Carlill v. Carbolic Smoke Ball Co. (1893, England)
Facts: Defendants advertised a reward of £100, backed up by ‘£1000 deposited with the Alliance Bank’ to show ‘sincerity’, to anyone who caught the flu after taking the Carbolic Smoke Ball medication as prescribed (three times a day for two weeks). Mrs. Carlill followed the regime, fell ill, and requested the £100. The lower court ruled in her favour, saying a valid contract had been formed.
Issue: Can an advertisement create a contract between the advertiser and the customer? Can a contract be accepted in some cases by merely performing the conditions in it? Can we consider being ‘inconvenienced’ or suffering discomfort adequate consideration?
Holding: That the C. Smoke Ball Co. honour its contract and pay £100 to Mrs. Carlill.
Reasoning: A reasonable person would have interpreted the advertisement as a binding promise. It was an offer that invited customers to perform the condition in order to accept it. Nor did the wording of the advertisement impose any obligation to notify acceptance other than taking the medication as prescribed. As for the presence of consideration, it is enough to have been inconvenienced in performing a contractual obligation. Taking the medication in this case was not insignificant.
Ratio:
· The validity of an offer in advertising can be subjected to a ‘reasonable person’ test.
· Based on wording, it may be possible to accept an offer by performing the condition in it without previously notifying acceptance.
· Consideration can have a negative expression: imposing an inconvenience or discomfort on the other party.