Carli Carli ll v Carboli c Smoke Ball Co [1893] 1 QB 256 Chapter 5 (pp 206, 209, 216, 218) Relevant Relevant f acts On 13 November 1891, Carbolic Smoke Ball Co (‘CSBC’) placed an advertisement in the ‘Pall Mall Gazette’ which included the following: 100 pounds 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 ball three times daily for two weeks according to the printed directions supplied with each ball. 1,000 pounds is deposited with the Alliance Bank, Regent Street, showing showing our sincerity in the matter…..
Based on the advertisement, Mrs Carlill purchased a smoke ball and used it as instructed from mid November 1891 until 17 January 1892, at which time she caught influenza. Mrs Carlill’s husband then contacted CSBC on his wife’s behalf claiming the 100 pound reward. CSBC refused to pay the reward. Mrs Carlill sued for damages for breach of contract. At first instance, the trial judge decided that CSBC was liable to pay the reward to Mrs Carlill. CSBC appealed to the Court of Appeal. Legal issue The main issue for the Court of Appeal to determine was whether a binding contract existed between Mrs Carlill and CSBC in relation to the reward. This was a separate contract to the contract for the purchase of the smoke ball and required consideration of the following questions: 1. Was the advertisement advertisement of the reward an offer or an invitation to treat? 2. If the advertisement advertisement was an offer, had Mrs Carllil communicated her acceptance acceptance of the offer? 3. Did the parties intend to be legally bound? bound? 4. Had Mrs Carllil Carllil provided consideration consideration for CSBC’s CSBC’s promise to pay a reward? Decision On 7 December 1892, the Court of Appeal (in separate reasons) unanimously decided as follows: 1. The advertisement was was a conditional offer offer made to all the world, world, and not merely an invitation to treat. 2. CSBC had waived the requirement that acceptance acceptance of its offer be communicated communicated to it. Instead, through its advertisement, CSBC had implied that the performance of certain conditions would constitute acceptance. These conditions were purchasing and using the smoke ball as instructed but still catching one of the ailments the smoke ball was said to prevent. Mrs Carlill had met these conditions
and a contract was created on fulfilment of the conditions. CSBC received notice of the acceptance at the same time as being told about notice of the performance of the conditions, which was, in any event, before the offer was retracted. 3. In the circumstances, CSBC had not successfully rebutted the presumption that the parties to commercial or business agreements intend to be legally bound. CSBC’s argument that the advertisement was an advertising gimmick such that no reasonable person would take seriously was rejected. The Court considered how the general public would view the advertisement, including the fact that the advertisement had said CSBC had deposited 1000 pounds with a bank in demonstration of their sincerity. According to Lord Justice Bowen: It seems to me that in order to arrive at this contract we must read it in its plain meaning as the public would understand it. It was intended to be issued to the public and to be read by the public. How would an ordinary person reading this document construe it upon the points which the defendant’s counsel has brought to our attention? 4. There was consideration for the contract in the form of Mrs Carlill’s inconvenience in performing the conditions set by CSBC as well as the advantage CSBC received by acceptance of their offer, namely, the use of the smoke ball would promote the sale of the smoke ball.
According to Lord Justice Bowen: What is the definition of consideration? It is any act of the plaintiff from which the defendant derives a benefit or advantage, or any labour, detriment or inconvenience sustained by the plaintiff, provided such act is performed or such inconvenience is suffered by the plaintiff with the consent, either express or implied, of the defendant. Can it be said here that if the person who reads this advertisement applies thrice daily, or such time as may seem to him to be bearable, the carbolic smoke ball to his nostrils for a whole fortnight, he is doing nothing at all - that it is a mere act which is not to count towards consideration to support a promise? The law does not require us to measure the adequacy of the consideration. Sufficient if there is an inconvenience sustained by the one party with the consent of the other.
Significance This decision presents an example of an advertisement that amounts to a conditional offer rather than just an invitation to treat. It is also authority for the proposition that an offeror can waive the requirement that acceptance of an offer be communicated by implying that performance of particular conditions will constitute acceptance, whether or not the offeror is aware of that performance. It is authority for the proposition that an inconvenience sustained by the offeree with the consent of the offeror may be sufficient consideration. Finally, it demonstrates that it is difficult to rebut the presumption that the parties intend to be legally bound by commercial or business agreements.
