Introduction

• This is the landmark case that raised the point of whether advertising of the goods will be considered as an express contract to pay or not. This case is based on the English Contract Act.

Facts

• In this case the Carbolic smoke ball company made a product called the smoke ball.
  • The small ball was promulgated as a cure for influenza, high fever, coughs and colds, headache, and many other diseases, in an advertisement by the company.
• The company advertised and claimed that they would pay $100 to any person who got sick after using the product according to the conditions mentioned by the company.
• The plaintiff Louisa Carlill used the product according to the instructions mentioned by the company and got sick from the disease.
  • Therefore, the plaintiff claimed the $100 money according to the advertisement, but the company refused to pay $100 to the plaintiff.
• Now the action was brought before the court against the company and the court ordered in favour of the plaintiff.
• The present appeal was brought by the company against the order.

Issues Involved

• Whether there was any binding effect of the contract between the parties?
• Whether Mrs Carlill was required to communicate her acceptance of the offer to the Carbolic Smoke Ball Company?

Observation

• The court said that the actions of the company clearly stated that they had an intention to create a legal contract. The action of deposit of amount to the bank and it showed the seriousness towards the contract.
• The court said the advertisement was made for the public, as far as the plaintiff is concerned, she fulfilled the instructions given by the company and the performance of the plaintiff amounts to acceptance of offer.
• The performance of the contract can define the implied acceptance of the contract, a specific notification of the acceptance is not required in such cases.
• This is a unilateral offer which doesn’t require acceptance as it is made to the world at large.
  • It shall be treated as an offer to anyone who performs the conditions and anyone who performs the specific condition (in this case using the smoke ball 3 times for 2 weeks) accepts the offer.
• There is valid consideration also and by depositing the amount to the bank, the company showed their intention to fulfil the contract.

Conclusion

• The appeal was dismissed by the Judges and ordered to pay $100 as compensation to the plaintiff.
• The court held that the advertisement was a general offer to the whole world. Anyone following the conditions mentioned in the advertisement constitutes a valid acceptance.

Note

According to the Indian Contract Act 1872, proposal is defined in Section 2(a) as “when one person will signify to another person his willingness to do or not do something (abstain) with a view to obtain the assent of such person to such an act or abstinence, he is said to make a proposal or an offer.”

• As per the Indian Contract Act 1872, Section 2 (b), acceptance is defined as “When the person to whom the proposal has been made signifies his assent thereto, the offer is said to be accepted.
• General Offer - An offer made to the world at large is known as a general offer. Such offers can be accepted by anyone, but the contract is not entered into with the whole world. It is made only with a person who comes forward & performs the condition of the proposal.
  The proposal may be for the whole world at large but be for the world at large but the number of acceptances to a proposal may be expressly or impliedly limited.