CARLILL V. CARBOLIC SMOKE BALL COMPANY – [1893] 1QB 256

INTRODUCTION

The law of contract in India is in the Indian Contract Act, 1872. The Act was passed by British India and is based on the principles of the English Common Law. It is applicable in all the states of India. It sets out the circumstances in which the promises made by the parties to the contract will be legally binding on them. All of us enter into many contracts daily – unknowingly. Each contract creates certain rights and duties on the contracting parties. Therefore, this law, the Indian Contract Act 1872 being of skeletal nature, relates to the performance of these rights and duties in India.

As per the Indian Contract Act, 1872 under section 2(h), “an agreement enforceable by law is contract”

The offer is the first step in concluding a contract, it marks the beginning of a contractual obligation between the parties. As it is a well-known fact that the acceptance can be made only with a preliminary offer, the offer is necessary for the formation of a contract.

Definition of Proposal (Offer):

According to Section 2(a) of the Indian Contracts Act, 1872, “when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal”.

And in India we are calling it as ‘Proposal’ but in England it was called as ‘Offer’.

There are so many types of offer, one of them is “General offer”.

A General offer is an offer that is made for the world at large. The root of general offer came from the landmark case “CARLILL V. CARBOLIC SMOKE BALL COMPANY”. It is British case which is adopted by Indian courts.

ABOUT CASE:

Plaintiff: Louisa Carlill

Counsel: Dickens, (Q.C., and W.B. Allen)

Defendant: Carbolic Smoke Ball Company

Counsel: Finlay, Q.C., and T. Terrell

Solicitors:

 For plaintiff: Field & Roscoe.    For defendants: J. Banks Pittman.

Court: Court of Appeal (Civil Division)

Date Decided: 6th and 7th December 1892

Citation:  [1893] 1QB 256

Bench: Lindley LJ,

             Bowen LJ,

             And AL Smith LJ,

MATERIAL FACTS

– Carbolic Smoke Ball Company placed a newspaper advertisement appeared in PALL MALL GAZETTE.

– Stated that a £ 100 reward would be paid to each person who received the flu after “using the ball three times a day for two weeks to the printed directions delivered on the ball”.

 – Claimed £ 1,000 had been deposited in Alliance Bank to show sincerity.

– Plaintiff has bought a smoke ball, used according to instruction and even came in contact with Influenza.

JUDGEMENT

The Court of Appeal unanimously rejected the company’s arguments and ruled that a fully binding £ 100 contract existed with Ms. Carlill.

For the reasons given by the three judges –

(1) That the advertising was a one-sided offer for the whole world.

(2) The satisfactory conditions for the use of the smoke ball represented the acceptance of the offer.

(3) Buying or simply using the smoke ball was a good idea as it was a significant disadvantage at the behest of the company and also more people who bought smoke balls by relying on advertising were a clear advantage for Carbolic.

Lindley J.:

One who makes a unilateral offer for the sale of goods by means of an advertisement impliedly waives notification of acceptance if it has been made to the world at large. It also held that an advertisement which requires performance, does not require notice of acceptance. The deposition of money in the account by the company was intended to demonstrate the company’s sincerity in paying the reward.

Concurring opinion by Bowen J.:

 Notification of acceptance is required under law. The requirement of notification of acceptance to the offeror must be determined by an objective reasonable person standard.

A.L. Smith, L.J.:

His judgment was more general and agreed with both Lindley LJ’s and Bowen LJ’s decisions.

Relevant Issues and their finding by judges

(a) Is there an offer or is it just a puff?

– Yes there was an offer and loyalty was shown by a 1000 pound deposit in Alliance Bank.

(b) Is the contract binding if offered to the world?

– Yes, it is offered to anyone who performs the conditions within the Advertisement. An Offer is accepted by those who comply with the conditions Included in the advertisement.

(c) Should the acceptance be notified?

– As a general principle, acceptance must be indicated when an offer is made. In this case, an exception is made, where there is no notice of acceptance is required to precede the performance. This offer is a continuous offer, the language and nature of the transaction indicates that Carbolic did not require notice of Approval, but notice of performance only.

(d) Was there consideration from Ms. Carlill ?

– Was argued as Nudum Pactum, that there is no consideration for the promise.

– An advantage has been given to the Smoke Ball Company, they get benefit from the public using their product, it provokes a reaction and generates sales that benefit Carbolic.

– Mrs. Carlil was embarrassed at Carbolic’s request by accepting the offer, she had to follow the specific guidelines they established “use three times a day for two weeks, “which hurts any smoke ball user.

RATIO DECIDENDI

Ratio Decidendi refers to the legal, moral, political and social principles on which a court’s decision rests. In this case it is

 –In unilateral contract, the declaration of acceptance is neither expected nor necessary.

– If there is an offer to world in general, and this offer does not explicitly or implicitly notify the execution, the execution of the specified condition in the offer will be an acceptance of the offer and consideration for the promise.

JUSTIFICATION TO SUPPORT THE DECISION

– The offer was made to customers who meet the specified conditions.

– The acceptance was regarded as fulfillment of the conditions stated in the advertisement.

– Justified that the notification of acceptance of the offer need not precede the performance as an offer is CONTINUING.

COROLLARY

The appeal was unanimously dismissed by all three judges and Mrs Carlill finally received compensation of £ 100. She lived to the advanced age of 96 years. She died on March 10, 1942.

Mr. Roe, owner of Carbolic Smoke Ball Co., continued aggressive marketing. This time he increased the reward to £ 200 after the loss of the case.

CONCLUSION

This is the most frequently mentioned case in general law of contract, especially with regard to unilateral contracts. It provides an excellent study of the basic principles of contract and how it relates to our day life. In this case, the necessary elements of the contract were mentioned, such as offer, acceptance, consent, intention to form a legal relationship, etc. This case forms the foundation of contract law.

REFERENCE

By – HARDIK SHETH

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