Carlill v Carbolic Smoke Ball Co

Facts

The Carbolic Smoke Ball Company advertised its product as a remedy against influenza, offering a £100 reward to anyone who, having used the smoke ball as directed for two weeks, still contracted the disease. To meet anticipated scepticism, the company stated that it had deposited £1,000 with the Alliance Bank to show its sincerity. Mrs Carlill bought a smoke ball, used it as directed, contracted influenza, and sued for the £100.

Issue

Was the advertisement a binding offer, or merely an invitation to treat or a "mere puff"? If it was an offer, had Mrs Carlill validly accepted it without communicating her acceptance?

Decision

The Court of Appeal unanimously held that the company was bound. Bowen LJ and Lindley LJ distinguished the advertisement from a mere puff. The explicit £1,000 deposit demonstrated objective intention to be bound. The advertisement was therefore an offer to the world, accepted by performance. Mrs Carlill's act of using the smoke ball was both her acceptance and the consideration. The usual rule requiring communication of acceptance was displaced because the offeror had, by the terms of the offer, dispensed with it.

Significance

The leading authority on unilateral contracts, and a staple of the first-year contract syllabus. Three propositions flow from it. First, an offer can be made to the world at large. Second, performance can constitute both acceptance and consideration. Third, the requirement of communicated acceptance can be waived by the offeror, expressly or by implication. The case also illustrates how objective evidence of seriousness, in the form of the £1,000 deposit, can convert what looks like advertising bombast into legal liability.