Case Study On Contract Arising Out Of A General Offer

Author - Associate Kantika Mukherjee

You might see many general offers around you in the market, online and many other places offering you something, But have you ever thought how it becomes a contract and what contract arises out of these general offers? There are many case study on offer, and many General offer cases in India.

In this article we are going to discuss Cases related to general offer in Contract law and specific offer cases.

Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1 is one of the most leading matters relating to the contract arising out of a general offer law of contracts under common law. This case is known for both its academic importance as well as its contribution to the expansion of the laws regarding unilateral contracts.

The contract arising out of a general offer: Carlill v. Carbolic Smoke Ball Co

In this matter, the defendants had advertised their product Carbolic Smoke Ball for a preventive remedy against influenza and in the advertisement, they offered to pay £100 as reward towards anybody who contracted influenza, cold or any other disease caused after having used the product in the set manner. The petitioner depending on the advertisement bought a Smoke Ball and utilized the same as per the directions, nevertheless, she still caught influenza. Therefore, she charged the defendants to claim the reward of £100. It was stated that this being a general offer furnished to all the world had developed into a contract with the petitioner by her action of performance of the essential conditions and therefore accepting the offer. Hence, the petitioner was held eligible to claim the reward.

Brief Fact Summary

The Petitioner, believing Defendant’s advertisement that its product will prevent influenza, purchased a Carbolic Smoke Ball and used it as per the direction from November 20, 1891, until January 17, 1892, when she caught the flu. The Petitioner brought a legal suit to recover the 100£, which the Court found her qualified to recover. The Defendant appealed.

Synopsis of Rule of Law

This case is about whether an advertising stunt (that is the promise towards paying 100£ to anybody contracting influenza while using the Carbolic Smoke Ball) could be considered an express contractual promise to pay.

Facts

The Carbolic Smoke Ball Company of London, the Defendant, gave an advertisement in several newspapers on November 13, 1891, by affirming that its product, “The Carbolic Smoke Ball”, when utilized three times daily for two weeks, shall prevent colds as well as influenza. The manufacturers of the smoke ball moreover offered a £100 reward to anybody who caught influenza using their product, assuring this reward through affirming in their advertisement that they had deposited £100 in the bank as a show of their genuineness. The Petitioner, Lilli Carlill purchased a smoke ball and used it as per direction. After using the smoke ball for a few weeks, the Petitioner caught the flu. 

The Defendant’s Case

On plea, the defendant’s case was that there was no obligatory contract made amid the parties. The defendant corporation had no means of checking the ball, or of establishing whether the petitioner, in reality, had used the ball as directed. They also stated that the petitioner had not provided any consideration and that just doing an action in private (that is following instructions) shall not be enough.

They contended, in the alternative, that if the court held there to be a contract, that contract was just a ‘wagering contract’ in which responsibility was purely determined on one issue, whether the petitioner caught influenza or not - in which matter it shall be void, or that if it was an insurance policy that it was ‘bad’ as it depends on whether or not there would be an occurrence of an uncertain event. Though, the court didn’t consider that the ‘wager’ or ‘insurance’ arguments were valid. 

Issue

Lindley, L.J., for the Court of Appeals, records that the main concern was whether the language in Defendant’s ad, relating to the 100£ reward, was meant to be an express promise or, just, a sales puff, which had no meaning at all.

Held

The Defendant’s Appeal has been dismissed, the Petitioner was entitled towards recovering 100£. 

The Petitioner had argued that the advertisement constituted an offer, which can be accepted by anybody who saw it. The court had agreed with the Petitioner’s argument and dismissed the defendant’s plea. The advertisement was a promise to pay any individual who took up the offer the amount of £100 if they caught influenza in spite of having used the smoke ball as per direction. The petitioner provided the consideration prerequisite to forming part of the contract in their continued usage of the carbolic smoke ball.

The Court acknowledged that in the matter of vague advertisements, language relating to the payment of a reward is usually a puff, which had no enforceability. In this case, though, the Defendant held the deposit of £100 in their ad, as a show of their genuineness. As the Defendant did this, the Court held that their offer to reward was a promise backed through their own sincerity.

Concurrence

In the agreements of Bowen L.J. and A.L. Smith, L.J., the concept of contractual consideration also becomes a concern of relevance. Both of these Judges held that while the Defendant can argue lack of consideration, Petitioner, in purchasing the Carbolic Smoke Ball and using it as per direction, provided satisfactory consideration through the inconvenience she experienced through using the product.

Discussion

This case held that the proposition that even though sales puffery in advertisements is usually not intended to create a contract with prospective product buyers, in this matter it did since the defendant elevated their language towards the level of a promise, through relying on their own sincerity.

Conclusion

These General offer case laws are one of the most often cited cases in the common law of contract, mainly a contract arising out of a general offer.