Carlill v. The Carbolic Smoke Ball Company [1892] 2 QB 484

The Carbolic Smoke Ball Co. advertised that anyone using their smoke ball correctly and contracting influenza would receive £100. Mrs Carlill followed instructions, contracted influenza, and successfully sued for her reward. The court held the company’s advertisement was a legally binding unilateral offer accepted by Mrs Carlill’s conduct.

In 1891, the Carbolic Smoke Ball Company, manufacturers of a medical device called the “Carbolic Smoke Ball,” published an advertisement in the Pall Mall Gazette on November 13. The advertisement stated:​

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

To demonstrate their sincerity, the company further mentioned:​

“£1,000 is deposited with the Alliance Bank, Regent Street, showing our sincerity in the matter.”

Mrs. Louisa Carlill, upon reading this advertisement, purchased a Carbolic Smoke Ball and used it as directed from November 20, 1891, until January 17, 1892. Despite her adherence to the instructions, she contracted influenza on January 17, 1892. Subsequently, Mrs. Carlill sought to claim the £100 reward from the Carbolic Smoke Ball Company. The company refused to pay, leading Mrs. Carlill to initiate legal proceedings to recover the promised sum.​

The case was heard in the Queen’s Bench Division before Justice Hawkins. The Carbolic Smoke Ball Company raised several defenses:​

1. No binding contract: The company contended that the advertisement was a mere representation of their intentions and did not constitute a binding contract. They argued that the terms were too vague, particularly concerning the duration of the offer and the period during which a user could contract influenza and still claim the reward.
2. No notification of acceptance: They asserted that there was no notification of acceptance from Mrs. Carlill, which they deemed necessary to form a contract.
3. Wagering contract: The company argued that if a contract did exist, it was void under the Gaming Act 1845 as a wagering contract.
4. Insurance contract: They claimed that the contract was akin to an insurance contract and was void under the Life Assurance Act 1774 for not complying with statutory requirements for insurance contracts.

Justice Hawkins dismissed these defenses, ruling in favor of Mrs. Carlill. He held that the advertisement constituted a unilateral offer to the world, which could be accepted by anyone who performed the conditions stated in the offer. Justice Hawkins stated:​

“It seems to me that the defendants must be taken to have intended that the promise contained in the advertisement should be construed as a promise to pay this £100 in return for the consideration of the inconvenience, or, as it is phrased in the argument, the ‘onus’ of using this smoke ball.”

He further noted that the deposit of £1,000 with the bank was evidence of the company’s intention to be bound by the offer, dismissing the argument that the advertisement was mere puffery. Justice Hawkins concluded that a binding contract existed and that it was neither a wagering contract nor an insurance contract requiring formalities. He ruled in favor of Mrs. Carlill, awarding her the £100.​

The Carbolic Smoke Ball Company appealed the decision. The Court of Appeal, comprising Lord Justices Lindley, Bowen, and A.L. Smith, unanimously upheld Justice Hawkins’ judgment. They concurred that the advertisement was a unilateral offer to the world, which became a binding contract when an individual performed the specified conditions. The court emphasised that the company’s deposit of £1,000 with the bank was evidence of their intention to be bound by the offer, dismissing the argument that the advertisement was mere puffery. The Court of Appeal also rejected the defenses related to wagering and insurance contracts, affirming that the contract was neither a wager nor an insurance contract requiring formalities.​

Ratio Decidendi:

An advertisement can constitute a unilateral offer to the world, which becomes a binding contract when a person performs the conditions stated in the offer.​

Obiter Dicta:

The court noted that the deposit of £1,000 by the company was evidence of their intention to be bound by the offer, dismissing the argument that the advertisement was mere puffery.

Full text: https://www.bailii.org/uk/cases/UKHL/1932/100.html

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