CASE LAW COMICS: Carlill v Carbolic Smoke Ball Co.

Case Brief:
The case of Carlill v. Carbolic Smoke Ball Co. is a landmark decision in English contract law,
particularly in relation to unilateral contracts, acceptance, and intention to create legal relations.
The case arose out of an advertisement issued by the Carbolic Smoke Ball Company, which
manufactured a product known as the “Carbolic Smoke Ball,” claimed to prevent influenza and
other related diseases.
The Company published an advertisement in a newspaper stating that it would pay a reward of
£100 to any person who contracted influenza after using the smoke ball three times daily for two
weeks, as prescribed. To demonstrate the sincerity of this promise, the Company further declared
that it had deposited £1000 with the Alliance Bank. This statement was intended to assure the
public of the seriousness of the offer.
The claimant, Mrs. Carlill, purchased the smoke ball relying on the advertisement and used it
strictly in accordance with the instructions provided. Despite this, she contracted influenza.
Consequently, she wrote to the Company claiming the promised reward of £100. The Company
refused to pay, contending that the Claimant had not used the product according to the instructions
laid down.
Aggrieved by this refusal, Mrs. Carlill instituted legal proceedings against the Company. Several
issues arose before the Court. The primary issues included whether the advertisement constituted
a binding offer or was merely a trade puff, whether there was an intention to create legal relations,
whether acceptance of the offer required communication, and whether valid consideration existed.
The defendants argued that the advertisement was a mere puff intended to promote sales and not
a serious promise. They further contended that there was no contract as acceptance had not been
communicated to the Company. Additionally, it was argued that the contract was too vague and
lacked consideration.
On the other hand, the claimant contended that the deposit of £1000 clearly demonstrated the
Company’s intention to be legally bound. It was further argued that the advertisement amounted
to a unilateral offer made to the public at large, which could be accepted by anyone who performed
the conditions mentioned therein. Thus, acceptance was complete upon performance of the
conditions, and no separate communication was necessary.
The Court held in favour of Mrs. Carlill. The Court reasoned that the advertisement was not a mere
trade puff but a serious promise, as evidenced by the deposit of £1000. This deposit clearly
indicated an intention to create legal relations. The Court further held that the advertisement
constituted a unilateral offer made to the world at large.
The Court observed that in unilateral contracts, acceptance is shown through the performance of
the conditions. Therefore, Mrs. Carlill was not required to specifically communicate her
acceptance to the Company.
The ratio decidendi of the case is that an advertisement can constitute a legally enforceable
unilateral offer if it demonstrates a clear intention to be bound, and acceptance of such an offer is
completed by performance of the conditions mentioned therein without the need for separate
communication.
This decision is significant as it clarified the principles governing unilateral contracts and
acceptance. It established that advertisements can, in certain circumstances, give rise to binding
contractual obligations and that intention to create legal relations can be inferred from conduct.
The case continues to hold immense relevance in modern contract law, particularly in the context
of promotional offers and reward-based advertisements.