Carlill v Carbolic Smoke Ball Co and Unilateral Offers in Contract Law

Advising N: Offer, Acceptance, and Invitation to Treat

P, a car salesman, advertises one of his cars — made by Ferrari — for sale at £50,000 in a newspaper. N sees the advertisement and calls P, offering £40,000. P rejects N's offer and tells N that he would be willing to discuss an offer of £45,000. N agrees on the price but under the condition that P proves to her that the car is indeed a genuine Ferrari. P promises to disclose all necessary documents within three weeks. N agrees and waits. Two weeks later, N discovers that P has sold the car to C for £50,000.

In order to advise N, it is critical to analyze the terms of the case. This is clearly a case involving an offer and verbal acceptance, and represents a practical example of a unilateral offer. As Koerner (1958, p. 1016) noted, newspaper advertisements can be considered as an offer to sell a product. As was also established in Carlill v Carbolic Smoke Ball Co (1893), advertisements can indeed amount to an offer.

It is worth noting, however, that most advertisements never qualify as offers. Instead, they qualify as statements inviting others to enter into further negotiations — a concept known as invitation to treat. A clear example is the Partridge v Crittenden [1968] case, in which the appellant placed an advertisement in a bird fanciers' periodical stating "Bramblefinch cocks and hens 25s." The appellant was charged under the Protection of Birds Act 1954, section 6(1). Initially convicted, the appellant's conviction was overturned by the Divisional Court. This decision is consistent with the earlier ruling in Harris v Nickerson (1873), in which an auctioneer advertised that specific goods would be on sale at a certain location on a given date. The plaintiff traveled to the advertised sale only to find that all the lots he was interested in had been withdrawn. He sued the auctioneer for his loss of expenses and time. The court held that the claim failed, since the auctioneer's advertisement was merely a declaration of intent to hold a sale and therefore never amounted to an offer capable of acceptance — it could never form the basis of a binding contract. That advertisement therefore amounted to a mere invitation to treat.

N must therefore understand that P's advertisement could be treated as an invitation to treat, since it never amounted to an offer in itself. What elevated the situation toward an offer was P's verbal confirmation that he would be willing to discuss £45,000. Even so, that verbal statement is itself further evidence that the parties were still at the stage of negotiation. N cannot therefore succeed in suing P on the basis that he failed to honor his part of the bargain, since what P suggested was merely an opportunity for further negotiations — precisely what is meant by an invitation to treat.

Before proceeding further, it is useful to distinguish between unilateral and bilateral offers. Richards (2010) noted that a bilateral offer arises when one party promises to fulfill or do something in return for a promise made by the offeree. In this arrangement, both parties agree to accomplish something in exchange for a reciprocal promise from the other. For example, if N promises to sell their house in return for B promising to pay £6,000, that is a bilateral offer. The majority of commercial offers are of this type.

Unilateral and Bilateral Offers Explained

A unilateral offer, on the other hand, occurs when one party — the offeror — expressly promises to do something in return for the performance of an act by the other party. This is, in essence, a conditional promise. In the scenario involving N and P, N agrees on the price but only under the condition that P proves the car is a genuine Ferrari. This makes the arrangement a unilateral offer, since only one side promises to purchase once her conditions are fulfilled.

Whenever a product is advertised in large quantities via a poster or newspaper, it is generally not considered an offer. It is treated instead as an invitation to treat, because there is no guarantee that the advertiser can supply the item to every individual who might want one. This reasoning was central to the decision in Partridge v Crittenden [1968].

Advertisements as Invitation to Treat

In summary, N must accept that P's initial newspaper advertisement carried no binding legal force as an offer. P's willingness to discuss £45,000 opened the door to further negotiation but did not, by itself, constitute a concluded contract. Because no binding contract was ever formed — the condition set by N (proof of the car's authenticity) was never fulfilled — N is unlikely to have a successful legal claim against P for selling the car to C.

The Carlill v Carbolic Smoke Ball Co (1893) case is of great importance in contract law because it specifically highlights the meaning of an offer as a component of a contract.

In this case, the plaintiff (Mrs. Carlill) purchased a product called "The Carbolic Smoke Ball" — a supposed cure for influenza, colds, and similar ailments — from the defendant (Carbolic Smoke Ball Co). She did so on the basis of the defendant's advertisement, which promised to pay £100 to any customer who contracted influenza after using the product as directed and for the prescribed period of time. As a demonstration of their sincerity, the defendants stated that they had deposited £1,000 with the Alliance Bank on Regent Street.

Carlill v Carbolic Smoke Ball Co (1893): Facts of the Case

The plaintiff used the smoke ball according to the instructions but nonetheless contracted influenza. She then sued the Carbolic Smoke Ball Co for the advertised sum of £100. The defendant argued that the advertisement was not to be taken as a serious and legally binding offer, and maintained that no agreement existed between the parties. The defendant employed considerable ingenuity in advancing this argument.

One defense raised was that it was impossible to make an offer to the whole world, since that would theoretically enable the entire world to accept it — a scenario the defendant claimed was beyond the limits of commercial reality. This defense was rejected by the Court of Appeal. Bowen LJ addressed the point directly:

"It was also said that the contract is made with the whole world — that is, with everybody — and that you cannot contract with everybody. It is not a contract made with all the world. There is the fallacy of the argument. It is an offer made to all the world; and 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? . . . Although the offer is made to the world, the contract is made with that limited portion of the public who come forward and perform the condition on the faith of the advertisement." (Richards, 2010, p. 16)