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Case Summary

Carlill v. Carbolic Smoke Ball Co. (1891-94) All ER Rep.127

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This Case Summary is written by Ishanvi Jain, a student of Galgotias University, Noida

Introduction

The Plaintiff, believing Defendant’s advertisement that its product would prevent influenza, bought a Carbolic Smoke Ball and used it as directed from November 20, 1891 until January 17, 1892, when she caught the flu.  Plaintiff brought suit to recover the 100£, which the Court found her entitled to recover.  Defendant appealed.Carlil vs carbolic is notable for its curious subject matter and how the influential judges (particularly Lindley LJ and Bowen LJ) developed the law in inventive ways. Carlil vs carbolic is a contract case that is frequently discussed. In this casea medical firm advertised that its new wonder drug, a smoke ball, would cure people’s flu, and if it did not, buyers would receive £100. When sued, Carbolic argued the ad was not to be taken as a serious, legally binding offer. It was merely an invitation to treat, and a gimmick. But the court of appeal held that it would appear to a reasonable man that Carbolic had made a serious offer. People had given good “consideration” for it by going to the “distinct inconvenience” of using a faulty product. The Defendant, the Carbolic Smoke Ball Company of London (Defendant), placed an advertisement in several newspapers on November 13, 1891, stating that its product, “The Carbolic Smoke Ball”, when used three times daily, for two weeks, would prevent colds and influenza.  The makers of the smoke ball additionally offered a 100£ reward to anyone who caught influenza using their product, guaranteeing this reward by stating in their advertisement that they had deposited 1000£ in the bank as a show of their sincerity.  The Plaintiff, Lilli Carlill (Plaintiff), bought a smoke ball and used it as directed.  Several weeks after she began using the smoke ball, Plaintiff caught the flu.

Facts 

  1. The Company published advertisements in the Pall Mall Gazette and other newspapersclaiming that it would pay £100 to anyone who got sick with influenza after using its product according to the instructions.
  2. £100 reward will be paid by the Carbolic Smoke Ball Company to any person who will get caught by the cold or other diseases related to cold after having used the ball three times daily for two weeks, according to the printed directions supplied with each ball.
  3. The plaintiff (Louisa Carlill) believing in the accuracy of the statement made in the advertisement , purchased one packet and used it thrice every day from mid-November, 1891 until 17th Jan, 1892, after that  date she had an attack of influenza. 
  4. After that her husband wrote a letter for her to the defendants, stating what had happened, and asking for £100 as promised in the advertisement.

Issues raised

  1. Was the ad a “mere puff”?
  2. Does performance of the condition advertised in newspaper constitute acceptance of an offer?
  3. Was there any consideration made?

Judgement

The court said that there is no time limit fixed for catching influenza, and it cannot seriously be meant to promise to pay money to a person who catches influenza at any time after the inhaling of the smoke ball. There is also great vagueness in the limitation of the persons with whom the contract was intended to be made. But this document was intended to be issued to the public and to be read by public and the effect of this advertisement was to attract people and make them use it, which would amount to more sales, thus more profit. Based on this intention to promote the distribution of the smoke balls and to increase its usage, the advertisement was accepted as a contract addressing public at large but limited to those people who are using it either for prevention or treatment of influenza and other mentioned diseases.

Defendant’s Appeal was dismissed, Plaintiff was entitled to recover 100£.
The Court acknowledges that in the case of vague advertisements, language regarding payment of a reward is generally a puff, which carries no enforceability.  In this case, however, Defendant noted the deposit of £1000 in their advertisement, as a show of their sincerity.  Because Defendant did this, the Court found their offer to reward to be a promise, backed by their own sincerity. The Court of Appeal unanimously rejected the company’s arguments and held that there was a fully binding contract for £100 with Mrs. Carlill.

Conclusion

The ad was an express promise to pay 100 pounds to anyone who contracts flu after using the ball three times daily, 2 weeks. The ad was not a mere puff because of this statement “1000 is deposited with the Alliance Bank, showing our sincerity in the matter” proof of sincerity to pay. Promise is binding even though not made to anyone in particular. A unilateral offer  i.e. “offers to anybody who performs the conditions named in the advertisement, and anybody who does perform the condition accepts the offer”. The ad is not so vague that it cannot be construed as a promise the words can be reasonably construed. For example, that if you use the remedy for two weeks, you will not contract the flu within a reasonable time after that.

Suggestion 

The advertisement was an offer to the world. It was contended that it is not binding. It was said that it was not made with anybody in particular. In point of law the advertisement was an offer to pay £100 to anybody who will perform these conditions, and the performance of the conditions is the acceptance of the offer. Communication of acceptance is not necessary for a contract when people’s conduct manifests an intention to contract. 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 communicated but in cases of this kind, it is apprehended that they are an exception to the rule that the communication of the acceptance need not precede the performance. This offer is a continuing offer. It was never revoked, and if notice of acceptance is required, then the person who makes the offer gets the notice of acceptance contemporaneously with his notice of the performance of the condition before his offer is revoked.

