Author: KUMARI PRITY OF ASIAN LAW COLLEGE.
To the Point
- Issue: Can an advertisement offering a reward be considered a binding legal offer?
- Held: Yes, if it contains clear terms, shows intent to pay, and someone acts on it.
- Result: Mrs. Carlill won the case. The company had to pay the promised £100.
- Why it matters: The case established that promises made to the public can be enforceable when accepted through performance.
Use of Legal Jargon
1. Offer
An offer is when one person (called the offeror) clearly says they are willing to make a deal with someone else (called the offeree). If the other person agress, it can become a legal agreement.
2. Acceptance
Acceptance means saying “YES” to the offer. In contracts, it shows that the person agrees to the deal. In some types of contracts (called unilateral contracts), just doing what the offer says counts as acceptance.
3. Consideration
This refers to something of value given by both sides in a contract. It could be money, effort, or even inconvenience.
4. Unilateral Contract
A contract where only one party makes a promise, and the other party accepts it by performing an act (not by a counter-promise).
5. Intention to Create Legal Relations
Both people must seriously want to make a legal agreement. If one person is just joking or making an ad without meaning it, then it doesn’t count as a contract.
The Proof (Detailed Facts of the Case)
Background
The Carbolic Smoke Ball Company sold a product called the “smoke ball.” They said it could stop people from getting the flu and other illnesses. To sell more products, the company put an ad in many newspapers.
The Advertisement
THE COMPANY SAID~
“We will give £100 reward to anyone who gets the flu after using the smoke ball three times a day for two week, as per the instructions.
We have to put £1,000 in the bank to show we are serious about this offer.”
What Happened Next
- Mrs. Louisa Carlill, trusting the advertisement, bought and used the smoke ball as instructed.
- Despite using it correctly, she contracted influenza.
- She then claimed the £100 reward.
- The company NO, claiming the ad was just for attention and not meant to be real promise.
- Mrs. Carlill took the company to the court for breaking the promises (breach of contract).
Arguments by the Company (Defendant)
- No Binding Offer: The company claimed the ad was just a marketing gimmick and not a real legal promise.
- No Acceptance: They argued Mrs. Carlill never formally accepted the offer or told the company she was using the smoke ball.
- No Consideration: They said Carlill gave nothing in return — so there was no real contract.
- Too Vague: They argued that the terms were not specific enough to be enforced.
Arguments by Mrs. Carlill (Plaintiff)
- The ad was clear and specific — it said exactly what a person had to do and what the reward would be.
- She did everything the ad asked for, so a contract was formed.
- The company showed serious intention by saying they deposited £1,000 in a bank, proving they were not joking.
- Her time, effort, and reliance on the promise was valid consideration.
Judgment of the Court
The Court of Appeal sided with Mrs. Carlill. The judges — Lindley LJ, Bowen LJ, and A.L. Smith LJ — all agreed the company was legally bound to pay the reward.
Key Legal Findings:
1. The Advertisement Was an Offer
- The court said the ad was not just a sales message- it was a real offer to the public.
- The company’s statement that £1,000 was deposited showed that it had serious intent to be bound.
2. Acceptance by Conduct Is Valid
- In a unilateral contract, you don’t need to tell the company that you’re accepting the offer.
- Simply doing the act mentioned in the offer — like using the smoke ball — is enough to count as acceptance.
3. Consideration Was Present
- Mrs. Carlill suffered inconvenience and spent money trusting the ad. That was enough consideration.
- The company also benefited from more people buying the product.
4. Legal Intention Was Clear
- Mentioning the bank deposit proved that the company was not making an empty promise.
- The court said a reasonable person would think this ad was meant to be taken seriously.
Abstract
The case of Carlill v. Carbolic Smoke Ball Co. (1893) is one of the most important decisions in the history of contract law. It established the concept of unilateral contracts, clarified when advertisements can be legally binding offers, and explained how acceptance by conduct can lead to the formation of a valid contract. This article breaks down the case in simple yet legally accurate language. It explains the background, arguments, court reasoning, and the significance of the judgment in shaping modern contract principles.
