Carlill v Carbolic Smoke Ball Co [1893]
A landmark case on unilateral contracts and offer and acceptance.
Court
Court of Appeal
Judges
Lindley, Bowen and AL Smith LJJ
Judgment Date
4/7/1892
Material Facts
In 1891, during a flu epidemic in London, the Carbolic Smoke Ball Company made what they thought was a brilliant marketing move. They placed an advertisement in the Pall Mall Gazette that boldly declared:
"£100 reward will be paid by the Carbolic Smoke Ball Co to any person who contracts the increasing epidemic influenza, colds, or any diseases caused by taking cold, after having used the ball three times daily for two weeks according to the printed directions supplied with each ball. £1,000 is deposited with the Alliance Bank, Regent Street, showing our sincerity in the matter."
Mrs. Louisa Carlill, reading this advertisement, thought it seemed like a genuine promise. She bought a smoke ball from a chemist in Oxford Street and diligently used it three times daily for several weeks - even longer than the required two weeks. Despite following all the instructions perfectly, she caught the flu in January 1892.
When Mrs. Carlill claimed her £100 reward, the company essentially said "Nice try, but no." They refused to pay, leading to one of the most famous contract law cases in history.
The Legal Issues
The case raised several fundamental questions about contract formation:
1. Was this advertisement a serious offer or just marketing "puff"?
2. How can you accept an offer made to the whole world?
3. Do you need to notify the company before using the product?
4. Was there valid consideration (something of value exchanged)?
The Court's Reasoning
1. This Was a Real Offer, Not Just Puffery
Lord Justice Lindley cut straight to the heart of the matter:
"What is that money deposited for? What is that passage put in for, except to negative the suggestion that this is a mere puff, and means nothing at all? The deposit is called in aid by the advertisers as proof of their sincerity in the matter."
The court found that depositing £1,000 at the bank showed the company was serious. This wasn't just empty marketing talk - they'd put their money where their mouth was.
2. Offers Can Be Made to the World
The company argued you can't make a contract with the entire world. Lord Justice Bowen disagreed:
"It is an offer made to all the world, and why should not an offer be made to all the world which is to ripen into a contract with anybody who comes forward and performs the conditions?"
The court explained that while the offer is made to everyone, the contract is only formed with those who actually perform the conditions. It's like posting a "Lost Dog - £50 Reward" sign - you're not contracting with everyone who reads it, only with whoever actually finds and returns your dog.
3. No Need to Notify Before Performance
This is where the case gets really interesting for contract law. Normally, you need to communicate acceptance of an offer. But the court recognised this would be absurd in cases like this.
Lord Justice Bowen used a perfect analogy:
"If I advertise to the world that my dog is lost and that anybody who brings him to a particular place will be paid some money, are all the police or other persons whose business is to find lost dogs to be expected to sit down and write me a note saying that they have accepted my proposal?"
The court held that in these types of offers, performance of the requested act IS the acceptance. You don't need to warn the company you're about to use their product - just do it.
4. Using the Smoke Ball Was Valid Consideration
The company argued Mrs. Carlill gave nothing of value in return for their promise. The court disagreed on two grounds:
Inconvenience to Mrs. Carlill: Using the smoke ball three times daily for two weeks was itself an inconvenience that counted as consideration.
Benefit to the Company: Lord Justice Bowen noted:
"The use of the smoke ball would promote the sale of the smoke ball."
More people seeing others use the product would boost sales - a clear benefit to the company.
The Decision
The Court of Appeal unanimously ruled in favour of Mrs. Carlill. She was entitled to her £100 reward.
Lord Justice Lindley delivered a final blow to the company:
"If a person chooses to make these extravagant promises, he probably does so because it pays him to make them, and if he has made them the extravagance of the promises is no reason in law why he should not be bound by them."
In other words: If you make bold promises to sell your product, you'd better be prepared to keep them.
Why This Case Matters
For Contract Law:
- Established that advertisements can be binding offers if they're specific and show serious intent
- Created the principle that performance can equal acceptance in unilateral contracts
- Showed that acceptance doesn't always need to be communicated before performance
For Everyday Life:
- Reward posters, promotional offers, and competition advertisements can create real legal obligations
- Companies can't hide behind "it was just an ad" if they make specific promises
- The law protects consumers who reasonably rely on clear commercial promises
The Legacy
This case remains a cornerstone of contract law teaching worldwide. It shows that contract law isn't about trapping people with technicalities - it's about holding people to their word when they make serious promises in business.
For Mrs. Carlill, it meant justice and her £100 (worth about $34,000 today). For the rest of us, it means that when companies make specific promises to sell their products, those promises can have real teeth.
The Carbolic Smoke Ball Company, perhaps learning their lesson, went on to reduce their reward offers significantly in future advertisements. But by then, the legal principle was set: make a promise in business, show you mean it, and the law will hold you to it.