When you take one of our classes on the language of contract law, your tutor will inevitably mention this well-known legal case decided at The Court of Appeal in 1893 which confirmed that it is possible for a unilateral contract to exist in English and Welsh law. The case is one of the most important contract law cases that you should know and remains a precedent today.
As a reminder, for a contract to be valid in English law there must be an offer, acceptance, consideration (an exchange) and an intention to create legal relations.
The facts of the case are well-known among law students. The Carbolic Smoke Ball Company placed this advertisement in various newspapers:
“£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 in Regent Street showing our sincerity in the matter. During the last epidemic of influenza many thousand carbolic smoke balls were sold as preventives against this disease, and in no ascertained case was the disease contracted by those using the carbolic smoke ball. One carbolic smoke ball will last a family several months, making it the cheapest remedy in the world at the price, 10s. post free. The ball can be refilled at a cost of 5s. Address: Carbolic Smoke Ball Company, 27, Princes Street, London.”
Offer and Acceptance
This was a bold and confident offer which Mrs Carlill accepted. She bought the smoke ball, used it consistently three times a day but caught the flu after two months. She wrote several letters to The Carbolic Smoke Ball Company claiming her reward yet they were all ignored or rejected so she took the claim to court.
Carlill's lawyers argued that this was simply an advertisement and not a valid contract while the lawyers for Mrs Carlill argued that she had done exactly what was specified in the advertisement.
The case went to The Court of Appeal with the three judges finding in favour of Mrs Carlill for several reasons.
The advertisement was not a unilateral offer to all the world but an offer limited to anyone who followed the terms contained in the advertisement. That was considered acceptance and buying the smoke ball constituted good consideration as an exchange took place between the customer and the company. In addition, the company's claim that £1000 was deposited at the Alliance Bank showed a serious intention to create legal relations.