promise at all, and whether the words in the advertisement were too vague to form a binding contract: The first observation made by the court was that there was an express promise to pay, and that it was not a mere puff as claimed by the defendants. The court pointed out that a part of the advertisement published by the defendants said that Pounds 1000 has been deposited in a bank, showing the company’s seriousness in this regard.

On the issue of whether the words were too vague, the court observed that, to arrive at the right conclusion, the advertisement has to be read in its true meaning, and when done so, it wouldn’t as vague as claimed by the defendants, and would be sufficient to form a binding contract. Whether or not the advertisement is binding, as it is not a contract made with anyone in particular: The court held that in such a situation, the advertisement was an offer made to anyone who performs the conditions named in the advertisement, and anyone who performs the condition accepts the offer.

The court cited the judgment in the case of Williams v. Carwardine, in which it was observed that in cases of general offers in advertisements, the performance of the conditions is the acceptance of the offer. Also, the court in this case observed that although there was an offer to the whole world, there was no contract with the whole world, therefore it was not an absurd basis for a contract, because only the people that used the product and caught influenza would bind the company. The judgment in the case of Spencer v.

Harding, by Willies J. , was cited, which essentially said that “an offer to become liable to any person, who before the offer should be retracted, should happen to be the person to fulfil the contract, of which the advertisement was an offer or tender. ” Whether communication of acceptance was necessary: The court held that in point of law, the advertisement is an offer to anybody who will perform these conditions, and such performance is considered as the acceptance of the offer, again citing Williams v.

Carwardine. Also, the court observed that though it is necessary for acceptance to be notified when an offer is made as a general rule, there is an exception to this rule, and not always should the notification of the acceptance precede the performance. The court observed that this kind of an offer is a continuing offer, and the performance of the conditions mentioned before the revocation of the general offer serves as acceptance. Lord Blackburn’s judgment in the case of Brodgen v.

Metropolitan Ry Co was cited by the court: “If notice of acceptance is required, the person who makes the offer gets the notice of acceptance contemporaneously with his notice of the performance of the condition. If he gets notice of the acceptance before his offer is revoked, that in principle is what you want. ” Whether this was a case of Nudum Pactum, that is, whether there was no consideration involved. The court felt that the last point that required attention in this matter was that of whether there was consideration involved on the part of both the parties.

The court held that it was not a case of Nudum pactum, and there was consideration involved on the part of both the parties. The court firstly stated the definition of ‘consideration’ given in Nisi Privis, which was adopted and cited by Tindal C J in Laythorp v. Bryant, as “Any act of the plaintiff from which the defendant derives a benefit or advantage, or any labour, detriment, or inconvenience suffered by the plaintiff, provided such act is performed or such inconvenience suffered by the plaintiff, with the consent, either express or implied, of the defendant. The court applied this definition to the facts of the case, and analysed that the acts of the plaintiff, of using the smoke balls for a fortnight, was enough consideration on their part, and the fact that the defendants received a benefit from this user as she purchased their product, and also, they benefited indirectly from their promise, as it boosted their sales, was enough consideration on their part, thus ruling that there was consideration involved.

Thus, having given its judgment, the court ruled in favour of the respondents (Louisa Carlill) and dismissed the appeal from the company, unanimously. There was a disagreement however, between Lidley LJ, and Bowen LJ as to what was the time period in which a claim could be brought to court, with the former saying that a reasonable time has to be ascertained, where as the latter said that a claim could be brought only when the smoke balls were being used.

However, this was not a major issue, as the plaintiff was using the medicine when she contracted influenza. Issue that was not determined by the court: In this case, the performance of the condition by the respondent was involuntary. Though the court decided the case in the respondent’s favour, it neither brought up this issue, nor provided any answers to the questions raised by the counsel for the petitioners in this regard, and this, in my opinion, was an issue that needed conclusive ruling upon. Analysis on whether the issues were framed properly or not:

Before going into the analysis of whether the issues were framed properly or not, it is necessary to look into the arguments advanced by counsels appearing on either sides, both in the Queen’s Bench, and the Court of Appeal. Briefly stating, there were three issues raised by the defendants in the lower court, that it was not intended to be a contract, that even if it is a contract, it comes under the category of wagering contract, which is unlawful, and even if it doesn’t come under a wagering contract, it was an insurance policy, but cannot be enforceable as it did not follow the prescribed form of stating people’s names.