Case Laws
1. Carlill v. Carbolic Smoke Ball Co. [1893] 1 QB 256
Court: Court of Appeal, UK
Significance:
This is the main case and the subject of the article. It laid down several key principles in contract law:
- Advertisement can be real offers if they are clear and shown they are serious.
- One- sided (unilateral) contracts are valid and can be accepted just by doing it is enough.
- You don’t need to tell the company that you accept the offer- just doing it is enough.
- No formal communication of acceptance is needed in such contracts.
- A promise backed by intention (like depositing £1,000 in a bank) can make an advertisement legally binding.
- Consideration was found in the form of inconvenience and effort by Mrs. Carlill.
This judgment forms the foundation of many later decisions in both UK and Indian legal systems.
2. Partridge v. Crittenden [1968] 1 WLR 1204
Court: Queen’s Bench Division
Judge: Ashworth J
Facts:
The defendant placed an advertisement in a magazine offering birds for sale. He was later charged under the Protection of Birds Act 1954 for illegally offering protected birds for sale. Partridge argued that his advertisement was not a real offer, but just an invitation to treat (which means he was inviting people to make offers to buy, not actually selling directly through the advertisement.)
Held:
The court held that advertisements are generally not offers but invitations to treat — meaning they are invitations for customers to make offers, which the seller can accept or reject.
Relevance to Carlill:
- However, in Carlill, the ad went beyond this — it was specific, included performance terms, and a reward — making it an exception to the rule in Partridge.
- This shows that if an advertisement uses clear words and shows a serious intention, it can become a legally binding offer.
3. Leonard v. Pepsico, Inc. (1999) 88 F. Supp. 2d 116
Court: U.S. District Court, Southern District of New York
Facts:
Pepsi aired a commercial stating that people could collect Pepsi Points and redeem them for prizes. In the ad, a fighter jet was humorously shown as a prize for 7 million points. Leonard actually collected enough points and asked for the jet.
Held:
The court ruled against Leonard. It found that the ad was not a serious offer but a joke, and no reasonable person would believe Pepsi intended to give away a fighter jet.
Relevance to Carlill:
- Shows the limit of Carlill.
- Ads that are clearly exaggerated or humorous do not create contracts.
- The key difference from Carlill: no serious intention and no reasonable reliance.
Conclusion of Case Law Section
These cases, when read together, give a clear picture of how courts interpret advertisements and performance-based promises in contract law:
Case
Key Contribution
Carlill v. Carbolic Smoke Ball Co.
Established enforceable unilateral contracts through advertisements
Partridge v. Crittenden
Ads are usually invitations to treat unless clearly specific
Leonard v. Pepsico
If an advertisement is a meant as a joke or isn’t serious, it doesn’t count as a real contract.
These precedents show that intention, clarity, and reliance are the deciding factors in turning words into a legally binding promise.
Conclusion
Carlill v. Carbolic Smoke Ball Co. is more than a case about a strange product; it’s a foundation for modern contract law. It teaches that:
- Promises made publicly can be binding if clear and serious.
- If someone does the action mentioned in an offer, a contract can be created- even without writing or direct communication.
- Consumers have legal protection when they rely on company promises.
This case protects people from false advertising and holds companies accountable when they offer rewards or guarantees. Even over 130 years later, it is taught in classrooms and used in courts because of its powerful and lasting impact.
FAQ
Q1: Was there a written agreement between Carlill and the company?
A: No. There was no written agreement. The contract happened because Carlill followed the ad and did what it asked.
Q2: Is every advertisement a legal offer?
A: No. Most ads are just invitations to make an offer. But if the ad is specific and serious, it can be a real offer — like in this case.
Q3: What made the company’s offer legally binding?
A: The ad had clear instructions, a promised reward, and the company showed intention by depositing money in a bank.
Q4: Why is this case still important today?
A: It set the rules for unilateral contracts, acceptance by performance, and truth in advertising — ideas still relevant in modern law.
