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Lex saturates

Law of contracts

Carlill
Vs.
Carbolic smoke balls

Analysis by:
Paridhi Shrivastava
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Table of content

Parties involved ...................................................3rd page

Date of judgement................................................3rd page
Bench of judges.....................................................3rd page
Introduction..........................................................4th page
Issues....................................................................5th page
Legal pronouncement.............................................5th page
Argument ...............................................................6th page
Judgement.................................................................8th page
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Parties involved
Petitioner- carbolic smoke balls
Vs.
Respondent – Louisa carlill

Date of judgement
7/12/1893

Bench
1. Nathaniel lindley
2. Charles bowen
3. Baron bowen
4. Archibald smith
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Introduction
This case is concerned with the manufacture of smoke balls. It is one
the basic cases to understand the Indian contract law. The court of
appeal held in this case that all the essentials of a contract was present
i.e offer , acceptance , consideration and intentions to create legal
realations. 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.

In this case the company carbolic smoke balls manufactured smoke

balls and advertised that whoever consumes this smoke balls will not
get sick of influenza. The company also kept 100 euros aside as the
compensation. Mrs carlill saw the advertisement and consumed the
smoke balls as per the prescription. Later she got sick of influenza and
claimed the 100 euros. The company replied that if the smoke balls
would have been taken according to the proper prescription then they
would have been worked. The company refused to pay the claim and
filed the petition.

Issues :
1. can one make contract with the whole world

2. how does one interpret vague terms?

3. Was the ad a mere ‘puff’?

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4. Does performance of the conditions

advertised in the paper constitute acceptance

of the offer?

5. Was there any consideration ?

Legal pronouncement :

1. Smith vs hughes (1871)

2. Brogden vs. Metropolitan ply co. (1876-77)

3. Williams vs. Carwardine

Argument :

the counsel made three submissions :

first there was no contract, because Carbolic had not

intended to create an obligation enforceable by law upon

themselves, shown by the wide terms in which the

advertisement was expressed. The advertisement said the

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"reward" was for anyone getting influenza "after having used

the ball", which could mean any time in someone's life.

Second, it was not a wager contract, and therefore not void,

because Thacker v Hardy said wagers are about one side

winning and another losing. Here, even if Mrs Carlill did not

"win" £100, Carbolic won nothing. Third, using the smokeball

could not be an insurance policy, because it was not shaped

as an insurance policy.

the contract was not like other reward cases, because

catching the flu was not something you had control over,and

that the words in the advertisement expressed a vague

intention but in no way amounted to a promise. They said

the terms were far too vague to make any contract. New

arguments were that there was no "consideration” moving

from the plaintiff - Mrs Carlill did nothing of value for the

company - by getting the flu. They also argued that there was
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no communication of an intention by Mrs Carlill to accept the

offer, and they relied on Brogden v. Metropolitan Ry. Co.

where Lord Blackburn had said that to get a contract simply

performing a private act is not enough to create obligations

on other people. If one was honestly going to take the

advertisement seriously, then it would allow someone that

stole the Smoke Ball, and used it and got the flu, to get a

reward. But that would be absurd because there would be no

benefit given to the company. And, using the arguments from

the Queen's Bench briefly, even if it was a contract between

a purchaser and the company, it would still be void as a

wagering (gambling) contract or as an insurance contract

without the required form.

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Judgement

The Court of Appeal unanimously rejected the company's

arguments and held that there was a fully binding contract for
£100 with Mrs. Carlill
Among the reasons given by the three judges were
(1) That the advertisement was a unilateral offer to the entire
world
(2) The 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 advert 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.
The judge dismissed the appeal. He, giving his decision first

and reasons later, explained his judgment answering to all

allegations put up by the defendant’s counsel and upholding

the lower court’s decision. An excerpt which makes a short

shrift of the insurance and wagering contract that were dealt

with in the Queen’s Bench.

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Another point which was discussed in the court was that of

the time limit of the contract. How do you define reasonable

time period? And after great discussion, the respected judge

came to a conclusion that the protection warranted by the

contract was to last during the epidemic (1889-90 Flu

epidemic).If so, it was during this epidemic that the plaintiff

contracted this disease. So the contract holds.