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er, is too late. Offer and acceptance determined the precise moment at which the
parties were contractually bound. On this basis the Court of Appeal held, the c
ontract having been formed at the barrier, that the notice outside was included,
but the ticket and sign were not.
The concept of a unilateral contract is illstrated by refrence to a classic cont
ract law case, Carlil v. Carbolic Smoke Ball Co Ltd. The defendant, Frederick Ro
e, the proprietor of a medical preparation called The Carbolic Smoke Ball , placed
an advertisement in The Pall Mall Gazette Promising to pay $100 to anyone who us
ed the Carbolic Smoke Ball for two weeks and who, for a limited period thereafte
r, contracted influenza. Mrs Louise Carlil did both and sued to recover her $100
, as promised. In the High Court, the defences of the Smoke Ball Company, indeed
most of the arguments, appear to have been about the facts rather than the law.
In commercial contract practice and litigation, or arbitration over disputes, t
he facts are indeed often more complicated and relevant to the final outcome tha
n the law in question. In Carlil some of the factual arguments were that the adv
ertisement was not accurately reported. The plaintiff had not relied on it in an
y case, had not used it properly, had never actually caught influenza and, if sh
e did, never reported it to the defendant. The court found for the plaintiff. In
the Court of Appeal, the Carbolic Smoke Ball Co as appellants raised a number o
f legal points relevant to contract law: (1) the advertisement was not an offer,
but an invitation to treat. In other words, there was no intention of making an
offer; (2) the advertisement was too vague to be an offer; (3) an offer could n
ot be made to the whole world; (4) there was no consideration for the promise (w
hether the plaintiff herself had actually bought the smoke ball) ; (5) where was
tha accepyance of the offer? In a bilateral contract the acceptance is normally
communicated., and that was not done here; (6) the advertisement was a bet or w
agering contract, in which case it would be void as contrary to public policy.
The Court of Appeal rejected most of these arguments and held that there was a c
ontract. The advertisement was held to be a promise which was an offer to the wh
ole world, and was capable of amounting to an offer of a unilateral contract. Co
mmunication of acceptance is not necessary in the case of a unilateral contract.
Consideration and acceptance could be found in Mrs Carlil taking and using the
Smoke Ball for the full two weeks. It was only at the end of this time that the
promise became legally binding. The Smoke Ball Companys offer could be revoked at
any time until she had completed performance. The Court of Appeal also dealt wi
th the consideration point. Catching influenza was not the consideration but a co
ndition (sometimes called and if clause). (I will pay you if a certain event happen
s, which you do not promise to bring about or which is outside of your control.)
. Consideration was found in Mrs Carlil using the Smoke Ball. The Court of Appe
al also found that there was an intention by the parties to treat the arrangemen
ts as contractual. The deposit of money was an important indicator of contractua
l intention. Carlil was the first case to explicitly state a requirement of inte
ntion to create legal relations.
Category : Law
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