Submitted By:◦ Chirag Adlakha◦ Laxmi Keswani◦ Sandeep Ranjan

Pattnaik◦ Sarada Prasan Behera◦ Shyam Modi◦ Sunny Saurabh Prashar

Carlill Vs. Carbolic Smoke Ball Co.(1882)- A Case Presentation

ContractA contract is an exchange of promises between two or more parties to do, or refrain from doing, an act which is enforceable in a court of law.

OfferWhen a person signifies to another his willingness to do or to abstain from doing anything with a view to obtaining the assent of that other to such act or abstinence, he is said to make a offer.

AcceptanceAcceptance usually refers to cases where a person experiences a situation or condition without attempting to change it.

ConsiderationConsideration is the legal concept of value in connection with contracts. It is anything of value in the common sense, promised to another when making a contract. It can take the form of money, physical objects, services, promised actions, or even abstinence from a future action. 

“£100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the increasing epidemic influenza colds, or any disease caused by taking cold, after having used the ball three times daily for two weeks, according to the printed directions supplied with each ball.

£1000 is deposited with the Alliance Bank, Regent Street.”

Advertisement By Carbolic Smoke Ball Co. (1882)

Carlill Vs Carbolic Smoke Ball Company(1892), is one of the leading judgment from England and Wales Court of Appeal in the law of contract.

Parties to the Action:◦ Appellant : Carbolic Smoke Ball Co.[Defendants]◦ Respondent: Mrs. Carlill [Plaintiff]

Hearing Jury: • Lord Justice A L Smith• Lord Justice Lindley • Lord Justice Bowen

Outline of the Case

Carbolic Smoke Company, in 1892,advertised in the newspaper that they would pay £100 to anyone who uses the medicine as directed and nevertheless contracts a cold, influenza, or other cold disease.

The advertisement also claimed that £1000 was being deposited into the bank to demonstrate their sincerity.

Mrs. Carlill used the ball as directed but contracted influenza.

She sued to recover the money promised in the advertisement.

Fact about the Case

The Defendant argued that:◦ Contract was too vague to be enforced

No way to check the conditions were met You cannot contract with everybody( i.e. the whole

world) Timeframe not specified

◦ Acceptance had not been communicated to the offeror

◦ There was no consideration

Arguments by the Defendant

The Court of Appeal 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

◦ that the advertisement was a unilateral offer to all the world

◦ that satisfying conditions for using the smoke ball constituted acceptance of the offer

◦ 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 ball by relying on the advert was a clear benefit to Carbolic

◦ that the company's claim that £1000 was deposited at the

Alliance Bank showed the serious intention to be legally bound

VERDICT BY THE COURT OF APPEAL

A silent movie on the case

Pg. 32, The Modern Law Of Contract by Richard Stone

Pg.4.6, Business Law, The Institute of Cost and Works Accountant of India

http://www.bailii.org/ew/cases/EWCA/Civ/1892/1.html(dt.09/01/2010)

http://www.leeds.ac.uk/law/hamlyn/carlill.html(dt.09/01/2010)

http://www.youtube.com/watch?v=ABZeKvAIyEc&feature=related(09/01/2010)

Reference

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