The curious case of Carlill v the Carbolic Smoke Ball Company is one of the first that law students learn. Decided by the Court of Appeal in 1892, it set the framework for contract law and modern consumer protection, and is so established the world over that some American lawyers organise an annual ball named after it. Set against the Russian influenza pandemic, which is estimated to have killed one million people globally, it strikes a chord in these unusual days of coronavirus.
The Carbolic Smoke Ball Company produced a device that it claimed would protect users from the flu: a rubber ball filled with powdered carbolic acid, with a tube attached. The user inserted the tube into their nose and squeezed the ball, releasing a puff of powder and making their nose run, flushing out any infection. The company advertised the product in the Pall Mall Gazette, offering a £100 reward to anyone who used it correctly and still contracted influenza. They deposited £1,000 in the Alliance Bank in Regent Street to show they had they money to pay out.
Louisa Elizabeth Carlill bought a ball and used it, as directed, three times a day for nearly two months. She then promptly caught the flu, and sought to claim the reward from the company. Carlill’s husband, who happened to be a trained solicitor, sent two letters to the company which it ignored. After a third letter, the company said it had total confidence in its product, and Carlill took them to court.
Her lawyers argued that the advert and her reliance on it created a contract between her and the company. The company, represented by HH Asquith (who went on to become prime minister), argued that the advert was a “mere puff” and not to be taken seriously; that there was no consideration or thing of value passing between them; that an offer could not be understood to have been made to the entire world; and that there was no way of knowing if Carlill had followed the instructions correctly.
The company lost: the three judges ruled that the advert was not a unilateral offer to all the world but was restricted to those who acted upon the terms in the advert, and that doing so constituted an acceptance of the offer.
The court said that purchasing the smoke ball constituted good consideration because more people buying smoke balls, relying on the advert, was a clear benefit to the company. And the fact that the company had deposited £1,000 at the Alliance Bank showed its intention to be legally bound by the advert.
In summary, explains principal lawyer Mark Woloshak, the case shows the elements needed for a valid contract: offer, acceptance, consideration, and an intention to create legal relations.
Georgina Dietrich, a pupil barrister at 3PB, explains that the judgment meant companies selling unregulated medicines and charlatan remedies could no longer legally entice consumers to purchase their products with monetary rewards and then not pay up. “This case marked the beginning of modern consumer protection and contract law,” she says.
But while it helped define the contractual relationship between companies and their customers, it was not until the middle of the next century that consumer rights were protected by statutes.
In recent times, Dietrich adds, companies making offers to customers have been similarly bitten. In 1992, vacuum manufacturer Hoover ran a notorious “Fly for Free” promotion, offering complementary plane tickets to the United States to customers who spent more than £100 on items. “The campaign resulted in an unexpected consumer response, and the company could not match the demand and failed to keep its promise,” she says.
The principles in Smoke Ball case, says Woloskok, are still used today – like in the class action brought by Slater & Gordon against Volkswagen, on behalf of customers who bought cars based on the fact that they had lower greenhouse gas emissions.
In April, the High Court ruled that the car company had installed unlawful software in thousands of cars sold in the UK to defeat emissions tests.
But what of Mrs Carlill? She lived until the age of 96. She died on 10 March, 1942, according to her doctor, principally of old age. But her death certificate noted one cause of death: influenza.