The issues raised by the defendants in the court of appeal were shaky and did not have a solid argument, as the plaintiffs clearly showed to the court that this could not have been a bet, as in a bet one party needs to win something and the other party should lose something, which is clearly not the case here. The other two issues were also easily retracted by the plaintiffs by citing various authorities like Denton v. Great Northern Railway Co. and England v. Davis where it was established that the advertisement was an offer and the performance of the conditions is acceptance.

However, in the Court of Appeal, the appellants (The Carbolic Smoke Ball Company), raised some pertinent issues which involved questions on whether there was enough consideration and whether the acceptance should have been notified, along with the issues already raised in the lower court. They also came out with other pertinent arguments like the argument that the respondent (Louisa Carlill) could not perform the conditions mentioned intentionally, as catching flu was beyond the control of the respondent.

However, the issues raised on whether it was a wagering contract or whether it was an insurance policy even in the Court of Appeal were quite pointless, as it had been authoritatively dealt away with in the lower court. On an overall note, the issues raised in the Court of Appeal were substantive questions of law which needed attention, and the issues were raised properly in my opinion, without omitting anything substantial that needed to be decided upon. Analysis as to the correctness of the reasoning of the court:

The reasoning of the court, seems to be of good nature while determining the answers to the questions of law posed before it. It can be observed easily that public interest is kept in mind and given high regard by the judges while determining the case. This however, does not mean that satisfying answers were not given while deciding upon each of the issues raised. The court depended on a series of judgements while determining each of the issues, other than the issue relating to consideration.

The decision seems logical at most parts, though it can be felt at certain places that the court stretched the facts a little to bring them under the ambit of their principle, especially while deciding on the time frame in which an action can be brought. And also, inconsistencies can be found in the decision of Lindley LJ and Bowen LJ regarding this matter. However, this was not an essential part of the case, as the fact that the respondent was using the smoke balls while she caught the flu, helped in not complicating the matters.

On an overall note, the judgement seems logical and the reasoning given is convincing enough without any major fallacies. The impact of the decision on the law in general: The Court of Appeal’s decision in Carlill v. Carbolic Smoke Ball Company is frequently cited as a leading case in the law of contracts, especially under unilateral contracts. In my opinion, this might be because of two important reasons. Firstly, even though the case is over 120 years old, the principles established in this case were not overturned by any major judgement, and still carries a persuasive value.

The second reason as observed by me, is the fact that the counsel for the defence tried to avail every single defence he could, thus, the court ended up in ruling on a variety of important things such as intimation of acceptance, consideration etc, thus making it a leading case. The impact of this case was that the advertisers started to be more responsible, or rather, more careful in their advertisements, by adding clauses such as conditions apply etc in the advertisements to avoid the assumption of a contract by anyone and everyone.

The principles laid down in this case can be seen in Section 8 of the Indian Contracts Act, and the principles of this case are used in numerous Indian cases, including Har Bhajan Lal v. Har Charan Lal, etc. ——————————————– [ 2 ]. [1893] 1 QB 256 [ 3 ]. (1833) 4 B. & Ad. 621 [ 4 ]. (1877) 2 App. Cas. 666 [ 5 ]. 2 E. B. 476 [ 6 ]. Influenza A virus subtype A [ 7 ]. Ibid at 2 [ 8 ]. (1870) LR 5 CP 561 [ 9 ]. Ibid at 2 [ 10 ]. Ibid at 3 [ 11 ]. 8th edition. P. 47 [ 12 ]. 3 Scott, 238, 250 [ 13 ]. [1865]  5 E. B. 860 [ 14 ]. 11 A 7 E 856 [ 15 ]. AIR 1925 All 539