For educational purpose

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[1892] 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): [1892], [1893]
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:

13. 1. Lindley LJ
He gave the first judgment on it, after running through the
facts again. He makes short shrift of the insurance and
wagering contract arguments that were dealt with in the
Queen's Bench.
“I will begin by referring to two points which were raised in
the Court below. I refer to them simply for the purpose of
dismissing them. First, it is said no action will lie upon this
contract because it is a policy. You have only to look at the
advertisement to dismiss that suggestion. Then it was said
that it is a bet.
Hawkins,J., came to the conclusion that nobody ever dreamt
of a bet, and that the transaction had nothing whatever in
common with a bet. I so entirely agree with him that I pass
over this contention also as not worth serious attention.
Then, what is left? The first observation I will make is that
we are not dealing with any inference of fact. We are dealing
with an express promise to pay £100. In certain events. Read
the advertisement how you will, and twist it about as you
will, here is a distinct promise expressed in language which
is perfectly unmistakable —
“£100. reward will be paid by the Carbolic Smoke Ball
Company to any person who contracts the influenza after
having used the ball three times daily for two weeks
according to the printed directions supplied with each ball.”

14. 2. Lord Justice Bowen :
Bowen LJ 's opinion was more tightly structured in style and
is frequently cited. Five main steps in his reasoning can be
identified. First, he says that the contract was not too vague
to be enforced, because it could be interpreted according to
what ordinary people would understand by it. He differed
slightly from Lindley LJ on what time period one could
contract flu and still have a claim (Lindley LJ said a
"reasonable time" after use, while Bowen LJ said "while the
smoke ball is used") but this was not a crucial point, because
the fact was that Mrs. Carlill got flu while using the smoke
ball. Second, like Lindley LJ , Bowen LJ says that the advert
was not mere puff because £1000 was deposited in the bank
to pay rewards. Third, he said that although there was an
offer to the whole world, there was not a contract with the
whole world. Therefore, it was not an absurd basis for a
contract, because only the people that used it would bind the
company. Fourth, he says that communication is not
necessary to accept the terms of an offer; conduct is and
should be sufficient. Fifth, there was clearly good
consideration given by Mrs. Carlill because she went to the
"inconvenience" of using it, and the company got the benefit
of extra sales.
“I am of the same opinion. We were asked by the council for
the defendants to say that this document was a contract too
vague to be enforced.”

15. 3. Lord Justice AL Smith:
AL Smith LJ 's judgment was more general and concurred
with both Lindley LJ and Bowen LJ's decisions.
“The first point in this case is, whether the defendants'
advertisement which appeared in the Pall Mall Gazette was
an offer which, when accepted and its conditions performed,
constituted a promise to pay, assuming there was good
consideration to uphold that promise, or whether it was only
a puff from which no promise could be implied, or, as put by
Mr. Finlay, a mere statement by the defendants of the
confidence they entertained in the efficacy of their remedy.
Or as I might put it in the words of Lord Campbell in Denton
v Great Northern Ry. Co., whether this advertisement was
mere waste paper. That is the first matter to be determined.
It seems to me that this advertisement reads as follows:
“100l. reward will be paid by the Carbolic Smoke Ball
Company to any person who after having used the ball three
times daily for two weeks according to the printed directions
supplied with such ball contracts the increasing epidemic
influenza, colds, or any diseases caused by taking cold. The
ball will last a family several months, and can be refilled at a
cost of 5s.”
Held:-Yes the contract was binding and the
defendant was ordered to pay the ₤100 to the plaintiff.
Appeal Dismissed.4
4
Pg.32,TheModernLaw Of ContractbyRichardStone

16. Chapter
4 Aftermath of the Case
After the action, Mr. Roe formed a new company with
Limited liability, and started up advertising again. Many
people conclude after reading the case that the Carbolic
Smoke Ball Company would have been brought down by
thousands of claims. The company did not have limited
liability, which could have meant personal ruin for Mr Roe.
In his submissions to the Court of Appeal, Finlay QC had
used that as an argument against liability. He said that
10,000 people might now be sniffing at smoke balls hoping
for their £100, and it would be a travesty to inflict insolvency
on this one unfortunate company. But this did not happen at
all. In a new advert on February 25, 1893 in the Illustrated
London News, Mr. Roe cunningly turned the whole lost case
to his advantage. He described the culpable advert, and then
said,
"Many thousand Carbolic Smoke Balls were sold on these
advertisements, but only three people claimed the reward of
£100, thus proving conclusively that this invaluable remedy
will prevent and cure the above mentioned diseases. The
CARBOLIC SMOKE BALL COMPANY LTD. now offer £200
REWARD to the person who purchases a Carbolic Smoke
Ball and afterwards contracts any of the following
diseases..."

17. In the advertisement's small print were some restrictive
conditions, with a period of 3 months to use the ball and
claim, showing that legal advice had been adhered to. Mr.
Roe left the management of the new company to other new
subscribers and directors, who did not pursue such an
aggressive advertising policy. By 1895 the company had
fallen on harder times, and it had to be wound up in 1896.
Simpson suggests that the new management "had failed to
grasp the fact that vigorous advertising was essential to
success in the field of quack medicine." Mr. Roe himself died
at the age of 57 on June 3, 1899 of tuberculosis and valvular
heart disease.
Mrs. Louisa Carlill, however, lived until she was 96. She died
on March 10, 1942, according to her doctor, Mr. Joseph
M.Yarman, principally of old age. But there was one other
cause noted: influenza. 5
5
^ Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative
provisions of the Member States concerning liability for defective products

18. Chapter
5 Conclusion
This case that ruled that newspaper adverts can sometimes
result in contracts.
During a flu epidemic in 1892, Mrs. Elizabeth Carlill, a
writer and wife of a lawyer, bought the defendant‟s „Carbolic
Smoke Ball‟, which claimed to prevent flu.
An advert placed by the company promised to pay £100 to
anyone who used the ball but still caught the flu. The
company claimed it had put aside money for the payments if
it needed. Mrs. Carlill used the ball, and then caught the flu.
But, the company refused to pay her the £100 claiming the
pledge was only an “advertising puff”. Mrs. Carlill sued and
won. The court ruled that since money had been put aside to
reimburse customers, this suggested the company wanted its
customers to treat the claim and £100 offer as serious.

19. Bibliography
1. Law of Contract., R.K Bangia, Avatar
singh
2. Business Law, The Institute of Cost
and Works Accountant of India
3. Simpson,A.W.B (1985). "Quackery
and Contract Law: The Case of the
Carbolic Smoke Ball". Journal of Legal
Studies 14(2): 345–389
4. Westlaw India, Manupatra.in
5. Wikipedia.com