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Case Summary

Harvey vs. Facey (1893) AC 552

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This Case Summary is written by Ishanvi Jain, a student of Galgotias University, Noida

Introduction

Harvey vs. Facey case is one of the important case law in contract law as it defines the difference between an invitation to offer and offer. In this case it is shown that the quotation of the price was held not to be an offer. Its importance is that it defined the difference between an offer and supply of information. In this case it is described that the indication of lowest acceptable price does not constitute an offer to sell, but it is considered as an invitation to enter into any negotiation. The defendants in this case were the owner the land, Bumper Hall Pen. And the plaintiffs were those who wanted to buy that land. The plaintiff sent a telegram to the defendant stating “Will you sell us the Bumper Hall Pen?” Telegraph the lowest price.” The defendants in return telegraphed them “the lowest price for Bumper Hall Pen is £900.” The plaintiffs then sent them the telegraph saying that “we agree to buy the Bumper Hall Pen for £900, send the details of the deeds”.

But then the defendants changed their mind and refused to sell their land to them. So the plaintiff sued them on the basis that the second telegraph sent by the defendant quoting the lowest price was the offer and same had been accepted by the plaintiff, and the contract was completed. But on the other hand defendants said that quoting the lowest price is not an offer which can be accepted. The Judicial Committee if the Privy Council held that the exchange of the above stated telegrams had not resulted in a contract. In the first telegram two questions were asked, first was regarding the willingness to sell the land and the second was about the price for which they can sell their land. And in the reply of this telegraph only the lowest price was sent which cannot be considered as offer to sell. In the third telegraph the plaintiffs agreed to buy the land and asked them to send the details of the deeds, which can be considered that they agreed to buy the land, which means that it is an offer and not the acceptance to offer. As the offer was not accepted so it cannot be considered as binding contract between two parties.

Facts

  1. Harvey who was running the partnership company in Jamaica wanted to buy the property owned by Facey who was also negotiating with the Mayor and Council of the Kingdom of Kingston City for the same property.
  2. On October 6th, 1893 appellant sent a telegram regarding the purchase of property to Mr. Facey who was travelling on the train on that day as he did not want that the property was sold to Kingston City.
  3. Telegram said “Will you sell us Bumper Hall Pen? Telegraph lowest cash price-answer paid.” Mr. Facey replied “Lowest price for Bumper Hall Pen£900.” In return, Mr. Harvey Replied “We agree to buy Bumper Hall Pen for the sum of nine hundred pounds asked by you. Please send us your title deed in order that we may get early possession.”
  4. Then Mr. Facey changed his mind and refused to sell the land to Mr. Harvey, on this basis Mr. Harvey sued him stating that there existed a contract between them and said that the telegram was an offer and he accepted it.

Issues Raised

  1. Was there an explicit offer from Mr. Facey to Mr. Harvey for the sale of the said property for the consideration of £900 and is it capable of acceptance?
  2. Was there a valid contract or not?
  3. Was the telegram advising the lowest price an offer capable of acceptance?

Judgement

The honourable Judges Bench reviewed the total matter of this case and upholding the Justice Curran’s verdict the Lordships held that the Telegraph 1 asks the respondent this willingness to sell the land and what is the lowest price of that land. But the respondent answered only the second part, and his willingness to sell the property was absent in the telegraph and therefore it cannot be expected to be binding upon him. Here the Court asserted that through the telegraph 3 the reply from the appellants cannot be considered an acceptance to the offer to sell them the land. So the respondent acceptance cannot be granted as a valid contract and actually no acceptance through any form was conveyed by respondent. The Privy Council held that there was no contract concluded between the parties. Facey had not directly answered the first question as to whether they would sell and the lowest price stated was merely responding to a request for information not an offer. There was thus no evidence of an intention that the telegram sent by Facey was to be an offer.

Conclusion

A valid contract requires a proposal and an acceptance to it and to make contract binding acceptance of the proposal must be notified to the proposer because a legally enforceable agreement required sureness to hold. This case clearly explains the differentiation between invitation to offer and offer and it also throws a light explaining the nature of the offer as it plays a very important role. A valid and concluded contract requires a proposal and an acceptance of the proposal. To make a contract binding it is necessary that the proposal must be accepted and also the acceptance of the proposal must be notified to the proposer. A mere statement contains no implied acceptance to hold. This is because a legally enforceable agreement requires certainty to hold. Here, in this case invitation to offer is an abstract concept which was realized clearly and expressly and this concept is improvising over the period of time. Now, I must say that the principle of invitation to offer is clearly distinguishable from an offer and it has played a crucial role to understand the nature of an offer.

