The — flu pandemic was estimated to have killed 1 million people. The smoke ball was a rubber ball with a tube attached. It was filled with carbolic acid or phenol. The nose would run, ostensibly flushing out viral infections.
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Search for: Case study: Carbolic Smoke Ball Company In the late s, it was quite common for businesses selling medical and pharmaceutical products to make outlandish promises about their products. Following the instructions closely, Mrs Carlill used it three times daily for a period of two months. At the end of this period, she subsequently contracted influenza. Her lawyers argued the company had breached the terms of the advertisement — and thus its contract with customers.
Its conditions were so vague, they argued, that it was not intended to be taken seriously. The case progressed to the Court of Appeal. There had never been a case with a similar set of facts, so the three-judge bench had to develop a new precedent. After deliberation, they unanimously found in favour of Carlill. They concluded that a binding contract existed between the Carbolic Smoke Ball Company and Mrs Carlill, for several reasons.
Secondly, the advertisement induced customers to buy the Smoke Balls, involving an inconvenience to the customer and a financial advantage to the company.
This transaction constituted an exchange of promises. The judgement set precedents in contract law that continue in both Britain and Australia. It established that an offer of contract can be unilateral: it does not have to be made to a specific party. Carlill v. Carbolic Smoke Ball also established that acceptance of such an offer does not require notification; once a party purchases the item and meets the condition, the contract is active.
It also established that such a purchase is an example of consideration and therefore legitimises the contract. Carbolic Smoke Ball Company was a landmark case in protecting the rights of consumers and defining the responsibilities of companies.
Carlill v Carbolic Smoke Ball Co