Carlill V Carbolic Smoke Ball: A Case Study

INTRODUCTION;

The case of Carlill v Carbolic Smoke Ball is one of the most important cases in English legal history. In essence
it defined what it is to create an ‘offer’ in an advertisement, and how a member of the public successfully
argued that they had ‘accepted’ the offer and performed under the terms of the advertisement (contract.)

Facts of the Case

The Carbolic Smoke Ball Company advertised in the Pall Mall Gazette in 1891 that their Carbolic Smoke Ball
was a cure for flu, bronchitis, coughs, colds, headaches, hay-fever, whooping cough, laryngitis and sore throats
amongst others.

It was so confident of the usefulness of the carbolic smoke ball, and its ability not only to cure but also to
prevent someone from getting the ‘flu, that it advertised on the following basis: Anyone who used the carbolic
smoke ball in a particular way for a specified period of time, but who still caught influenza afterwards, would
be entitled to claim £100 from the company.

The advertisement went on to say that the company had gone so far as to deposit £1000 in the Alliance Bank
in the event of any such claims. The plaintiff (who nowadays would be called the ‘claimant’) saw the
advertisement and decided to buy one of the carbolic smoke balls. She used it exactly as advised, but still
caught influenza. She took the Carbolic Smoke Ball Company to court in order to claim her £100. The court
found in her favour, but the defendants appealed.

Issue
 Does one who makes a unilateral offer for the sale of goods by means of an advertisement impliedly waive
notification of acceptance, if his purpose is to sell as much product as possible?
Holding and Rule (Lindley)
 Yes. One who makes a unilateral offer for the sale of goods by means of an advertisement impliedly waives
notification of acceptance if his purpose is to sell as much product as possible.
The court held that a person who makes an offer may decline to require notice of acceptance if he or she
wishes. One who makes an offer dispenses with the requirement of notice of acceptance if the form of the
offer shows that notice of acceptance is not required. To accept an offer, a person need only follow the
indicated method of acceptance. If the offeror either expressly or impliedly intimates in his offer that it will be
sufficient to act without giving notice of acceptance, performance is sufficient acceptance without notification.
The court held that an advertisement is considered to be an offer when it specifies the quantity of persons
who are eligible to accept its terms. If such an advertisement requires performance, the offeree is not
required to give notice of his performance.
The court addressed the issue of whether the ad was intended to be a promise or whether it was merely
“puffing”. The court pointed to Carbolic Smoke Ball’s claim in the advertisement that it had deposited 1000
pounds with Alliance Bank, which the court decided was intended to demonstrate the company’s sincerity in
paying the reward.

The Judgment

The plaintiff argued that the advertisement constituted an offer, which could be accepted by anyone who saw
it. The court agreed with the plaintiff and dismissed the defendant’s appeal. The advertisement was a promise
to pay any person who took up the offer the sum of £100 if they caught the influenza despite having used the
 smoke ball as directed. The plaintiff provided the consideration required to form part of the contract in their
continued use of the carbolic smoke ball.

Harvey v Facey

Facts: 
Harvey sent a telegraph enquiring, "will you sell us Bumer Hall Pen? telegraph lowest cash price". Facey
replied, "lowest price for Bumper Hall Pen 900" to which Harvey replied, "we agree to buy Bumper Hall Pen
for the sum of 900 asked by you"
.
1. Harvey – Will you sell us bumper hall pen? Telegraph lowest price -answer paid.
2. Facey – Lowest price for bumper hall is $900.
3. Harvey – We agree to buy bumper hall for the sum of $900 asked by you.
4. Harvey sued for specific performance of this agreement and for an injunction to restrain the town of
Kingston from taking conveyance of the property (Facey was previously engaged in negotiations to sell
the land to Kingston)

Issue(s): 

Harvey sued for breach in contract. Harvey argued Faceys telegraph was an offer to contract which he sent a
telegraph "agreein to buy" Bumper hall.

3.Durga Prasad vs. Baldeo, (1880)

B spent some money on the improvement of a market at the desire of the Collector of the district. In
consideration of this D who was using the market promised to pay some money to B.
Held: The agreement was void being without consideration as it had not moved at the desire of D.

