Court: Court of Appeal (England and Wales)
Citation: (1893) 1 QB 256; (1892) EWCA Civ 1
Year: 1893
Facts:
Advertisements for the Carbolic Smoke Ball Company’s smoke ball product were featured in The Pall Mall Gazette. The advertisement included a guarantee to compensate anyone who contracted the flu after using the product as directed for two weeks, three times a day, with a payment of £100. Moreover, the advertisement indicated that the company had deposited £1,000 with the Alliance bank as a security. Mrs. Carlill purchased the smoke balls and followed the instructions, but she subsequently contracted the flu. When the defendant refused to honor her claim, she initiated legal proceedings to seek a refund of the money.
Issues:
- Does the agreement between the parties hold any legal validity?
- Was a formal acceptance notice required for the contract in question?
- Was it necessary for Mrs. Carlill to communicate her acceptance of the offer to the Carbolic Smoke Ball Company?
- Did Mrs. Carlill provide any consideration in exchange for the £100 reward offered by the company?
Judgement:
The company’s objections were unanimously dismissed by the Court of Appeal, who ruled that a legally binding contract for £100 existed between Mrs. Carlill and the company.
The three judges provided various reasons for their decision, including the following:
(1) The advertisement constituted a unilateral offer to the entire world;
(2) Complying with the smoke ball usage requirements was tantamount to accepting the offer;
(3) Purchasing or using the smoke ball was sufficient consideration;
(4) The company’s deposit of £1000 at the Alliance Bank demonstrated a genuine intention to assume legal responsibility.