AUTHOR: Rupsha Mitra, Intern at ILW

ABSTRACT

In contract law, the doctrine of unilateral contracts occupies a significant position. The foundational principles governing unilateral contracts, acceptance by performance, and intention to create legal relations were laid down in the landmark case of Carlill v. Carbolic Smoke Ball Co. (1893). This research paper undertakes a doctrinal and analytical study of the case, examining its historical background, legal issues, judicial reasoning, and enduring relevance. It further provides a critical analysis of the judgment and evaluates its applicability in contemporary commercial and digital contracting scenarios. The study concludes that the principles established in this case continue to influence modern contract law and remain relevant in resolving disputes arising from public advertisements and promotional offers.

INTRODUCTION

The law of contract is grounded in the principles of offer, acceptance, consideration, and intention to create legal relations. Traditionally, advertisements were viewed as mere invitations to treat, unless judicial interpretation demonstrated a clear intention to be legally bound.¹ Carlill v. Carbolic Smoke Ball Co. is one of the most influential cases in this regard, as it established that an offer made to the public can result in a binding unilateral contract upon performance of stipulated conditions.²

This research paper analyses the legal principles developed in Carlill, particularly those relating to unilateral contracts and acceptance by conduct, and evaluates the judgment’s relevance in contemporary consumer and commercial transactions.

FACTS OF THE CASE

The Carbolic Smoke Ball Company (defendant) advertised that it would pay £100 to any individual who contracted influenza after using its product, the Carbolic Smoke Ball, in accordance with the instructions.³ The company further declared that £1,000 had been deposited in a bank to demonstrate its good faith. Mrs. Carlill (plaintiff) purchased and used the product as directed but subsequently contracted influenza. Upon the defendant’s refusal to pay the promised reward, she initiated legal proceedings.

ISSUES BEFORE THE COURT

The Court of Appeal considered the following legal issues:

1. Whether the advertisement constituted a legally enforceable offer or merely an invitation to treat.

2. Whether acceptance of the offer required communication to the offeror.

3. Whether there was an intention to create legal relations.

4. Whether valid consideration existed to support the contract.⁴

JUDGMENT

The Court of Appeal held that a binding contract had been formed between Mrs. Carlill and the defendant company. It ruled that the advertisement constituted a unilateral offer made to the public at large, capable of acceptance by any person who fulfilled the stated conditions.⁵ Acceptance was completed by performing the task specified in the advertisement, and no separate communication of acceptance was required.

The Court further held that the deposit of £1,000 in a bank account provided clear evidence of an intention to create legal relations. Consideration was found in both the inconvenience suffered by the plaintiff and the commercial benefit accruing to the defendant through increased sales.⁶

ESTABLISHMENT OF LEGAL PRINCIPLES

The judgment in this case established several foundational principles of contract law:• A public advertisement may constitute a valid offer if it reflects a clear intention to be legally bound.• In unilateral contracts, acceptance may be effected by performance without prior communication.• Intention to create legal relations may be inferred from conduct and surrounding circumstances.• Consideration includes not only monetary exchange but also effort, inconvenience, or detriment.⁷

These principles have since been consistently applied in common law jurisdictions, including India.⁸

CRITICAL ANALYSIS

The decision in Carlill v. Carbolic Smoke Ball Co. is often praised for its pragmatic approach to contract formation. By recognising acceptance through performance, the Court adapted contract law to commercial realities and strengthened consumer protection.⁹ The emphasis on intention rather than formal communication reflects a flexible and equitable approach to legal interpretation.

However, critics argue that the judgment may expose advertisers to unintended contractual liability if promotional statements are interpreted broadly.¹⁰ Courts have subsequently addressed this concern by requiring clarity, certainty, and demonstrable intention before treating advertisements as binding offers.

CONCLUSION

In the modern digital economy, the principles laid down in this case remain highly relevant. Online promotional schemes, reward programs, and cashback offers often resemble unilateral contracts, and courts continue to rely on Carlill to determine whether such public promises are legally enforceable.¹¹ Despite being a nineteenth-century decision, the case retains strong doctrinal and practical significance.

Carlill v. Carbolic Smoke Ball Co. remains a cornerstone of contract law in understanding unilateral contracts and acceptance by performance. The judgment successfully balanced contractual certainty with fairness and consumer protection. Its continued application in modern commercial contexts demonstrates the adaptability of common law principles. The case therefore serves as an important precedent in determining the enforceability of public offers across evolving modes of commerce.

Footnotes

1. Partridge v. Crittenden, (1968) 1 WLR 1204 (QB).

2. Carlill v. Carbolic Smoke Ball Co., (1893) 1 QB 256 (CA).

3. Id.

4. Id.

5. Id. at 268.

6. Id.

7. G.H. Treitel, The Law of Contract 15–18 (14th ed. 2015).

8. Harbhajan Lal v. Harcharan Lal, AIR 1925 All 539.

9. P.S. Atiyah, An Introduction to the Law of Contract 32 (6th ed. 2005).

10. Ewan McKendrick, Contract Law: Text, Cases, and Materials 78 (8th ed. 2020).

11. Lefkowitz v. Great Minneapolis Surplus Store, 86 N.W.2d 689 (Minn. 1957).