Fact of the Case
The defendant company made a product called “Smoke Ball”. It claimed to be a cure to influenza and many other diseases.The ball is filled with Carbolic acid (Phenol). The tube is supposed to be inserted in one of your nostrils and the bottom part of the rubber ball is to be pressed. The gas enters your respiratory tract and flushes out all the viruses.
The Company published advertisements in the Pall Mall Gazette and other newspapers on November 13, 1891, claiming that it would pay £100 to anyone who got sick with influenza after using its product according to the instructions set out in the advertisement.
Mrs. 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.
Issue
Whether there was a binding contract
Ratio Decidendi
The advertisement was a unilateral offer to the entire world. The satisfying conditions for using the smoke ball constituted acceptance of the offer.
The 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 advert was a clear benefit to Carbolic.
The company’s claim that £1000 was deposited at the Alliance Bank showed the serious intention to be legally bound.
The trail court held in favour of Mrs Carlill and the defendant appealed.The Court of Appeal unanimously rejected the company’s arguments and held that there was a fully binding contract for £100 with Mrs. Carlill.
