The Indian Contract Act, 1872 as we all know has evolved and been taken from the English Law which has provided us with various landmark judgments in the field of Contract act. The Carlill v. Carbolic Smokeball Co. is one of the many judgments, which comes up in the life of every law student. This judgment is one of the main doctrines of the Contract act. This case law deals with the concept of unilateral, which will be briefly discussed as we progress through the case law. For a better understanding of the case, we have to first deal with what is an unilateral contract.
The basic meaning of the word would be ‘one-sided’, so an unilateral contract is a type of contract in which an offer is made to the public at large and explicit communication of the acceptance is not necessary.
The implementation of these kinds of contract is complicated because of the part of the consideration. The problem with an unilateral contract is that they are not definite on the terms of the obligations that both the parties hold against each other. For example, Ram has lost his wallet and Ram offers Rohan Rs.100 if he finds the wallet. This is an unilateral contract because Ram is only obligated to pay the Rs. 100 if, and only if, Rohan finds the lost wallet. However, Rohan is under no obligation to find the lost wallet technically, he has only accepted the offer once he finds the lost wallet.
Facts of the Case
The Carbolic smoke ball company came up with an advertising agenda, which stated that with the use of the carbolic smoke ball one could get remedy over influenza, cough and cold and all sorts of lung-related problems and also deal with problems of sore throat.
The company was so confident over their product that they even asserted that with the use of the smoke ball it would not only cure any person of influenza but would also prevent any kind of common flu to all its users.
The main subject matter was that the company claimed that even after the usage of the smoke ball if any of its users come in contact with any kind of influenza then the company would pay an amount of 100 pounds to the user, provided that the user has taken the smoke ball for the specific period of time for which the company has prescribed.
Moreover, the company also stated that it had deposited the sum of 1000 pounds in a certain Alliance bank that in an event where a person falls ill even after taking the smoke ball the money could be paid to the person in lieu of the advertisement.
The plaintiff followed all the procedures laid down by the Carbolic Smokeball Company in the usage of the smoke ball and even after following all the protocols, she still caught influenza.
Consequently, she filed a suit against the Carlill Smoke Ball Company and claimed the amount that the company had advertised, the court ruled in her favor but the defendants appealed.
The plaintiff argued that the promise was not vague and the company’s offer was in a way clear that if the product was ineffective or faulty the company would reward an amount of 100 pounds and for this by the means of action they had deposited the said amount in one Alliance bank as the advertisement claimed. Moreover, the plaintiff even proved that there was a consideration in the agreement, which is an essential element to the contract.
The advertisement was in the form of a Unilateral Contract according to the Plaintiff and the Company had to perform their end of the bargain by paying the amount mentioned.
The Carbolic Smoke Ball Company argued that the advertisement was in itself vague and it did not amount to a promise to pay the money.
The second contention made by the defendant was that there was no means of checking on how the consumer used the product, which could lead to ways a consumer not using the product properly and claiming the said amount as a reward in which the company had to bear the loss.
The defendants even claimed that there was no contract at all because in a valid contract, there is an intention to accept and communication is made in lieu of that. In this case, Carlill did not really send any acceptance with regard to the offer.
The company further stated that this was just an advertising strategy and the company had no intention to perform the promise because they claimed this promise to be an offer at large.
The Court held that the contract to be binding and the reason was that according to the Judge the advertisement was an express promise, and anyone who used the product following all the procedures prescribed by the company and even after that fell ill had to be paid the amount of 100 pounds.
The 1000 pounds deposited in one Alliance bank shows the intention of the company to pay the amount if the product did not function properly was seen as an intention to perform the promise by the court.
The judge further stated that this was an unilateral offer, which was made to people at large, and this kind of unilateral offer does not require acceptance mere fulfilling the conditions provided by the offeror would make the offeror bound on his/her part to perform the obligations.
For an offer to exist there must be a valid consideration and according to the Judges of the court, there was a valid consideration on the part of the consumer that the consumer had paid for the product and the company had earned profits by the sales of the product thus making it a valid consideration. Furthermore, the 1000 pounds deposited in the bank by the company shows the intention to fulfill the promise and fulfilling their end of the bargain.
The case was dismissed and the plaintiff received an amount of 100 pounds as a reward.