An Oldie but a Goodie When I reflect on my first year of law school, one particular case stands out. Not only because it was a landmark case that reshaped our understanding of contract law, but it also continues to be relevant in the world of advertising and marketing. The Carlill v Carbolic Smoke Ball Co decision was delivered by the Queen’s Bench in 1892. The facts are straightforward. In 1891, Carlill, the plaintiff, saw an advertisement in a local newspaper, published by the defendant, the Carbolic Smoke Ball Company. As you may know, during the late 1880s, the influenza epidemic had claimed the lives of many. The defendant’s claimed that their ‘smoke ball’ could cure the flu. They were so sure of their product that their advertisements promised a 100€ reward to any person that contacts the influenza or any cold, after using the Carbolic Smoke Ball according to the printed directions supplied with each ball. The advertisement went as far as stating that the company deposited 1000€ to a bank to demonstrate their sincerity in the matter. Upon seeing the advertisement, the plaintiff purchased one of the balls and used it as instructed (3 times a day for nearly two months). Unfortunately, she contracted the flu. She claimed her 100€ reward from the defendant but was completely ignored. She turned to the court, arguing that she was entitled to the reward. The legal issues boiled down to whether the defendant’s advertised reward was a ‘mere puff’, used to attract customers. Or whether there was a contract formed and eventually breached by the defendant when they refused to award the plaintiff the 100€. Essentially, Carbolic argued that the advertisement was only an attempt to promote and sell their products. They claimed that it would be outrageous of any customer to believe that the company truly meant to pay up. As a result, the court makes a distinction between two kinds of advertisements. First, vague advertisements, using ambiguous language about rewards, are to be considered mere puffs, which carry no enforceability. By contract, where an advertisement uses specific language, it is construed to be an offer. The latter applies here. Not only did the defendant’s ad stipulate that there is a 100€, they also went on to note that there was a deposit worth 1000€ made to the bank. As such, the ad was deemed to be a unilateral offer, which did not require performance but when the performance was completed by the plaintiff, the offer was accepted. A contract was then formed, and it is left to the defendant to perform. Carbolic shews, by the nature and language of the ad, that they do not expect to be notified of performance. Why is this important? While most marketing strategies can be reduced to a mere hoax or ‘puff’, advertising that uses precise and specific language can legally bind the offeror to live up to their promises. Essentially this decision has created a new binding relationship between companies and consumers, holding the companies responsible for the promises they choose to advertise to the world. Unlike typical bilateral contracts, acceptance of unilateral offers does not have to be communicated. In general, a contract is formed once there is intention to create a legal relationship, then an offer, a communicated acceptance and then performance of the contract in exchange for consideration. In a unilateral contract, however, the contract is accepted when the offeree performs the conditions of the contract. Notice of acceptance does not have to precede performance of the offer in unilateral contracts. The offeror gets notice of acceptance at the same time they get notice of performance of conditions. By Lucinda Chitapain
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