Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256 is an English contract law decision by the Court of Appeal, which held an advertisement containing certain terms to get a reward constituted a binding unilateral offer that could be accepted by anyone who performed its terms. It is notable for its treatment of contract and of puffery in advertising, for its curious subject matter associated with medical quackery, and how the influential judges (particularly Lindley and Bowen) developed the law in inventive ways. Carlill is frequently discussed as an introductory contract case, often one of the first cases a law student studies in the law of contract.
The case concerned a purported flu remedy called the "carbolic smoke ball". The manufacturer advertised that buyers who found it did not work would be awarded £100, a considerable amount of money at the time (equivalent to £14,000 in 2023). The company was found to have been bound by its advertisement, which was construed as an offer which the buyer, by using the smoke ball, accepted, creating a contract. The Court of Appeal held the essential elements of a contract were all present, including offer and acceptance, consideration and an intention to create legal relations.
Facts
The Carbolic Smoke Ball Co. made a product called the "smoke ball" and claimed it to be a cure for influenza and a number of other diseases. (The 1889–1890 pandemic ongoing at the time was estimated to have killed 1 million people, but may have been caused either by influenza or a coronavirus.) The smoke ball was a rubber ball with a tube attached. It was filled with carbolic acid (now known as phenol). The tube would be inserted into a user's nose and the ball would be squeezed at the bottom to release the vapours.
The Company published advertisements in the Pall Mall Gazette and other newspapers on November 13, 1891, stating that it would pay £100 () to anyone who got sick with influenza after using its product according to the instructions provided with it:
Louisa Elizabeth Carlill saw the advertisement, bought one of the balls and used it three times daily for nearly two months until she contracted the flu on 17 January 1892. She claimed £100 from the Carbolic Smoke Ball Company. They ignored two letters from her husband, a solicitor. On a third request for her reward, they replied with an anonymous letter that if it is used properly the company had complete confidence in the smoke ball's efficacy, but "to protect themselves against all fraudulent claims", they would need her to come to their office to use the ball each day and be checked by the secretary. Carlill sued for breach of contract, her counsel arguing that the advertisement and her reliance on it amounted to a binding contract between her and the company, and that the company should therefore pay the promised £100. The company argued that they had made no legally binding offer which was capable of acceptance, and thus there could be no contract.
Judgment
The Carbolic Smoke Ball Company, represented by H. H. Asquith, lost its argument at the Queen's Bench, which decision was then appealed. The Court of Appeal unanimously rejected the company's arguments and held that they had made a binding contract with Carlill. Among the reasons given by the three judges were: (1) that the advertisement was not a unilateral invitation to treat to all the world, but rather an offer restricted to those who acted upon the terms set out in the advertisement; (2) that satisfying the stated conditions for using the smoke ball constituted acceptance of the offer; (3) 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 advertisement was a clear benefit to Carbolic; and (4) that the company's claim that £1000 was deposited at the Alliance Bank showed the serious intention to be legally bound.
Lord Justice Lindley
Lindley gave the first judgment. He made short shrift of the insurance and wagering contract arguments that were dealt with in the Queen's Bench.
He follows on with essentially five points. First, the advertisement was not "mere puff" as had been alleged by the company, because the deposit of £1000 in the bank evidenced seriousness. Second, the advertisement was an offer made specifically to anyone who performed the conditions in the advertisement rather than a statement "not made with anybody in particular." Third, communication of acceptance is not necessary for a contract when people's conduct manifests an intention to contract. Fourth, that the vagueness of the advertisement's terms was no insurmountable obstacle. And fifth, the nature of Carlill's consideration (what she gave in return for the offer) was good, because there is both an advantage in additional sales in reaction to the advertisement and a "distinct inconvenience" that people go to when using a smoke ball.
Lord Justice Bowen
Bowen's opinion was more tightly structured in style, . Five main steps in his reasoning can be identified. First, he said that the contract was not too vague to be enforced, because it could be interpreted according to what ordinary people would understand by it. He differed slightly from Lindley on what time period one could contract flu and still have a claim (Lindley said a "reasonable time" after use, while Bowen said "while the smoke ball is used"), but this was not a crucial point, because the fact was that Carlill got flu while using the smoke ball. Second, like Lindley, Bowen said that the advert was not mere puff because £1000 was deposited in the bank to pay rewards. Third, he said that although an offer was made to the whole world, the contract was not with the whole world. Therefore, it was not an absurd basis for a contract, because only the people who used it would bind the company. Fourth, he said that communication is not necessary to accept the terms of an offer; conduct is and should be sufficient. Fifth, good consideration was clearly given by Carlill because she went to the "inconvenience" of using it, and the company got the benefit of extra sales.