Contract-offer by advertisement-performance of condition in Advertisement-Notification of acceptance.
BRIEF FACTS
The defendants, the proprietors of the medical preparation called, “The Carbolic Smoke Ball”, issued an advertisement in the Pall Mall Gazette and in other newspapers, in which they offered to pay £100 to any person who contracted the influenza after having used one of their smoke balls in a specific manner and for a specific period. More so, to show sincerity in the matter the defendant company went on and deposited £1000 with Alliance Bank.
Riding on the faith of the advertisement, the plaintiff, Mrs. Carlill, bought one of the balls, and used it in the manner and for the period specified, but nevertheless contracted the influenza. Hawkin J., the judge in the lower court held that she was entitled to recover the £100. The defendants appealed.
LEGAL ARGUMENTS
On appeal, the defendants argued that there was no binding contract. This was actuated on account that the plaintiff did not give notified acceptance to the defendants. Further, the defendants averred that no consideration was given by the plaintiff as required by the principles of the law of contract, thus, no promise was bought.
In addition, the defendants contended that this contract could not be enforced due to policy, that is, an offer cannot be made to an entire world. Furthermore, the advertisement was a mere puff, whose intent was to market the defendants’ company and not binding the parties for legal actions.
LEGAL ISSUES
1. Whether or not the advertisement made by the defendants amounted to an offer or invitation to treat, and if so, whether an offer can be made to the entire world?
2.Whether or not the advertisement made by the defendant was a promise to create contractual and legal relation or a mere puff?
3. Whether or not the plaintiff had given sufficient consideration?
HOLDING
The three panel of judges unanimously agreed that the advertisement amounted to an offer, that is, an offer for a unilateral contract by the defendants. The court also guided that it is possible for an offer to be made to the world provided the wording of the advertisement was reasonably clear to imply terms of an offer.
The court further held that the defendants’ wilful claim to deposit £1000 negated the company's spirited argument of lacking intention. Thus, deposit of £1000 showed the defendants’ sincerity and intention to create legal relations.
Lastly, it was the court's view that consideration was given by the plaintiff, and this was identifiable and envisaged in the use of smoke balls according to the request and guidelines of the defendants, as opined by Balwin LJ.,:
Inconvenience sustained by one party at the request of the other is enough consideration. I think, therefore, that is consideration that the plaintiff took the trouble of using the smoke ball.
SIGNIFICANCE
This case is important as it gave the court occasion to set and put principles relating to offer and invitation to treat into perspective, in as far as advertisements as concerned. The case confirms that besides bilateral offers, the law also recognizes unilateral offers which form unilateral contracts. A unilateral offer is one where only one party undertakes to perform, in return for some act by the party accepting the offer. This type of can be made to one person or to the world at large, and in the present case, the offer was made to the world. Balwin LJ., confirmed as he gave his individual judgment:
"Why should not an offer be made to all the world which is to ripen into a contract with anybody who comes forward and performs the condition."
Further, while giving the lead Judgment, Lindsley LJ., added:
"Now that points in common the words of the advertisement and to the words of all other advertisements offering awards. They are offers to anybody who performs the conditions, accepts the offer. In law, this advertisement is an offer to anybody who performs these conditions, named in the advertisement, and of the condition is acceptance of the offer."
What this is suggesting is that an offer can be made to the world provided the offeree, that is, the person accepting the offer performs the conditions expressed in the offer. Much more, in unilateral contracts, where advertisements are concerned, an offeree will only be deemed go have accepted the offer if he or she completely performs the act, and not necessarily necessitating notified acceptance. This position is couched in the words of Lindsley LJ., who had this to say:
"Unquestionably, as a general proposition, when an offer is made, it is necessary in order to make a binding contract, not only that it should be accepted but that the acceptance should be notified. But is that so in cases of this kind? I apprehend that they are an exception to that rule, or if not an exception, they are open to the observation that the notification of the acceptance need not precede the performance."
In short, the court espoused that when an offer is made to the world by means of an advertisement, an offeree needs to notify acceptance to the offeror instead the mere performance of the request outlined in the advertisement is sufficient to amount to a valid acceptance. Besides that, the court also had occasion to clarify when a statement can amount to a mere puff. The court clarified that a statement will be a mere puff when the statement is vague and exaggerated whose intent is to induce a party into negotiation and accepting the terms and not necessarily intended to form the basis of a binding contract. Hence, the events and statement issued by the defendant in the present case, amounted to an intention to form legal relations. This was due to the claim of sincerity and clarity by the defendant company, to deposit £1000 with the Alliance Bank which would make any right minded or reasonable person infer and imply the defendants’ intentions to create legal relations. Balwin LJ., held:
"Now, what was the money deposited or that statement made except to negative the suggestion that this was a mere puff and meant nothing at all? The deposit is called in aid by the advertiser as proof of his sincerity in the matter."
In short, this case shows that a statement will not be a mere puff if legal intentions have been expressed through the actions and clarity in statement by the offeror.
Lastly, the case also explores the legal meaning of consideration. The confirms that there will be sufficient consideration when one party sustains a detriment or loss at the expense of another person's request. This is categorically envisaged in the words of Balwin LJ.
"Inconvenience sustained by one party at the request of the other is enough consideration. I think, therefore, that is consideration that the plaintiff took the trouble of using the smoke ball."
Therefore, consideration been the price for which a promise is bought. Mrs. Carlill bought the defendants’ promise when she decided to undertake the request that was made by the defendant company in the advertisement.
CONCLUSIVE COMMENTS
1. An offer can be made to the world.
2. The law recognizes unilateral offers as another form of a valid offer needed to create an enforceable contract.
3. A statement will not amount to mere puff if there is an intention to create legal relations and clarity in the statement.
4. Consideration will be sufficient where one party suffers an inconvenience at the request of the other.
This Article is Brought to You By:
LEGAL AID INITIATIVE
Bringing The law To Your Comfort
