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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, and may often be the first legal case a law student studies in the law of contract.
The case concerned a 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. 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, and rejected a number of defenses, including puffery.[2]
The Company published advertisements in the Pall Mall Gazette and other newspapers on November 13, 1891, claiming that it would pay 100 (equivalent to 14,000 in 2023) to anyone who got sick with influenza after using its product according to the instructions provided with it:
100[3] REWARD will be paid by the CARBOLIC SMOKE BALL CO. to any Person who contracts the Increasing Epidemic, INFLUENZA, Colds, or any Diseases caused by taking Cold, after having used the CARBOLIC SMOKE BALL according to the printed directions supplied with each Ball.
During the last epidemic of INFLUENZA many thousand CARBOLIC SMOKE BALLS were sold as preventives against this disease, and in no ascertained case was the disease contracted by those using the CARBOLIC SMOKE BALL.
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 brought a claim to court. Counsel representing her argued that the advertisement and her reliance on it was a contract between the company and her, so the company ought to pay. The company argued it was not a serious contract.
The Carbolic Smoke Ball Company, represented by H. H. Asquith, lost its argument at the Queen's Bench. It appealed straight away. The Court of Appeal unanimously rejected the company's arguments and held that there was a fully binding contract for 100 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 an offer restricted to those who acted upon the terms contained in the advertisement (2) that satisfying 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 (4) that the company's claim that 1000 was deposited at the Alliance Bank showed the serious intention to be legally bound.[4]
I will begin by referring to two points which were raised in the Court below. I refer to them simply for the purpose of dismissing them. First, it is said no action will lie upon this contract because it is a policy. You have only to look at the advertisement to dismiss that suggestion. Then it was said that it is a bet. Hawkins, J., came to the conclusion that nobody ever dreamt of a bet, and that the transaction had nothing whatever in common with a bet. I so entirely agree with him that I pass over this contention also as not worth serious attention.
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.[5] 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.
Then it is contended that it is not binding. In the first place, it is said that it is not made with anybody in particular. Now that point is common to the words of this advertisement and to the words of all other advertisements offering rewards. They are offers to anybody who performs the conditions named in the advertisement, and anybody who does perform the condition accepts the offer. In point of law this advertisement is an offer to pay 100 to anybody who will perform these conditions, and the performance of the conditions is the acceptance of the offer. That rests upon a string of authorities, the earliest of which is Williams v Carwardine,[6] which has been followed by many other decisions upon advertisements offering rewards.
But there is another view. Does not the person who acts upon this advertisement and accepts the offer put himself to some inconvenience at the request of the defendants? Is it nothing to use this ball three times daily for two weeks according to the directions at the request of the advertiser? Is that to go for nothing? It appears to me that there is a distinct inconvenience, not to say a detriment, to any person who so uses the smoke ball. I am of opinion, therefore, that there is ample consideration for the promise.
We were pressed upon this point with the case of Gerhard v Bates,[8] which was the case of a promoter of companies who had promised the bearers of share warrants that they should have dividends for so many years, and the promise as alleged was held not to shew any consideration. Lord Campbell's judgment when you come to examine it is open to the explanation, that the real point in that case was that the promise, if any, was to the original bearer and not to the plaintiff, and that as the plaintiff was not suing in the name of the original bearer there was no contract with him. Then Lord Campbell goes on to enforce that view by shewing that there was no consideration shewn for the promise to him. I cannot help thinking that Lord Campbell's observations would have been very different if the plaintiff in that action had been an original bearer, or if the declaration had gone on to shew what a socit anonyme was, and had alleged the promise to have been, not only to the first bearer, but to anybody who should become the bearer. There was no such allegation, and the Court said, in the absence of such allegation, they did not know (judicially, of course) what a socit anonyme was, and, therefore, there was no consideration. But in the present case, for the reasons I have given, I cannot see the slightest difficulty in coming to the conclusion that there is consideration.
Bowen's opinion was more tightly structured in style and is frequently cited. Five main steps in his reasoning can be identified. First, he says 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 says 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 says 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.
Was it intended that the 100 should, if the conditions were fulfilled, be paid? The advertisement says that 1000l. is lodged at the bank for the purpose. Therefore, it cannot be said that the statement that 100 would be paid was intended to be a mere puff. I think it was intended to be understood by the public as an offer which was to be acted upon.
But it was said there was no check on the part of the persons who issued the advertisement, and that it would be an insensate thing to promise 100 to a person who used the smoke ball unless you could check or superintend his manner of using it. The answer to that argument seems to me to be that if a person chooses to make extravagant promises of this kind he probably does so because it pays him to make them, and, if he has made them, the extravagance of the promises is no reason in law why he should not be bound by them.
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