4.Chinnaya vs. Ramayya, (1882)

An old lady, by a deed of gift, made over certain property to her daughter D, under the direction that she
should pay her aunt, P (sister of the old lady), a certain sum of money annually. The same day D entered
into an agreement with P to pay her the agreed amount. Later, D refused to pay the amount on the plea
that no consideration had moved from P to D.
Held: P was entitled to maintain suit as consideration had moved from the old lady, sister of P, to the
daughter, D.

Hadley v. Baxendale
intro Summary.

 Plaintiffs operated a mill, and a component of their steam engine broke causing them to shut down the mill.
Plaintiffs then contracted with Defendants, common carriers, to take the component to W. Joyce & Co. to have
a new part created. When delivery was delayed due to Defendants’ neglect, causing Plaintiffs’ mill to remain
closed longer than expected, Plaintiffs sued to recover damages.

Facts

Hadley (plaintiff) owned and operated a corn mill in Gloucester. The crank shaft that operated the mill broke
and halted all mill operations. To obtain a new shaft, Hadley was required to ship the old crank shaft to Joyce
& Co., an engineering company in Greenwich, to be used as a model for a new shaft. Hadley contacted Pickford
& Co. (Pickford), a shipping company owned by Baxendale (defendant), and obtained shipping information
for the crank shaft. Hadley was informed that if the crank shaft was delivered to Pickford before noon, it
would be shipped and delivered to Greenwich the following day. The following day, Hadley delivered the
crank shaft to Pickford before and paid the shipping price in full. However, Pickford negligently delayed
shipping, and the crank shaft was not delivered until several days later. As a result, Hadley obtained the new
crank shaft several days later than expected, during which time the mill remained closed. Hadley brought suit
against Baxendale for damages, including lost profits from the delay. The jury awarded Hadley lost profits,
and Baxendale appealed.

Issue

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JUDGEMENT
The Court of Exchequer, led by Baron Sir Edward Hall Alderson, declined to allow Hadley to recover lost
profits in this case, holding that Baxendale could only be held liable for losses that were generally foreseeable,
or if Hadley had mentioned his special circumstances in advance. The mere fact that a party is sending
something to be repaired does not indicate that the party would lose profits if it is not delivered on time. The
court suggested various other circumstances under which Hadley could have entered into this contract that
would not have presented such dire circumstances, and noted that where special circumstances exist,
provisions can be made in the contract voluntarily entered into by the parties to impose extra damages for a
breach. Alderson B said the following.

Now we think the proper rule in such a case as the present is this: Where two parties have made a contract
which one of them has broken, the damages which the other party ought to receive in respect of such
breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e.,
according to the usual course of things, from such breach of contract itself, or such as may reasonably be
supposed to have been in the contemplation of both parties, at the time they made the contract, as the
probable result of the breach of it. Now, if the special circumstances under which the contract was actually
made were communicated by the plaintiffs to the defendants, and thus known to both parties, the damages
resulting from the breach of such a contract, which they would reasonably contemplate, would be the
amount of injury which would ordinarily follow from a breach of contract under these special
circumstances so known and communicated. But, on the other hand, if these special circumstances were
wholly unknown to the party breaking the contract, he, at the most, could only be supposed to have had in
his contemplation the amount of injury which would arise generally, and in the great multitude of cases not
affected by any special circumstances, from such a breach of contract. For, had the special circumstances
been known, the parties might have specially provided for the breach of contract by special terms as to the
damages in that case, and of this advantage it would be very unjust to deprive them. Now the above
principles are those by which we think the jury ought to be guided in estimating the damages arising out of
any breach of contract...
But it is obvious that, in the great multitude of cases of millers sending off broken shafts to third persons by
a carrier under ordinary circumstances, such consequences would not, in all probability, have occurred,
and these special circumstances were here never communicated by the plaintiffs to the defendants. It
follows, therefore, that the loss of profits here cannot reasonably be considered such a consequence of the
breach of contract as could have been fairly and reasonably contemplated by both the parties when they
made this contract.[1]