Suggestions

This landmark case laid down the foundation of the concept “invitation to offer”, where a person barely think about the notion accepting the offer or not. Simply, we can say that when a person has not intimated his final desire to accept an offer, it is an invitation to offer. This clearly express that it is only mere formal proclamation of information on the terms on which the person may be willing to negotiate soon. Lack of consensus ad idem between the two parties is the primary reason for which this is not a complete offer. There was no valid contract between both the parties because in reply of the first telegraph the defendant answered only one of the two questions that is what is the lowest price of land and the answer was 900 pounds and it was only the reply of general information and only the invitation to offer but not an offer.

https://teamattorneylex.in/2022/11/06/harvey-vs-facey-1893-ac-552-2/

http://leagalworld.in/2022/09/15/harvey-vs-facey-1893-ac-552/

Case Summary

Felthouse V. Bindley (1862) 11 CB 869

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This Case Summary is written by Shivanshi Aggarwal, a student at Maharaja Agrasen Institute of Management Studies, GGSIPU

Introduction

To make a contract valid and legally bound, offer, acceptance of that offer and consideration are considered to be essential elements. The Indian Contract Act, 1872 defines offer and acceptance as “When one person signifies to another his willingness to do a particular act is said to be maid offer” and “when the other person to whom the offer is made signifies his assent is said to accept that offer”. A contract is made to be complete when an offer is made and that offer is accepted. But to make a certain offer and to accept that offer certain conditions are required. These conditions generally lead to misunderstandings and later disputes. In this case as well there was misunderstanding between the appellant and the party whose property was being subjected regarding whether the offer made was accepted or not. This case provided a slight clear vision towards the correct form of acceptance and how a mere communication does not amount to contract of sale. 

Facts

Paul Felthouse, a builder residing in London was the complainant. He had communication with his nephew John Felthouse, showing the interest to buy his horse. They both had two letters exchanged as there was some misunderstanding regarding the prices of the horse. Paul sent the final letter to his nephew saying, “If I hear no more about him, I consider the horse to be mine at 30 pounds and 15 cents”. He was ready to pay more to cover up for the misunderstanding. John being busy with his farm’s auction replied nothing but instructed auctioneer Mr. Bindley that the horse should not be auctioned and should be reserved. But the auctioneer forgot this communication and sold the horse to some other party gaining more profit. When John got to know about this he sent a letter to his uncle apologizing for the same. Finally Paul sued Bindley in the tort of conversion which is using someone else’s property inconsistently with their rights.

Some of the issues raised in front of the court were-

  1. Whether silence or no reply amount to acceptance
  2. Whether failure to reject amount to acceptance
  3. Does principle of acceptance put burden on the offeree to communicate the acceptance or the refusal

Arguments Raised

Defendant Side

Paul argued that since no letter was received from his nephew’s side the horse will considered being his and then Bindley had no right to sell or to take any advantage from the sale of the horse. He walked beyond his rights by selling the property which did not belonged to him. 

Accused Side

Bindley put up his point saying that since John never communicated his acceptance, there was no actual contract of sale or any bounding contract between them. He never officially communicated the horse to be his and thus Paul had no right over the horse. 

Judgement

This judgement was given by three judge bench consisting of Willes J, Byles J and Keating J unanimously. Willes J gave the leading judgement stating that there was no formal bargain for that horse and hence there was no space for contract of sale. Being silent or giving no response will not amount to acceptance. Though John showed his interest in selling the horse to Paul and also instructed Bindley not to sell the horse in auction but still showing interest will not legally bound him or Bindley to sell the horse to Paul. The date of sale of horse was 25th of February and by that date no letter of acceptance was being sent. The apology letter was sent on 27th of February which will be considered as the first official letter by the nephew to his uncle but that was after the sale of the horse. Thus at the time of the sale there was no legal contract between any party and Paul did not have the ownership of the horse. Since he had no legal right over the horse he cannot claim anything from Bindley and actions for conversion cannot be taken. The other two judges were of the same opinion and did not consider silence or failure to reject as an acceptance. They further signified that one cannot impose an obligation on another to reject one’s offer. 

Conclusion

Offer and acceptance being the major component of binding contract cannot be left as any loophole. There must be clear communication regarding making the offer and simultaneously accepting the offer made. In this case offer has been clearly made by Paul but John did not communicate any clear acceptance. Thus principles of acceptance of offer have been cleared here which clearly shows that silence cannot be considered as an acceptance. The court also considered the case of Dobell v. Hutchinson which tells that acceptance need not to be in written it can be oral as well. But regardless in this case acceptance was not made in any form and only the intention of selling the horse was shown which does not give ownership rights to any person concerned. This case was considered landmark as an important judgement was delivered regarding principles of acceptance. 

Suggestions

There is a concept of acceptance by conduct which means that doing ac act in accordance with what was required which shows the approval or acceptance. Since Paul put the letter stating, “If I do not hear”, and got no response there was a chance of acceptance by conduct. John might do not replied because he agreed to the conditions and prices. This case was also later reconsidered delivering that fact that there were chances of acceptance by conduct. Though the judges were right in saying that clear communication should be made for a contract of sale to become valid and legally bound but in my opinion this case should have been come under acceptance by conduct. The conduct of John, not replying or not giving any response will create a picture in someone’s mind that he accepted the offer and now horse belongs to him. Also the auctioneer was also instructed not to sell the horse and he also failed to work in accordance to what was required by his client. His negligence harmed Paul and Paul should be given the ownership of the horse. As can be seen in the case of Rust v. Abbey Life Asurance Co. Ltd., failure to reject was considered as acceptance.