The contract law is a branch of civil law which deals with the contracts which are enforceable by the law. These contracts are those which fulfil the essential requirements of the valid contract of which first is that their must be an offer by one party, acceptance by the other party, a consideration is also present and an intention to create legal relations is also there. The case of Carlill v. Carbolic Smoke Ball is a leading case which deals with whether the advertisement is considered as promise.
- What are the essentials of valid contract under English law ?
- What is the judgement of Carlill v. Carbolic Smoke Ball. State its impact on English contract law.
- Does advertisements come in the category of offers?
The case of Carlill v. Carbolic Smoke Ball is a introductory case of contract which is regarded as the first legal case taught to the students in the law of contract. This case is notable for its subject matter. The contract law regulates the rights, obligations and conduct of the parties who have entered into a valid contract. The essentials of the valid contract includes an offer by a party to which the acceptance is received is by other party. A consideration is also there and an intention to create legal relations is also present.
Facts Of The Case
The defendant in the case is Carbolic Smoke Ball company which manufactures the remedy of flu. The defendant placed an advertisement in many newspaper like pall Mall gazette which states that the product 'Carbolic Smoke Ball', if used three times a day for a period of two weeks will prevent the influenza and cold. The manufacturers of the Carbolic Smoke Ball additionally offered the reward of 100 Euros to anyone who catches influenza and uses their product. The company deposited 1000 Euros in bank in order to show sincerity for the reward guarantee. The plaintiff is Lilli Carlill who bought smoke ball and used the remedy as directed by the company. The plaintiff's husband received the letter and she ignore tow of the letters of her husband. She replied to third letter that if she could use the flu remedy properly and the company has full confidence on the efficacy of the Carbolic smoke ball but the company asked to user to come to their office to use the ball each day and check it by the Secretary in order to prevent the fraudulent claims. After many weeks, she started using carbolic smoke ball and the plaintiff caught flu.
Plaintiff argued that the advertisement and the reliance of plaintiff on the company is a contract and the company must be liable to pay the reward. The company have even deposited 1000 Euros in the bank to show their sincerity to form the valid contract. This shows their intention to create an agreement from one side. The attributes of the contract form the unilateral contract.
On the other hand the defendant argued that it was not a serious contract as the offer did have a binding impact to form a valid contract as the words used in advertisement is too vague and does not amount to promise. Secondly there was no intention to communicate the acceptance as Carlill failed to send any acceptance of the offer either impliedly or expressly. An the advertisement was just a marketing strategy and the organisation have no intention to form a valid contract.
Whether the language used in the advertisement meant to be express promise or the sales puff have no meaning to it?
Decision of lower court
The court held that the company is bound by the advertisement as it was construed as the offer to which the plaintiff accepted and a contract was formed. Hence the company is liable to pay the plaintiff reward for which it has promised to pay in the advertisement.
Decision of Court of Appeal
The defendant appealed to the Court of Appeal to which the court held that the plaintiff is entitled for the reward of 100 Euros. The court acknowledges that in case of vague advertisement, the language regarding the payment of the reward is normally puff which carries no enforceability. In the present case, the defendant noted that it has deposited 1000 Euros in the advertisement to show the sincerity. As defendant did this, the court found that the offer to reward is a promise which is backed by the sincerity.
Impact of the case on law of contract
The decision of the court impacted the concept of unilateral contract as now the companies have become more aware when advertising. The advertisement is an offer to the large people and it is implied that the offer may be accepted. So the offeror now becomes obliged to perform its part of the agreement. Thus the advertisements are unilateral contracts and it must have a binding effect on the party making it.