Corporate Law Answer

Q.3. The proprietors of a medical preparation called the “Carbolic Smoke Ball” published in several newspapers the following advertisement:-

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.

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The Defendant’s Case

On appeal, the defendant’s case was that there was no binding contract between the parties. The defendant company had no means of checking the ball, or of establishing whether the...