Carlill v. Carbolic Smoke Ball Company

Carlill v. Carbolic Smoke Ball Company [1893] 1 QB 256 is a landmark case in English contract law, specifically the law of unilateral offers.

Background
The Carbolic Smoke Ball Company made a product called a smoke ball that it claimed could protect the user from contracting influenza. The smoke ball was a rubber ball with a tube attached. It was filled with carbolic acid (phenol). The tube was then inserted into the user's nose. It was squeezed at the bottom to release the vapours into the nose of the user. This would cause the nose to run, and hopefully flush out the cold. In fact the inflammation caused by the device would have probably increased susceptibility to catching influenza.

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.

They stated: "£100 reward will be paid by the Carbolic 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 each ball. £1000 is deposited with the Alliance Bank, Regent Street, showing our sincerity in the matter."

Mrs Carlill, relying on the promises made in the advertisement, bought one of the balls and used it in the manner specified, yet still managed to contract influenza.

Ruling
The Carbolic Company claimed that there was no enforceable contract between it and the user of the smoke ball on the grounds that there was no acceptance of its offer, because Mrs Carlill had never notified the Company that she accepted its offer, nor furnished any consideration, since the Company did not receive any benefit from a purchaser's use of the product once the sale had been completed.

The court rejected both arguments, ruling that the advertisement was an offer of a unilateral contract between the Carbolic Smoke Ball Company and anyone who satisfies the conditions set out in the advertisement. Once Mrs Carlill had satisfied the conditions she was entitled to enforcement of the contract; the notification of performance of the conditions formed part of the acceptance. Furthermore, weight was placed on the £1000 bank deposit that claimed to 'shew[sic] their sincerity in the matter' in showing that the advertisement was not just a puff.

As to consideration, the Court of Appeal held that there was consideration on two grounds. The first was the benefit that the defendants gained as a result of the use of the smoke ball in response to the advertisements and the sales produced thereby. The second was that the use by Mrs Carlill of the smoke ball three times daily for two weeks constituted a detriment so that she had provided consideration for the defendants' promise.

Later influence
The case was quoted extensively in the famous "Pepsi Points case", Leonard v. Pepsico, Inc., 88 F.Supp.2d 116 (S.D.N.Y 1996), wherein presiding Judge Kimba Wood wrote:

Long a staple of law school curricula, Carbolic Smoke Ball owes its fame not merely to "the comic and slightly mysterious object involved"... but also to its role in developing the law of unilateral offers.