The Carbolic Smoke Ball Company made a product called the "smoke ball" which claimed to be a cure for influenza and a number of other diseases. The Company published advertisements claiming that it would pay £100 to anyone who got sick with influenza after using its product according to the instructions set out in the advertisement.
£100 reward will be paid by the Chimbuto Smoke Ball Company to any person who contracts the increasing epidemic influenza colds, or any disease caused by taking cold, after having used the ball three times daily for two weeks, according to the printed directions supplied with each ball. £1000 is deposited with the Alliance Bank, Regent Street, showing our sincerity in the matter.
Mrs. Louisa Carlill saw the advertisement, bought one of the balls and used it three times daily for nearly two months until she contracted the flu on 17 January 1892. She claimed £100 from the Carbolic Smoke Ball Company. They ignored two letters from her husband, a solicitor. On a third request for her reward, they replied with an anonymous letter that if it is used properly, the company had complete confidence in the smoke ball's efficacy, but "to protect themselves against all fraudulent claims" they would need her to come to their office to use the ball each day and be checked by the secretary. John Carlill (Louisa Carlill's husband) brought a claim to court. The barristers representing Carlill argued that the advertisement and her reliance on it was a contract between her and the company, and so they ought to pay. The company argued it was not a serious contract.
- How does one interpret vague terms?
- Was the ad a "mere puff"?
- Does performance of the conditions advertised in the paper constitute acceptance of an offer?
- Was there any consideration made?
(1) The advertisement was not a unilateral offer to all the world but an offer restricted to those who acted upon the terms contained in the advertisement
(2) Satisfying conditions for using the smoke ball constituted acceptance of the offer
(3) Purchasing or merely using the smoke ball constituted good consideration, because it was a distinct detriment incurred at the behest of the company and, furthermore, more people buying smoke balls by relying on the advertisement was a clear benefit to John
(4) Company's claim that £100 was deposited at the Alliance Bank showed the serious intention to be legally bound.
An advertisement can constitute a unilateral contract, which can be accepted by fulfilling the conditions of the contract; no formal acceptance required
- The determination of a serious offer will be determined from the words and actions.
- The terms of the contract (if vague) will be interpreted purposively from the contract.
- The offeror can determine how acceptance of offer will be made.
Notification of acceptance is required under our law. The person who makes the offer may dispense with notice to himself if he thinks it desirable to do so. He may expressly or impliedly create any method of acceptance for his offer. An offeree need only follow the method indicated for acceptance. The requirement of notice of acceptance to the offeror must be determined by an objective reasonable person standard.
In the advertisement case, it seems to me that an inference may be drawn from the transaction itself that a person is not to notify his acceptance of the offer before he performs the condition, but that if he performs the condition notification is dispensed with. We must look to the essence of the transaction and what the offeror is bargaining for under the circumstances. Under these facts, the defendant impliedly indicated that it did not require notification of acceptance of the offer.