1. “Carlill vs. Carbolic Smoke ball Co.” A Case Study Academic Project 2014-15 Subject: Law of Contract Submitted To: Prof. Nemichand Submitted By: Sandeep K Bohra Class: B.B.A LL.B. Sem III Roll No. : 19
2. In This project discusses the case of Carlill vs. Carbolic Smoke Ball Co. Continuously studied though it has been by lawyers and law students for close to a century, an air of mystery long surrounded the case; even at the time the very form taken by the celebrated smoke ball was unknown to Lindley LJ, who adjudicated in the case in the Court of Appeal. He is reported to have referred to it as „a thing they call the „Carbolic Smoke Ball‟. What that is, I don't know‟. Happily, a considerable volume of material survives that makes it possible to recreate at least something of the historical background and significance of this landmark in the history of contract law and its relationship to the seedy world of the late 19th- century vendors of patent medical appliances.
3. Acknowledgement This Project on “Carlill vs. Carbolic Smoke ball Co.” is an integrated part of Law of Contract, is do hereby submitted to the Law faculty of Jai Narain Vyas University, Jodhpur. And it is purposely consecrate to the respected Professor Mr. Nemichand and Honorable Dean of the faculty Mr. R.K Sinha. I have tried out best not to fall into lapses of the subject matter and the language but errors the habit of creeping in inadvertently. I hope that you and my fellow classmates, mentors, friends will help me in making the project more useful. Thank You
4. “Certificate Of Completion” This Certificate is herby awarded to For Outstanding Performance and Achieving the Skill of the Subject “Carlill vs. Carbolic smoke Ball Co. case study.” And verifying by grade, On the date of Signature:
5. INDEX Names of Chapters 1. Introduction of the Case 2. Facts about the Case 3. Verdict of the case 4. Aftermath of case 5. Conclusion Bibliography
6. Chapter 1 Introduction Carlill v Carbolic Smoke Ball Company is an English contract law decision by the Court of Appeal, which held an advertisement containing certain terms to get a reward constituted a binding unilateral offer that could be accepted by anyone who performed its terms. It is notable for its curious subject matter and how the influential judges (particularly Lindley LJ and Bowen LJ ) developed the law in inventive ways. Carlillis frequently discussed as an introductory contract case, and may often be the first legal case a law student studies in the law of contract. The case concerned a fluremedy called the "carbolic smoke ball". The manufacturer advertised that buyers who found it did not work would be awarded £100, a considerable amount of money at the time. The company was found to have been bound by its advertisement, which was construed as an offer which the buyer, by using the smoke ball, accepted, creating a contract. The Court of Appeal held the essential elements of a contract were all present, including offer and acceptance, consideration and an intention to create legal relations.
7. Case Intro1: Court: Court of Appeal (Civil Division) Full case Name: Louisa Carlill v Carbolic Smoke Ball Company Decided: 7 December 1892 Citation(s): ,  Judge(s) sitting: Lindley LJ, Bowen LJ and AL Smith LJ 1 Manupatra.comcase_1893Carlill vs. carbolic smoke ballco. ...
8. Keywords of the Case2:-- 1. Contract: is an exchange of promises between two or more parties to do, or refrain from doing, an act which is enforceable in a court of law. 2. Offer: When a person signifies to another his willingness to do or to abstain from doing anything with a view to obtaining the assent of that other to such act or abstinence, he is said to make an offer. 3. Acceptance: usually refers to cases where a person experiences a situation or condition without attempting to change it. 4. Consideration: is the legal concept of value in connection with contracts. It is anything of value in the common sense, promised to another when making a contract. It can take the form of money, physical objects, services, promised actions, or even abstinence from a future action. 5. Wagering Contracts: a contract by which a promisor agrees that upon the occurrence of an uncertain event or condition he or she will render a performance for which there is no agreed consideration exchanged, and under which the promisee or the beneficiary of the contract is not made whole for any loss caused by such occurrence (as in options, insurance contracts, trading in futures, or betting contracts). 2 Law of contract by R.K Bangia
9. Chapter 2 Facts about the Case The Carbolic Smoke Ball Company made a product called the "smoke ball". It claimed to be a cure for influenza and a number of other diseases, in the context of the 1889–1890 flu pandemic(estimated to have killed 1 million people). The smoke ball was a rubber ball with a tube attached. It was filled with carbolic acid(or phenol). The tube would be inserted into a user's nose and squeezed at the bottom to release the vapors. The nose would run, ostensibly flushing out viral infections. The Company published advertisements in the Pall Mall Gazette and other newspapers on November 13, 1891, claiming that it would pay £100 to anyone who got sick with influenza after using its product according to the instructions provided with it. “£1003 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 3 £7,792.31 in 2007 pounds/roughly $15,380 mid-2008 US dollars
10. 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. During the last epidemic of influenza many thousand carbolic smoke balls were sold as preventives against this disease, and in no ascertained case was the disease contracted by those using the carbolic smoke ball. One carbolic smoke ball will last a family several months, making it the cheapest remedy in the world at the price, 10s. post free. The ball can be refilled at a cost of 5s. Address: “Carbolic Smoke Ball Company”, 27, Princes Street, Hanover Square, London.” Mrs. Louisa Elizabeth 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. Mrs Carlill brought a claim to court. The barristers representing her 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.
11. Issue: Does an advertisement to the general public promising to pay money to anyone who does something create a binding contract between the parties? Arguments: The Defendant argued that: Contract was too vague to be enforced; No way to check the conditions were met; You cannot contract with everybody (ie the whole world); Timeframe not specified; Acceptance had not been communicated to the offeror; There was no consideration: nudum pactum; Analysis: Bowen L.J.: How would an ordinary person construe this document? Was it intended that the ₤100 should, if the conditions were fulfilled, be paid? The advertisement says that ₤1000 is lodged at the bank for this purpose. Therefore the statement was not a mere puff, “I think it was intended to be understood by the public as an offer which was to be acted upon.” The extravagance of a promise is no reason in law to not enforce a contract. “If this is an offer to be bound, then it is a contract the moment the person fulfils the condition.” Whether notification is required in advertising cases is to be determined by the language of the ad and the nature of the transaction. The law does not require us to measure the adequacy of consideration and inconvenience sustained by one party at the request of another is enough to create consideration. Lindley M.R.: “the person who makes the offer shows by his language and from the nature of the transaction that he does not expect and does not require notice of the acceptance apart from notice of the performance.”
12. Chapter 3 Verdict of the Case The Carbolic Smoke Ball Company, represented by HH Asquith, lost its argument at the Queen'sBench. It appealed straight away. The Court of Appeal unanimously rejected the company's arguments and held that there was a fully binding contract for £100 with Mrs. Carlill. Among the reasons given by the three judges were; (1) That the advertisement was not a unilateral offer to the entire world but an offer restricted to those who acted upon the terms contained in the advertisement. (2) That satisfying conditions for using the smoke ball constituted acceptance of the offer (3) That 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 Carbolic. (4) That the company's claim that £1000 was deposited at the Alliance Bank showed the serious intention to be legally bound. The judgments of the court were as follows: