NATIONAL UNIVERSITY OF

STUDY AND RESEARCH IN LAW,

RANCHI

CONTRACTS I PROJECT
General Offer: Carlill vs Smoke Ball Company
SUBMITTED TO: SUBMITTED BY:

Ms. Soni Bhola NAME: SHASHWAT LOHIA

SEMESTER I
SECTION B
ROLL No.: 1313

General Offer: Carlill vs Smoke Ball Company 1

 DECLARATION

I, Shashwat Lohia a first semester B.A.LLB. student at the National University of Study and
Research in Law, Ranchi, declare that the project titled “General Offer: Carlill vs

Smoke Ball Company”, under the guidance of Ms. Soni Bhola, faculty of Law, is an
original work. It has been completed with sincere efforts with a thorough attempt at not
misrepresenting facts or data.

I also declare that the statements and the thereafter drawn conclusions are the bona fide result
of the research undertaken by me. The findings of this paper have been, to the best of my
knowledge and understanding, given proper citations and respect; and does not contain any
work that has been submitted to other universities or colleges.

General Offer: Carlill vs Smoke Ball Company 2

 ACKNOWLEDGMENT

I would like to thank my teacher and mentor, Ms. Soni ma’am, who has instilled me with gratitude for

her unwavering faith and belief in my ability to provide justice to the topic so allocated. Her attention

to detail and guidance towards completion of my project has pivoted this project work to its maximum

potential. I further thank all the staff members, administrators and librarians who have helped me

complete this project with the aid of a plethora of resources. Their support has proven to be very

crucial.

Lastly, I express my gratitude towards all those people without which this project would not be

possible.

Thanking you,

Shashwat Lohia

Semester I

Section B

Roll no.: 1313

General Offer: Carlill vs Smoke Ball Company 3

 INTRODUCTION

The case of Carlill vs Carbolic Smoke Ball Co.held that meeting the condition is sufficient
acceptance without notification. The English Contract Law has developed in various
dimensions, leading to a number of landmark cases that shaped its concepts by presenting
scenarios that challenged judicial minds. Carlill v. Carbolic Smoke Ball Company is a well-
known case that serves as such (a landmark case).

The English Court of Appeals had made the final decision in this case. More importantly,
because of its notable and unusual subject matter, it became a landmark decision.When the
bench interpreted the legal concepts involved in the case, the presiding Coram was also very
influential and well-founded.

In order to gain a comprehensive understanding of this case, the concept of unilateral

contracts will be briefly discussed. I have further explained Section 8 of the Indian Contract
Act, which deals with acceptance by performing conditions or receiving consideration, in this
research paper.

Later I have attempted to briefly describe the concept of general offer in the first section of
the research paper, which is a necessary terminology to understand the given case.

General Offer: Carlill vs Smoke Ball Company 4

 GENERAL OFFER

A general offer is one that is made to the general public and can be accepted by anyone who
meets the offer's terms. When the person to whom the offer is directed accepts it, the offeror
and the offeree form a contract. The number of contracts formed will be equal to the number
of people who accept the offer, if a large number of people accept it. If a reward is offered for
completing a task, only the person who completes the task can accept it.

In the Indian case of Lalman Shukla v. Gauri Dutt, a servant was dispatched by his master to
locate his missing nephew. Meanwhile, he's offering a reward to anyone who can locate his
nephew. He made a general offer because the offer was to the general public, and the reward
will be given to the person who meets the offer's conditions after being notified of the offer.

General Offer: Carlill vs Smoke Ball Company 5

 SECTION 8

Section 8 in The Indian Contract Act, 1872:

The Eight Section of The Indian Contracts Act, (1872) states that acceptance by
performing conditions, or receiving consideration — Performance of the conditions of a
proposal, or the acceptance of any consideration for a reciprocal promise which may be
offered with a proposal, is an acceptance of the proposal.

Performance of a conditions of a contract is also an implied acceptance in a contract

according to section 8.

General Offer: Carlill vs Smoke Ball Company 6

 FACTS OF THE CASE

The Carbolic Smoke Ball Company formed a new marketing strategy that required them to
market their products as a remedy for influenza, hay fever, coughs and colds, headaches,
bronchitis, laryngitis, whooping cough, and other sore throat-related illnesses.

In actuality, the corporation was highly confident in their product's utility. They also claimed
that the carbolic smoke ball could both cure and prevent their customers from catching
influenza or any other type of common flu. However, the company's primary point in their
marketing was that anyone who gets a cold or becomes infected with influenza after using
their medication will be paid. The person will be eligible to a £100 refund from the company
if the product has been utilized for a set period of time.

The company also indicated that £1000 had been put in a specific Alliance Bank. In the event
that any claims were made in lieu of their advertisement, the corporation made this deposit.
The plaintiff, Carllil, followed the carbolic smoke ball's directions to the letter. Despite
following the procedure, she contracted the illness. She pursued legal action against the
Carbolic Smoke Ball Company as a result of this. Her claim to the company was for £100
because the product was advertised as such. The court ruled in her favor. However, the
defendant, Carbolic Smoke Ball Company, challenged the decision.

General Offer: Carlill vs Smoke Ball Company 7

 POINTS OF CONTENTION IN THE CASE

Contentions Raised:

There were four major contentions raised before the bench:

1. Is there any evidence that the contract between the parties had any binding effect?

2. Is a formal notification of acceptance required under the contract in question?

3. Is it true that Mrs Carlill was required to notify the Carbolic Smoke Ball Company of
her acceptance of the offer?

4. Is there any evidence that Mrs Carlill gave anything in exchange for the company's
reward of £100?

General Offer: Carlill vs Smoke Ball Company 8

 UNILATERAL CONTRACTS

Unilateral Contracts, also known as Single-sided Contracts, are offers made to the entire
world at large that do not require formal acceptance communication. The way these contracts
are structured has a variety of implications. After a careful review of the theory of Single-
sided Contracts, many people come to the opinion that its application is difficult due to the
theory of consideration.

Most contracts need payment as a condition of execution; otherwise, the agreement would not
be regarded legally binding. Anything of worth is taken into consideration. For example, a
benefit or a liability. Only when such a benefit or disadvantage is guaranteed in exchange for
the promisor's promise does an agreement become a legitimate contract. In addition, the
consideration must be legal and valid. If a contract is formed on the basis of illegal
consideration, it is null and void.

Promises that are backed up by a valid consideration (on both sides) are enforceable.
Unilateral contracts have the issue of neither side having a clear duty to the other. There is no
apparent obligation for the other party (who receives the benefit) to deliver any consideration
in exchange, under such contracts if the offer made, it is advantageous.

A unilateral contract should be illegitimate due to a lack of consideration under the

fundamentals of a valid contract; however it very well occurs and thrives in market settings in
everyday scenarios.

General Offer: Carlill vs Smoke Ball Company 9

 ANALYSIS

Defendant’s arguments

The Carbolic Smoke Ball Company claimed that their offer lacked the binding impact
required to constitute a legally binding contract. Their reasoning was that because the
wording of the advertisement was too ambiguous to form a contract, the language used in the
advertisement did not constitute a legal commitment.

Secondly, they stated that there was no time limit and that there was no way to track how
clients used the smoke ball (product). A unscrupulous customer, for example, may not have
used the product effectively and then accuses the corporation of failing to deposit the money
as promised.

Thirdly, because making a legitimate contract includes expression of acceptance intent, there
was no contract. Carlill did not accept the offer in this situation, either explicitly or indirectly,
or by any overt act.

As a result, it's evident that the billboard was only a marketing ploy, and that the corporation
had no intention of entering into any form of contract while making a public offer.

General Offer: Carlill vs Smoke Ball Company 10

Plaintiff’s Arguments

The plaintiff, on the other hand, claimed that the promise was not vague and that the offer
was written in such a way that it was obvious that if the product was unsuccessful, the
enterprise would compensate a particular sum. The company had also deposited a big sum of
money in the Alliance bank account to make things easier.

As a result, depositing the money shows that one party is serious about reaching an
agreement. The plaintiffs additionally proved that the money spent on the carbolic smoke ball
was a factor in their decision.

It wasn't just a random offer in the marketing. In reality, it encapsulated the vast majority of
the important attributes that characterize a successful company.As a result, the business must
meet his obligations.

General Offer: Carlill vs Smoke Ball Company 11

The Court's Position
The contract was found to be binding by the English Court of Appeals. Carlill was a winner.
The following is the reasoning provided by the judges:

In conclusion, Justice Lindley concluded that the advertisement should be interpreted as an

express promise. If the smoke ball is used according to the manufacturer's directions, anyone
who develops the flu despite the smoke ball's claimed ability to prevent it will be rewarded
with £100. (Three times daily for two weeks). He expresses his reasons as follows:

1. Because of the use of a specific statement, "1000 is deposited with the Alliance Bank,
showing our sincerity in the matter," Justice Lindley concluded that the advertisement
was not an empty boast or a mere puff. This statement demonstrates that the company
was sincere in its reward offering in the first place.
2. Even though there was no specific at the receiving end of this conditional benefit, the
company's promise is sufficient. As it is made to the entire world, this is a unilateral
offer that does not require acceptance. It will be treated as an offer to anyone who
meets the terms and conditions, as well as anyone who meets the specific condition
(in this case, using the internet).
3. In addition, Justice Lindley determined that the advertisement is not ambiguous. The
words used to construct the advertisement's language can be interpreted as a promise.
The words are carefully chosen to lead any potential customer to believe that if they
get the flu after using the smoke ball, they are entitled to a compensation of £100.
4. When it comes to notification of acceptance, Lindley points out that it is not necessary
for the notification to come before the performance. It was a long-term offer. If an
express acceptance is required, for example, the person making the offer receives a
notice of acceptance along with a promise to fulfil the conditions set forth in the
advertisement. To put it another way, if the specific conditions are met, it entails
communication of acceptance of the offer.
5. Finally, Justice Lindley concluded that there was consideration in this case for two
reasons. For starters, the company benefited from increased sales. Second, there is a
disadvantage, which is the direct inconvenience caused to the consumer who uses the
smoke ball in accordance with the advertisement's terms. As a result, fulfilment of the
specified conditions serves as consideration for the promise.

General Offer: Carlill vs Smoke Ball Company 12

Justice Bowen explained his reasoning as well. Justice Lindley and Bowen both agreed. His
logic can be summarised in the following points

1. If anyone meets the contract's conditions, an offer made to the general public can turn
into a contract. Their performance establishes the consideration and implies their
acceptance.
2. In such cases, a specific Notification of Acceptance is not required.
3. There is a valid point to consider. To begin with, the company will profit from the
product's sale. Second, the fact that the company put 1000 pounds in the bank for the
purpose of the offer implies that they are serious about fulfilling their end of the
bargain if their product fails.

Finally, Justice Smith agreed with Justice Bowen and Lindley's reasoning and dismissed the
appeal unanimously. The plaintiff was awarded £100 in damages.

General Offer: Carlill vs Smoke Ball Company 13

 The Impact of the Carlill v. Carbolic Smoke Ball case on English Contract Law

This case had a significant impact on the concept of a unilateral contract. As a result,
businesses and advertising firms have become more cautious about what they advertise to the
public. A hasty marketing strategy can cost a firm a lot of money since it can drag them into
an unwarranted legal battle.

Other possibilities for unilateral contracts have come into interpreted existence. For example,
A unilateral contract can be constituted, if a person/pet goes missing and their family/owner
puts up a poster with their photo and name on it, promising a reward for any pertinent
information or even the safe return of the missing person/petit is considered that this created a
contract and that the offer has been accepted after the person or pet has been located. As a
result, the offeror is now required to carry out his side of the deal, which is to reward the
person who discovered them.

Similarly, the public will be rewarded if the police provide monetary prizes to anyone who
offers information that supports the police in a criminal investigation.

General Offer: Carlill vs Smoke Ball Company 14

 Critical Analysis

In English common contract law, this is one of the most frequently referenced decisions. It's
an excellent representation of unilateral agreements. It also illustrates the issues that come
with unilateral contracts. This case also assists in understanding the basics of regular
contracts, as it is an exception to these rules owing to the lack of a prerequisite of an offer,
acceptance and consideration. The commercial uncertainty caused by such a void in unilateral
contracts has an influence on the theory of contract privity. Consequently, this case has
become a precedent in contract law. Overall, the ruling was well-crafted; yet the underlying
ramifications of the decision have aroused concerns.

Carlill vs Carbolic Smoke Ball Co. is related to section 8 as it talks about implied acceptance
by performing a certain condition of the contract and in the given case Carbolic Smoke Ball
Co. makes a general offer to the public at large claiming that whoever uses its product would
not catch any kind of influenza or cold and if anyone catches the cold even after using the
product would be compensated. Carlill, the plaintiff, follows all the directions as provided by
the corporation and nevertheless the plaintiff developed cold. The plaintiff, Carlill, didn’t
communicate the acceptance to the company but performs the conditions given in the offer
and as it is a case of unilateral contract, the general rule of notification of acceptance is not
necessary and performance of a certain condition of the contract would act as an implied
acceptance as the court had held.

General Offer: Carlill vs Smoke Ball Company 15