Can advertisementsCreate

A contract?

A write up on legal environment of business case let

Submitted by:Adil mirza

ICFAI Business School

Carlill vs. Carbolic Smoke Ball Company

Court of Appeal (London), 1893Parties involved:

The plaintiff: Mrs. Carlill who after reading the advertisement bought the product and even after

using it according to the specifications mentioned in the advertisement caught influenza. She

proceeded to claim an amount of 100£ from the defendants as was promised by them.

The defendants: The Carbolic smoke ball company, a pharmaceutical manufacturer of smoke

balls, who advertised to pay a sum of 100£ to anyone who caught influenza even after using the

smoke balls as they prescribed it.

Issues in the case:

1. Can an advertisement create a contract?

2. Did Mrs. Carlill’s act of buying the smoke ball and yet catching influenza form the

consideration for the company’s contract?

3. Is this contact a wager or a policy of insurance?

4. Is this contract intended to be a promise or is it a mere puff?

5. Is the contract not binding because it is not made to anyone In particular?

6. Is notice of acceptance needed?

Holding:

1. Yes an advertisement can create a contract particularly in the cases like the one in Mrs.

Carlill vs. Carbolic smoke company. Where the advertisement creates a general offer of

acceptance and the person qualifying for the offer accepts it without communicating to

the offeror as it becomes an implied acceptance.

2. Yes Mrs. Carlill act of buying the smoke ball and yet catching the influenza forms the

considerations for the company’s contract as the inconvenience sustained by the plaintiff

at the request of the defendant is enough to create a consideration. In this case the

plaintiff took the trouble of using the Smoke Ball, also the use of the Smoke Ball was

contemplated by the defendants as being indirectly a benefit to them, because the use of

the Smoke Ball would promote their sales.

3. This contract is not a wager as it is not a bet between two parties. It is a policy of

insurance as the defendants in the advertisements assured the users of the Smoke Balls of

reimbursement of some amount of money in case the usage did not produce the desired

results.

4. This contract is intended to be a serious offer as the defendant disclosed in the

advertisement that they had deposited 1000 £ with the Alliance Bank, showing their

sincerity in the matter. While on the other hand a mere puff is a gimmick which does not

have any seriousness associated with it.

5. The contract in this case is binding as it a general offer. A general offer is made to the

world at large or to the general public and maybe accepted by any person who fulfills the

necessary conditions.

6. In this case no notice of acceptance is needed as it is a general offer and any person who

fulfills the necessary conditions can accept it. In this case notice of performance is good

enough to accept the offer.

Legal Theories Used:

By the Defendant:

1. The defendants contended that it is a bad policy to regard their advertisement as a binding

contract.

2. The defendants also contended that the advertisement was a mere puff and the company

had no intention of entering into a legal contract.

3. The defendant contended that the offer had not been made to any one person in particular

and that the plaintiff had not communicated her intention of accepting the offer or

consideration.

By the Plaintiff:

1. The plaintiff contended that the advertisement constituted an offer and thus a binding

contract was formed.

2. The plaintiff also contended that buying the Smoke Balls, using them as directed and then

getting sick constituted an acceptance because any person who fulfills the necessary

conditions can accept it and notice of performance is good enough to accept the offer.

Conclusion:

In the light of above discussion it is clear that in the given case there is an express promise made

by the plaintiff by the notice of performance. In this case the notice of performance complies

with the notice of acceptance because the offerer is agreeing that by performing the offeree is

automatically accepting. The advertisement is not also a mere puff as 1000 £ deposited in the

bank speaks for the sincerity of the offer. There is also a consideration on both the plaintiff as

well as the defendant’s side as the plaintiff took the trouble of using the Smoke Ball, also the use

of the Smoke Ball was contemplated by the defendants as being indirectly a benefit to them,

because the use of the Smoke Ball would promote their sales.

Thus the judgement goes in favour of plaintiff and she must get the 100 £ as promised.